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Stuart J
Stuart J, Solicitor
Category: UK Family Law
Satisfied Customers: 22386
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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I have a family issue surrounding borrowed money and need

Customer Question

I have a family issue surrounding borrowed money and need some advice.
After a convincing pitch, my elderly father lent my brother and his partner/ girlfriend£50,000 for a business venture involving investment in properties. He also gave them an additional £50,000 to make similar investments on his behalf.
To give them this £100k he took out a remortgage on his 2nd house, a rental property.
I can not fully recall the setup, but the money was meant to be held in an account by the mortgage company and my brother etc would be able to draw money as needed to purchase 'options properties'. Due to the nature of these 'option' deals the amounts drawn would be small, up to maybe £20k per property and they would then pay interest (This being an interest only mortgage) on any amount withdrawn from the holding account. They did not receive interest on any funds in the holding account as far as I am aware.
From what has been described, the proposal sold to my dad detailed that:
- The £100k would be a pool of money that my brother and partner would be able to draw against as and when a property option came up.
- In line with the interest only mortgage taken out to fund the £100k pot, any money used from this £100k would incur an interest payment until it was paid back into the holding account. The idea was that interest would never be due on the total £100k as there would always be money in the holding account.
- Based on how these options properties were supposed to work, any money withdrawn and invested in said properties would be recouped during the period of the remortgage, most likely within 5-7 years or before with additional cash benefits.
- There was meant to be a safeguarding process in place that would prevent my brother & partner from drawing money regularly or large amounts without my dad being notified.
The upshot is that without my father's knowledge my brother & partner did withdrew and spend the entire £100k as the safeguards put in place had either being removed by them or the notification letters intercepted (sorry I cannot recall which now). As the truth of the situation began to come to light, they eventually admitted that they spent the money on living expenses, courses, a holiday etc. and that only a very small percentage went on properties.
This occurred about 6 years ago because as managers of my father's rental property the tenants paid the rent to them and they were meant to look after the house bills, take a fee and pay my dad his landlord share but began withholding his portion, as well as wrongfully withholding deposits to tenants who wanted to leave.
Since finding out, we as a family have been trying to deal with the situation amicably; looking at realistic payment plans for both the rental money owed to my dad as well as the £100k pot of money.
This amicable course of action has not being effective as over the years, not only have they made few payments to the £100k debt, or the rental debt but have at times not even paid the monthly mortgage interest payments They have cited a number of reasons for this including the fact that:
- they have since had another two children so have had child rearing cost to uphold despite being at times unemployed
- They have chosen to pursue entrepreneurial dreams over normal employment despite this route not bringing in enough of an income.
- They have downscaled little of their lifestyle & spend spare cash i.e. from advances on contracts on expensive family holidays.
The situation has recently gotten worse as:
- The couple have split up (possibly indefinitely) and no longer share living expenses
- My brother's partner is somewhat refusing to pay her share of the debt/ monthly mortgage (This is a little complicated as she says she is covering shared debt i.e credit cards in her name whose debt is frozen)
- We are approx yrs away from the end of the mortgage term
I would like some advise on what we can do.
One issue is that it is likely that the property will have to be sold if mortgage payments can not be kept up (currently this is being covered by the rental income, so my dad has a reduced income from this) or at the end of the term when the full mortgage repayment of £100k is due, as there is now no adequate investment that will repay this amount.
In selling the property my dad will have paid their debt of £100k and they will even feel less obligated to repay.
1. Is it possible to get a legally binding document outlining that this is a shared debt belonging to both my brother & partner which needs to be repaid to my dad. Can this be enforced? One or both of them may not want to willfully sign up to this though they have previously assumed responsibility for the debt
2. Is there anything that we can do about the fact they they spent all this money without consent and did not keep to the verbal agreement made with my dad?
3. Is there any other advice you can give about this situation.
Thanks Jo
Submitted: 7 months ago.
Category: UK Family Law
Expert:  Stuart J replied 7 months ago.

Thank you for the question. It’s my pleasure to assist you with this. Would you be prepared to go to the police with this?

