Property Dispute, Money Claim, Counterclaim and Stay

[SterlingMess]

I'm in the middle of a property ownership dispute. (In 2010, I loaned a friend money to buy their house by drawing down on my mortgage. They own 13%; I own the rest. Under a DoT, they paid me the equivalent mortgage interest (like rent) every month. In 2018, they inherited and repaid a big chunk, leaving £62k to pay.)
They stopped paying the mortgage interest in November 2023, claiming I had inflated the interest rate, so they had overpaid and are in credit. I remortgaged a few times to get better deals and did not pass on the savings, but the DoT doesn't say I have to. While we're disputing the ownership (it's more complicated than I have set out in summary here), I feel the mortgage interest should continue, but they have stopped. Neither party wants to go to court over £62k. We have agreed to settle for 2/3rds but now the friend needs 3 months to remortgage the second property they inherited.
So, I have filed a Money Claim for the last 6 months' unpaid mortgage interest, but the friend (we're not now) has asked to file a stay on the claim while they resolve the dispute. I see them as separate.
Is it true that the Money (formerly Small) Claims court will consider the separate dispute a counterclaim? The counterclaim/ownership dispute involves sums greater than the Money Claim's limits, so I hope they consider the unpaid mortgage interest on its own merit.
Does anyone have a similar experience?
(I did have a solicitor, but he was no match for the friend's solicitor and simply topped and tailed my emails, so I am currently on my own, hence asking the opinion of the court of PH.)

[OutInTheShed]

I'd be checking the rules about unlicensed moneylending.

[Sebring440]

SterlingMess said:

I did have a solicitor, but he was no match for the friend's solicitor

Get a better solicitor.

[Forester1965]

Trying to work out why you didn't wait 3 months until the ownership issue was sorted first?

[SterlingMess]

OutInTheShed said:

I'd be checking the rules about unlicensed moneylending.

It was agreed by solicitors on both sides of the purchase and then protected by a Declaration of Trust written by a thrid solicitor.

[SterlingMess]

Sebring440 said:

SterlingMess said:

I did have a solicitor, but he was no match for the friend's solicitor

Get a better solicitor.

I will do.

[Getragdogleg]

Why didn't you pass on the interest savings from mortgaging and getting a better deal ?

If I lent a friend money by borrowing it but got a better deal halfway through id pass on the savings and would be chuffed id saved him money.

ETA: Ignore me, I have read it properly now and you mortgaged your house to do this, not taken one out for him as it were.

Yeah, the time scale would annoy me too and I can see why you wouldn't pass savings on, its bound you to a problem longer than you thought it would.

Edited by Getragdogleg on Friday 19th April 19:18

[SterlingMess]

Forester1965 said:

Trying to work out why you didn't wait 3 months until the ownership issue was sorted first?

Because the original promise in 2018 was "repayment in weeks, not months or years". Five years later, I'm still waiting.

It's in the friend's interest to kick the can down the road with delay after delay, while they live rent-free, at my expense in a 3-bed house. If I had any evidence that they would pay promptly, I would have waited. I wanted something to budge. The Money Claim has caused them a problem.

[SterlingMess]

Getragdogleg said:

Why didn't you pass on the interest savings from mortgaging and getting a better deal ?

If I lent a friend money by borrowing it but got a better deal halfway through id pass on the savings and would be chuffed id saved him money.

It's a fair question, but historic missed payments and other shenanigans have tainted the friendship. I'm talking about changes of less than 0.5% which have accumulated to around £2k over 13 years.

[Forester1965]

SterlingMess said:

Because the original promise in 2018 was "repayment in weeks, not months or years". Five years later, I'm still waiting.

It's in the friend's interest to kick the can down the road with delay after delay, while they live rent-free, at my expense in a 3-bed house. If I had any evidence that they would pay promptly, I would have waited. I wanted something to budge. The Money Claim has caused them a problem.

OK, however your original post said you'd reached an agreement on what I presume is the capital and there seems a plan on that being repaid. If you'd waited for that to be sorted, you'd have it in the bank. Then you can claim for the unpaid interest ('rental'). By claiming now you throw a grenade into the problem, they dig in and the lawyers earn more of both your monies.

[SterlingMess]

Forester1965 said:

SterlingMess said:

Because the original promise in 2018 was "repayment in weeks, not months or years". Five years later, I'm still waiting.

It's in the friend's interest to kick the can down the road with delay after delay, while they live rent-free, at my expense in a 3-bed house. If I had any evidence that they would pay promptly, I would have waited. I wanted something to budge. The Money Claim has caused them a problem.

OK, however your original post said you'd reached an agreement on what I presume is the capital and there seems a plan on that being repaid. If you'd waited for that to be sorted, you'd have it in the bank. Then you can claim for the unpaid interest ('rental'). By claiming now you throw a grenade into the problem, they dig in and the lawyers earn more of both your monies.

Okay, so I'm in danger of getting hit by my grenade's shrapnel, too? Might I be better off cancelling the claim now, letting them focus on the settlement, and then claiming later? They'll almost certainly put something in the settlement that excludes me from claiming again. I like that the claim has them rattled, but I don't want more delay.

[Panamax]

SterlingMess said:

It was agreed by solicitors on both sides of the purchase and then protected by a Declaration of Trust written by a third solicitor.

None of this makes any sense. IMO the chances of any court helping you recover your money look rather slim. The whole set-up has the distinctive aroma of fish.

