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  • Legal FAQs

    Facing loss & wondering best course of action

    I apologize on the outset as I know no better place to post this, but knowing the amount of smart people on this forum, I may get proper advise.

    So here is what's going on: Few years ago, I made an investment in mobile homes through a company. The business was actually building mobile homes (caravans like) and housing benefit tenants, which the business claimed was being back by the council.

    After investing for few homes, rents started like clockwork from the following month. In October rents stopped, and when inquiring what was going on, we were told the company was facing problems due to universal credit messing them up, so we had to remain patient while this was resolved.

    We have recently been advised, that the company's entire mobile home portfolio is being merged with another company, and that new contract agreements will be issued. The rentals are going to be lower, with some other terms which are opposite to what it was with the initial contract.

    The details:

    I was promised 60 months of equal monthly rental payments. At the end of the duration, I could extend the tenure (and paying a small refurbishment fee), or I could sell the home back to them for a fixed sum.

    The director of the company is trying to keep his record clean, and so far he has managed. It does not seem, like he wants his image to be tarnished. However I am quite anxious and want out of this. I have made a grand mistake of thinking where councils are involved, everything would be safe.

    Would you think it would be reasonable to put a money claim online for the outstanding rents? The current amount for the 6 months is just shy of £13,000

    I am hoping this will earn me a phone call with return of entire capital to prevent heading to court, as I have signed agreements which are presentable.

    If anyone can think of anything that could backfire, please drop your advise, as I really need to make an informed decision how I play my cards.

    Thanking you all in advance,

    Maz

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    Do you have a chattel mortgage on the mobile homes or any evidence that you own them?  Have you ever visited them?

    Although the UC excuse is plausible, my feeling is that this is likely a scam so you need to get a grip on this to find out what is going on. Even if it isn't, the terms of the contract cannot simply be changed to suit the person issuing it.  They were contracted to pay you £X for X months and that is what you should receive.

    It's quite common in scams to claim that the local authority has backed the scheme.  I think it unlikely that councils would house benefit tenants in mobile homes myself.

    I would turn at the company's place of business and speak to someone to find out exactly what is going on.  I would also ask to visit your mobile homes to see what state they are in.

    These so called "armchair investments" are really just a licence to sit back and watch someone exploit you and your money, so if that is not the case here, you have been lucky imho.

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    On the assumption this development does actually exist - it should be viewable on Google Earth - maybe even Google Street views unless high hedges are in the way.

    I assume the rents were paid for a lot less than the contracted 5 yrs?

    I am guessing you "own" 3 or 4 of these mobile homes?

    You can check the Company's finances at Company's House online for free for a basic summary.

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    Thank you for your feedback.

    One thing that I have noticed, is that the new company that he wants all investors to re-contract with includes him as a shareholder. But he has done this through layers of LTD companies, in which he is the sole shareholder. I guess this is to give him safety and protection.

    @LandyLordy: I entered contracts in October 2016. We have been paid for 18/60 months. 

    Anyway, let us assume, that regardless of whether my homes exist or not, I just hold on to the fact that he must honor my original contract. Is taking him to court for non payment of rentals a sensible thing to do via the online money claim procedure? I feel that no one has stood up to him, and he will just get me off his chin by returning my outstanding capital/rentals. Well atleast that's what I am hoping for.

    Although I am unsure, if a judgement does get entered in for his company, does it work in the same way as it does for individuals? Are people able to see a record of the judgement online?

    Maz

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    Sorry, but I think your focus here is wrong.

    You need to understand what assets you purchased.  These are more valuable to you and missing rental money.  They are your assets and you need to understand what is going on with them.

    It's pointless taking any form of legal action without understanding what the situation is and protect yourself from future or increasing loss by doing that.

    What is your security for these mobile homes?  Do you have chattel mortgages?  These are important questions to know the answers to, to understand your situation and how it might be best remedied.

    Out of interest, are you willing to say how much you have invested in these mobile homes?

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    The layers of Ltd Companies are precisely to limit liability - as the Company(ies) are separate legal entities to the Director per se who is thus shielded from personal loss should the Director decide to fold the company - potentially after milking dry any assets/funds held in the Company(ies).

    Having invested via a Company rather than directly it suggests you have nil personal ownership of any of the mobile homes?

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    Yes, you see that's where the complication has come in.

    We invested with this person only because he was a very respected person in our business community. He hasn't had a bad past nor any wrong doings ever. Based on his business doing well in early years, he started to look for investors at a mass scale. He was promoted within our inner circles. Its then he was given a chance to explain what he does and his business model, and everything seemed legit...until now.

    Many of those effected are still holding on to the fact that he has a lot to lose if he is caught in wrong doing, therefore he won't try to close shop, otherwise he will have no face. I guess we have mixed knowing someone with business principles and have let our guard down. Although his finances didn't look in bad shape at all when we invested, I will drop screen shots shortly.

    With regards to your reference to ownership, he has told us verbally, that we all have certificates to prove ownership and none of the assets(homes) belong to the company. I have therefore asked him for my certificates so we know exactly what is what. But this hasn't been forthcoming yet. So suspicion is very high!


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    Hi Vanessa,

    The proposition that was put forward to us was that each of the mobile homes would be fabricated and installed at appropriate locations. Cost of each were approx £23k each, and I had invested in 4 of these. No chattel mortgages were involved.

    Therefore as you have rightly suggested, I need to know whether these homes were really made and installed, or was i duped in being paid my own principal (as rentals) for few months. Couple weeks ago, I requested them to provide certificates for my homes, and till now they haven't. Which makes me want to now believe that my homes do not really exist. Of course they wont say that to me. It is why, I am leaning over the idea of just getting out if I get the chance.

    I have contacted other individuals who have also been effected with this investment, and I tried to obtain some clarity if the end game was declaring bankruptcy, but I was told, that if that was the plan, it would have long happened. The director is trying hard to resolve/restructure the business.

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    Do you have any paperwork at all to show your ownership of these mobile homes?

    £23K is quite cheap for a static caravan - assuming that is what these are - unless you purchased them second hand?  I would expect a decent static to cost around £50 - £70K for a new one.

    What are the facilities at the site?  What site fees do you pay?  A lot of caravan sites are not fully residential and cannot be lived in year round.  The ones that are tend to be more expensive and are more robust in value and desire-ability.

    There are a lot of questions to ask about what you have got involved with.

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    Yes, I have the sale agreements. And we have both signed on it.

    I am not sure of the site facilities, but as far as costs (site costs, insurance etc) are concerned, we were told the company was in charge of and the pp of 23K had factored everything in it.

    Maz

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    Did you fully fund 4 of these homes at £23k each, so you invested £92k Cash?

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