Do you have any proof or acknowledgement that they took this money for anything other than the agreed purpose?

Is there any paperwork at all?

Customer: replied 7 months ago.

Thanks Stuart

I think the family would consider going to the police if it came to that and it would depend on what going to the police would achieve for us.

The only acknowledgement that we have is verbal based on various meetings that the family has had with them where they admitted spending the money on educational courses and living expenses. We don't have any receipts etc to prove what they spent the money on, though the absence of properties that they should have have spent the money on could also be proof? I could possibly ask them for copies of documents related to any properties purchased with the money?

With regards ***** ***** other paperwork, I don't think we have anything other than notes from various meetings the family have had with them and letters from the mortgage people re. missed payments etc.. What other kind of paperwork where you thinking of?

Expert:  Stuart J replied 7 months ago.

Thank you. There appears to be no dispute that the money was paid and what I was thinking for was regard to paperwork was anything, even letters or emails which confirmed what the purpose of this money was.

If the money was to buy property which clearly it was, and you can prove that, then to my mind, it is quite simply a case of theft.

Now, having said that, you need to be very careful of threatening to go to the police unless they pay. Even though they may actually owe the money to threaten to go to the police if they don’t pay could be construed as blackmail!

Demanding money with menaces is still blackmail even if they actually owe the money!

Now, having said that, it cannot be blackmail to report a criminal offence. To be honest, I would simply tell them (it needs to come from the father) I have taken advice and been advised that as this money was held on trust for the father to buy properties and has not been used for that, it has been stolen and that the matter should be immediately reported to the police. However, you would prefer to avoid that and therefore provided there is an immediate written admission that the money was for a particular purpose (buying houses) and that it was due to be repaid and that it was taken and that they make proposal to repay in a timely fashion and meanwhile, grant a charge against their personal houses, and do so within the next 21 days, the matter will be referred to the police with a view to bringing a criminal prosecution. I would go on to say that you would rather avoid that but in the absence of a satisfactory reply, there is no option.

Some police forces will look at this and think it’s complicated and not want to get involved! Others will jump on it but to my mind, it is undoubtedly theft and therefore the police may have to be pressed.

What would the police action, if successful, give you. Firstly, confirmation the money was owed, secondly could get a compensation order which could involve the culprits having to sell their personal properties.

I’m not certain whether that covers all the points in your question or not but I’m happy to answer any specific points arising from this.

Expert:  Stuart J replied 6 months ago.

Hello again. Can I assist you any further with this? Would a telephone call help? I will submit a Premium Service proposal for you.

Please do not forget to rate my answer service positively so that I get credit from my time today. You will get the impression the thread closes but it does not, it does remain open if you want to follow any points. Thank you. Kind regards

Customer: replied 6 months ago.

Hi Stuart

Sorry for my delay in getting back to you, but thanks for your detailed response; you have given us some food for thought. My siblings and I will be catching up with my brother and his partner sometime during the next 3 weeks to get an update on the situation. Once we have done that I will be in a better position to make a call to you worthwhile so I will be in touch once I'm ready so that you can submit another premium service proposal.

In the meantime, I agree that it is theft. This situation has of course had an impact on family relationships but we are still hoping to get to a resolution amicably. I believe that talk of police would lead to a big rift and as such we would only mention this at the point where we are prepared to go ahead with this option. We would definitely not use it as a threat.

I would just like to ensure that I understand your response. Are you saying that if we wish to go the police route that my dad would need to write to my brother and his girlfriend saying something like..(see bolded text and lined area below).


I have taken advice and been advised that as this money was issued with the purpose of being held on trust to buy properties and has not been used for that purpose, it has been stolen and as such the matter should be immediately reported to the police. However, I would prefer to avoid this provided the following can be organised within xxx (state a suitable timeframe i.e.up to one month):

1. An immediate written and signed admission that the money was given for (state the specific purpose - buying houses etc) under the following verbally agreed terms stated below (briefly state these), but was instead used without permission for other purposes including courses and living expenses as you have previously stated.

2. A written and signed proposal for how all future monthly interest payments will be paid in full starting from xxx (state next payment month).