Why was it done this way? Why do you not have a legal charge over the property? (i.e. a private mortgage)

[Mad Maximus]

Money and friends, money and family money and any other human just don’t mix. Even the closest of people turn nasty over it. It’s an embarrassment to us as a species.

Any who I hope you get it sorted and finished. I feel your pain of trying to be nice and getting stung.

[SterlingMess]

Panamax said:

SterlingMess said:

It was agreed by solicitors on both sides of the purchase and then protected by a Declaration of Trust written by a third solicitor.

None of this makes any sense. IMO the chances of any court helping you recover your money look rather slim. The whole set-up has the distinctive aroma of fish.

Why was it done this way? Why do you not have a legal charge over the property? (i.e. a private mortgage)

I am a co-owner on the HMLR. I have no charges on the property other than those set out in the DoT.

[SterlingMess]

Mad Maximus said:

Money and friends, money and family money and any other human just don’t mix. Even the closest of people turn nasty over it. It’s an embarrassment to us as a species.

Any who I hope you get it sorted and finished. I feel your pain of trying to be nice and getting stung.

Absolutely- never again!

[FMOB]

SterlingMess said:

Getragdogleg said:

Why didn't you pass on the interest savings from mortgaging and getting a better deal ?

If I lent a friend money by borrowing it but got a better deal halfway through id pass on the savings and would be chuffed id saved him money.

It's a fair question, but historic missed payments and other shenanigans have tainted the friendship. I'm talking about changes of less than 0.5% which have accumulated to around £2k over 13 years.

What would have happened if you had to re-mortgage at a higher rate? Would you take the financial hit or pass the extra cost on? If the latter you should has passed the savings on.

I assume the DoT doesn't say anything about interest rates or how change in rate should be dealt with hence the dispute.

I don't think you can separate the money claim and the stay as one is a response to the other, you have rather shot yourself in the foot with that as a possible resolution was on the cards.

What you might be able to do is sell your interest in the property to a 3rd party to put an end to your involvement.

Edited by FMOB on Sunday 21st April 22:23

[SterlingMess]

FMOB said:

SterlingMess said:

Getragdogleg said:

Why didn't you pass on the interest savings from mortgaging and getting a better deal ?

If I lent a friend money by borrowing it but got a better deal halfway through id pass on the savings and would be chuffed id saved him money.

It's a fair question, but historic missed payments and other shenanigans have tainted the friendship. I'm talking about changes of less than 0.5% which have accumulated to around £2k over 13 years.

What would have happened if you had to re-mortgage at a higher rate? Would you take the financial hit or pass the extra cost on? If the latter you should has passed the savings on.

I assume the DoT doesn't say anything about interest rates or how change in rate should be dealt with hence the dispute.

I don't think you can separate the money claim and the stay as one is a response to the other, you have rather shot yourself in the foot with that as a possible resolution was on the cards.

What you might be able to do is sell your interest in the property to a 3rd party to put an end to your involvement.

Edited by FMOB on Sunday 21st April 22:23

Thanks FMOB. Correct, the DoT only mentions "mortgage payments", with no reference to interest or that some of the payment prorata was to cover our own house.

I am confident the Money Claim acted as a catalyst to bring about the settlement- it was in the other party's interest to live "rent" free while she and her solicitors concocted ever more fanciful claims against us. I do agree, now it's a distraction and I am inclined to cancel it but somehow reserve the right to resubmit after settlement.

[Far Cough]

I have no advice to give as it sounds like a right car crash but I have never seen a more appropriate user name

[SterlingMess]

Far Cough said:

I have no advice to give as it sounds like a right car crash but I have never seen a more appropriate user name

Thank you! It's partly a reference to my business life—I distribute in the UK and Europe for two US manufacturers and remember fondly the days when our beloved Pound bought nearly 1.9 US Dollars. It's also a nod to the clowns who misspell the late crumpet-lover's first name.

[Pro Bono]

SterlingMess said:

Is it true that the Money (formerly Small) Claims court will consider the separate dispute a counterclaim? The counterclaim/ownership dispute involves sums greater than the Money Claim's limits, so I hope they consider the unpaid mortgage interest on its own merit.

You don't bring a claim in the `Small Claims Court' as there's no such thing. If you bring a claim for less than £10k then on the face of it the case will be allocated to the small claims track by the court. But if a counterclaim for, say, £15k were to be filed the case would instead be allocated to the fast track, where totally different rules apply.

It's not clear from your post whether or not there actually is a counterclaim. Normally, if a Defendant is going to make a counterclaim they would do so at the same time as filing their Defence. So has your co-owner filed a Defence / Counterclaim, and if so what does it say?

If he has, and he's raised the issue of ownership, then the court will send each of you a directions questionnaire.

Depending on the answers that you both give the court will decide which `track' to allocate the case to - the three options are small claims, fast track (up to £25k) or multi-track if the value of the counterclaim exceeds £25k. However, from the figures mentioned, and the technical issues involved, there's no way that such a case would ever be allocated to the small claims track.

However, as you said that you'd settled the ownership dispute I can't see on what basis the defendant could now raise it as a counterclaim.

Also, I can't understand how the dispute as to the amount of interest due has arisen in the first place. Presumably the DoT set out in detail the amount of interest you were to receive, so it should be a simple arithmetical calculation. Why, therefore, is the amount disputed?