Dealing with the family home where it is not excluded from the trust deed
Section 175 of the Act (agreement in respect of client’s heritable property) applies where the client may have some equity that could be realised by the trustee but not enough for the trustee to sell the home. For example, if there is equity of £2,000 in the property at the time of signing the trust deed, the trustee would be looking to realise the £2,000 without having to sell the property and make the client homeless.
If the trustee does not realise the full amount of available equity in the family home. The trustee must give an equity statement to creditors and AiB.
The trustee has the following options:
Explore these options when considering making a referral for a trust deed. For more information in see section 2.9.trustees’ notes for guidance.
1Payment by the client
Where there is some equity in the property, the trustee may continue the trust deed for a longer period to allow the client to make up the amount of the equity.
This can involve the client making extra payments after the normal 48 months to make up the difference. In the example above, the client could offer the trustee £200 a month for 10 months or £100 per month for 20 months, extending the trust deed period to 58 or 68 months respectively. This increases the length of the trust deed but ensures the client does not lose their home.
Payment by a third party
The trustee can agree with a third party (eg, a close friend or family member) to make up the equity in the home so that the creditors do not lose out. The third party can make the contributions alongside the client’s normal contributions over the 48-month period.
Using the example above, they could pay £2,000 over 48 months (£41.67 a month). This avoids the trustee having to sell the property.