3. A written and signed proposal for how the additional debt of £xxx with be repaid in a timely fashion. This amount covers the monthly mortgage interest payments that you have missed from xxx (state time period) which I have needed to pay on your behalf. Please see breakdown of debt on separate sheet.

4. A written proposal for how the £100k will be paid back to the mortgage company at the end of the interest only mortgage period. This agreement will end in (xxx month/ year) at which point the mortgage company will expect full repayment of the £100k

I would rather avoid this route but in the absence of a satisfactory reply, I will have no other option.

As stated in my initial inquiry, in relation to points 2 & 3 above, they have to pay the mortgage company interest on any part of the 100k withdrawn from the mortgage companies holding account. They have missed quite a few payments over the last approx. 3 years and for the last 1.5 years my dad has had to cover that bill in full or part or risk repossession of this house.

My brother has recently began paying half of the amount due and my dad is paying the rest. As my brother and his partner are currently estranged she has refused to pay her share based on him apparently not paying his share of other shared debt in her name. This is not something we are getting involved in but part of our follow up with them is about the legal advice she said she was going to get.


There are also a couple of other points you mention that I am unclear about and need to be able to explain this to my siblings.

  1. You say 'meanwhile, grant a charge against their personal houses, and do so within the next 21 days'

  • Are you advising that we do this now within the next 21 day or within 21 days of us informing them of police action?

  • I am not sure this matters as they do not presently own any personal houses, they rent, but what is the significance of the 21 days?

  • Instead of a charge on property could this also be a county court judgement application?

  • Based on the fact that they do not currently have properties, could a compensation order still be issued?

  1. You say ‘the matter will be referred to the police with a view to bringing a criminal prosecution’

  • I am unclear what you are referring to here, will the charge on their property (if pursued) be referred to the police or should this text be included in the letter from my dad? So to informing them that if my dad does not hear from them, the matter will be referred to the police for criminal prosecution.

  • Also just to be clear in terms of criminal prosecution are we talking potential jail time or just as you said the ability for a compensation order to be issued and indisputable confirmation that the money is owed.

  1. Lastly, while we are still trying to be amicable, do you think mediation would help? I’m thinking that they would have to be open and honest about income, expenditure and creating a firm plan. Or is this not something that mediation can force them to disclose and adhere to if they do not want to?

Thanks Jo

Expert:  Stuart J replied 6 months ago.

It’s entirely up to your father whether he sends a letter as outlined or he simply goes straight to the police. I think it needs to be much shorter.

I transferred this money over you to hold on trust for the purposes of buying houses. You have spent it on yourself. I have been advised that the money you have spent has been stolen by you. Unless I get firm proposals to repay by the end of the week, I will refer the matter to the police with a view to having you prosecuted.

I don’t think it needs to be any longer. There is no need to try to negotiate.

If they don’t have personal houses, the matter of the charge is irrelevant. The reason for 21 days is to give them a reasonable length of time to respond. If the police are not interested (your father may need to push them) then you could always issue County Court proceedings against them.

The criminal court would issue a compensation order, the County Court (civil claim) would issue a County Court judgement. If they don’t own houses, they could go bankrupt and that would write the debt off and your father would be hanging out to dry with no money.

The charge on the property is a civil issue and nothing to do with the police. If your father accepted a charge on the property, from a criminal point of view he would probably be seen to have acquiesced to what they have done.

In view of the fact that this is 50 grand they have taken, if it does get prosecuted, they could well serve a short custodial sentence but it wouldn’t let them off the hook for failing to pay and they would still have to pay. By all means try mediation but to be honest, I can’t see what there is to mediate. They admit they take this money so the only thing to mediate it whenever going to pay back the court could order them to disclose all their finances .

When you have a moment, please don’t forget to use the rating service so that I get credit for my time. The thread does remain open we can continue.

I am online and off-line spasmodically over the weekend and therefore, I may not get back to you immediately.

Expert:  Stuart J replied 6 months ago.

Hello again. Good afternoon. Can I assist you any further with this or have you now resolve the issue?

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