Raising Finance from an asset in trust

[MAMC]

I own 33.33% of a property (house) which is held in a trust alongside the other two owners (family members). Property is free of any mortgage/loans. It has a 'tenant' who has permission to live there for as long as they wish and rent is not paid (as part of the agreement). Value of the property is somewhere in the region of £300,000 - £350,000.

My question is.... Is there any way that I can leverage my ownership percentage? Will any specialist lenders lend against my part of the asset?

[wattsm666]

A lender cannot get access to the security of that asset unless the trustees allow the property to be secured. The trustees can agree to finance the property and then give the proceeds to a beneficiary (subject to the terms of the trust).

The trustees would also have to believe it is in the best interest of the beneficiaries.

[ZedLeg]

It would kind of defeat the point of a trust if one person could build debt against it without the other members knowing.

[GiantCardboardPlato]

You don’t own anything, the trust does.

If the trust is managed for your benefit, the trust could in principle raise finance against the share of the property they manage in your interest and then, if it were in your interest and compatible with any other interests they are required to consider (hard to argue that in this case I suspect) could give you the cash. But if the trust has no income, how will it repay the finance?

Edited by GiantCardboardPlato on Saturday 1st April 09:27

[MAMC]

Thanks for the replies.

Trust was created to hold the asset for the benefit of the three owners. Knew it would be a hard one because of the no income challenge but was hoping there was a way of using the value rather than leaving it there for a long period of time.

[EW109]

GiantCardboardPlato said:

You don’t own anything, the trust does.

If the trust is managed for your benefit, the trust could in principle raise finance against the share of the property they manage in your interest and then, if it were in your interest and compatible with any other interests they are required to consider (hard to argue that in this case I suspect) could give you the cash. But if the trust has no income, how will it repay the finance?

Edited by GiantCardboardPlato on Saturday 1st April 09:27

Eh?

This is not (or at least does not appear to be) a discretionary trust. The OP owns a one-third equitable interest. True it is that he does not own the legal estate, but that does not mean that he has no proprietary interest.

Of course he can dispose of that equitable interest, or charge it, if he wishes. Whether anyone is prepared to lend on the basis of a mere equitable charge of an equitable interest is, of course, an entirely different question.