Advice required - just before volunatry sale

A

Adecco

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Very briefly.

I have multiple buy-to-let properties. Bank told me they were unsustainable last year- so i agreed to sell them.

They are very nearly all sale completed (another month and all 3 should be sold)

I will have a shortfall of residual debt c. €350k once sold.

Before i sell, should i now go to bank and tell them i want to do a deal on residual now - or else threaten to hand them back the keys and tell them sell it themselves?

Surely once i sell i wont get any brownie points from bank at that point? Surely now is the time to play hardball yes?

Earlier in the year my solicitor did try this but the bank said they wont engage at all until properties are sold. I accepted that at the time.
But in hindsight i am now thinking my solicitor surely should have put the onus back on the bank ?

The properties are still not fully sold so i'm thinking the opportunity is still there.
A family member has signed as a guarantor for a substantial amount so that is where i want to get the deal on as my priority.

Any advice welcome
 
Before i sell, should i now go to bank and tell them i want to do a deal on residual now - or else threaten to hand them back the keys?
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Absolutely. You are now in a strong negotiating position with the Bank to agree a settlement on the residual debt. Forget brownie points they are meaningless in a business negotiation.
A family has signed as a guarantor for a substantial amount so that is where i want to get the deal on as my priority
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I presume you are referring to a family member or members. The bank will pursue you first for the residual amount and ultimately the guarantors. If you have no other assets or ability to pay back an acceptable amount of the residual balance the Bank will call in the guarantee. Try to get a good negotiator to deal with the bank on your behalf!
 
44brendan said:
Absolutely. You are now in a strong negotiating position with the Bank to agree a settlement on the residual debt. Forget brownie points they are meaningless in a business negotiation.

I presume you are referring to a family member or members. The bank will pursue you first for the residual amount and ultimately the guarantors. If you have no other assets or ability to pay back an acceptable amount of the residual balance the Bank will call in the guarantee. Try to get a good negotiator to deal with the bank on your behalf!
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Yes - sorry...i meant a family member. (elderly mother for up to €100k)

I will not be able to pay off full residual debt at all (althogh i do earn wuite a bit)- so legally they can certainly go after my mother.
In practice, is it fair to assume they will go after every cent from her? (She can afford it in that it wont make her homeless or anything....but it would cause quite a bit of distress)

Basically should i try to haggle on limiting exposure of guarantor as this is my main concern.

As an aside i am based in UK so on one level i personally am kind of bullet proof as bankruptcy is an option for me. But obviously the guarantor is the main concern.
I'm thinking of suggesting i pay teh €100k and thats teh end of it for everyone (as in theory that is the most the can get out of me and mother combined anyway should i choose to go bankrupt)
 
As an aside i am based in UK so on one level im kind of bullet proof as bankruptcy is an option for me.
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Adecco. I am on the other side of this process being a banker currently working in the area of Debt Recovery. Banks are pragmatic and are prepared to do deals in return for co-operation. As I said previously you need to look for a good external negotiator who can deal with the banks on your behalf. Even if you go bankrupt your mother remains liable up to 100K. However get a copy of the guarantee to ensure that it has been completed correctly and that she obtained independent legal advice before signing it. This would need to have been written down by her on the actual guarantee.
 
44brendan said:
Adecco. I am on the other side of this process being a banker currently working in the area of Debt Recovery. Banks are pragmatic and are prepared to do deals in return for co-operation. As I said previously you need to look for a good external negotiator who can deal with the banks on your behalf. Even if you go bankrupt your mother remains liable up to 100K. However get a copy of the guarantee to ensure that it has been completed correctly and that she obtained independent legal advice before signing it. This would need to have been written down by her on the actual guarantee.
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Thanks Brendan.

I actually edited the previous post with an additional line which you may have missed by the time you read my last post. (Copied below) (Apologies if you already saw it)

"I'm thinking of suggesting i pay the €100k out of my future earnings over next 3 years (or possibly a partial loan from uk bank) and that's the end of it for everyone (as in theory that is the most the can get out of me and mother combined anyway should i choose to go bankrupt)"

In fact - given that the most they can get is €100k regardless of whether i give the properties up voluntarily or not, seeing as i am volunatily selling the properties it woudl seem reasonable to me to do a deal for less than €100k. Maybe €70-€80k. And less again if i managed to do a once-off lump sum up front.

What do people think of the above strategy? It makes sense to me. A €50k once off lump sum up front could be my suggestion.

Also - i have seen the signed guarantee agreement and it is signed by her saying she got legal advice. So its pretty watertight.
 
Yes you can offer 50K. However, before agreeing to any settlement the Bank will require a full financial overview which should incorporate a sworn statement of affairs and income statement. If these documents are found later to have been incorrectly completed any settlement agreement will be rendered void, evan if the relevant funds are paid over!
 
44brendan said:
Yes you can offer 50K. However, before agreeing to any settlement the Bank will require a full financial overview which should incorporate a sworn statement of affairs and income statement. If these documents are found later to have been incorrectly completed any settlement agreement will be rendered void, evan if the relevant funds are paid over!
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Thanks for your help Brendan. i think i just needed someone to bounce the ides with in case i was completely off the mark with my thoughts.
 
Which lender is involved?

To the best of my knowledge, only AIB and KBC will agree beforehand on how the shortfall will be dealt with.

I doubt if any lender would let your mother off the guarantee.

I think you should aim to have your liability written off and that your mother would cough up on the guarantee. You could then repay your mother over the coming years.

Brendan
 
It all with AIB.

Ya...your right in that the bank should chase the full guarantee.

But my logic is, as part of the negotiation i am voluntarily surrendering all the properties. (Another month and they will be completely sold and all parties could be out of this mess before Christmas)

So in reward/incentive for surrendering and selling voluntarily, they should knock some of it off the guarantee.
Their alternative is to take the keys back from me now and sell themselves - and still only get €100k max !

So there's definitely incentive there for them to allow me sell in return for a reduction on liability of guarantee. (avoiding cost and hassle of selling themselves)

The most they will ever get combined is €100k anyway. (I am a single guy with no dependencies already living in UK anyway - so bankruptcy is no big deal for me)

So them settling for less than €100k in total makes sense to me. As to how much less is up for debate. Only time will tell I guess.
 
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