How do I solve this ?
Five years ago I sold the lease of a restaurant to one of my employees for 48k, an agreement was reached where upon they paid 100 a week for 10 years, there was a charge placed on their house for 48k in case of non payment and an agreement written up by a solicitor that incase of non payment,after 10 days of it becoming due and not being paid a 5%(above the base rate) interest charge could be added on a weekly basis.
For a while they did pay albeit in chunks and a lot in arrears.I didnt demand any interest as a gesture of goodwill and felt that as long as they were bringing it up to date eventually it was ok.
The last payment was in july 2007.
Because of the recession and some family problems I decided to not put too much pressure on as they would finally bring it up to date when they could.
A few months ago I contacted the solicitor that drew up the agreement and asked him to clarify how the interest rate was calculated. He explained to me that he couldnt act for me again as the other party were his clients on another matter but agreed to send me all the paperwork.But he did explain the non payment interest rate calculation.This is 5% above base rate on a weekly basis after 10 days of it becoming due.( I have worked on a 0% base rate.
I have done this calculation and in just 1 year 100 becomes 23210.So over 3 years the figure would be enormous ,well above what their house is worth.
So no wonder they have'nt paid. The solicitor refuses to respond to my calls asking him for more clarification.
So I am stuck with a debt that I cant claim back.Eventually when they sell the property,I guess I will get the principle back but that could be never.And of course by then I wouldnt get any interest.
What do I do next. Is this the solicitors fault for drawing up an agreement which is practically unworkable.
Do I go to court with the final amount which runs in hundreds of thousands and see if I can force the sale of the property with the charge on it and the 2 other properties he has ?
If I do the latter,I expect it will cost me an arm and a leg with upfront court costs etc which I havent got.
Hi Neilw, You certainly can
Hi Neilw,
You certainly can enforce this debt and the sooner that you take steps to do so the better. The longer a debt remains outstanding the more difficult it is to recover.
I do not think that the solicitor is at fault here and it may well be that he cannot act for you if he is now acting for your ex employee.
It is imperative that you obtain the original agreement if you have not already done so. You should then seek legal advice from another solicitor immediately.
At the very least you should be issuing proceedings against your ex employee asking the court to make an order for sale of the property which is subject to the charge.
It may well cost you some money to issue the proceedings but unfortunately from the details that you given above I think that this is the only way that you will recover any of the money due to you.
I am a Legal Advisor employed by Sarginsons Law and specialise in Civil Litigation matters. I deal with disputes between individuals and businesses including Landlord and Tenant issues, debt recovery and property disputes.
Telephone 02476 553181
Thanks for your reply Gerard.
Thanks for your reply Gerard. Yes I have got the original agreement. As I said, clearly on there is the interest rate chargeable on arrears and that it is on a weekly basis.
But what does this mean ?
The solicitor reckons the calculation is the weekly amount plus 5%.e.g. 100 + 5% = 105 + 100 =205 + 5% =30.75 recurring for 3 years. This works out to a ludicrous figure.Over 23000 in just one year !
Or does it mean
100 + 5% = 105 then next week 100+5% = 105, this over a year would equal 5460.
See my problem. There is no explanation how the interest rate would be calculated,it just says on a weekly basis.
How much do you think it would cost to force a sale ?
If the property doesn't cover the debt ,what then ?
What do you mean by the longer the debt go's on its more difficult to recover ?