Can I Sell My House While in a Trust Deed?

If you’re in a trust deed and own your home, it’s very normal to feel nervous about what that means for your house.

You might feel torn. You want to keep a roof over your head, but you also want a fresh start with your debts. On top of that, you’re probably wondering if you can move, downsize or sell up at all while the trust deed’s still running.

Let’s go through what a trust deed is, how it affects your home and what happens if you want or need to sell your house while you’re in one.

A quick heads-up: this isn’t personal debt advice. A free, impartial adviser can look at your full situation, including your mortgage, trust deed and any sale plans, then help you decide what’s safest.

What is a trust deed?

Available only in Scotland, a trust deed is a voluntary agreement that can give you a route out of unmanageable debt. It’s a formal agreement between you and your creditors to pay back part of what you owe over a set period, usually around four years. You pay what you can afford each month, then at the end of the trust deed the remaining included debts are normally written off.

A licensed insolvency practitioner, called the trustee, manages the trust deed for you. They deal with your creditors, collect your payments and handle any assets that might be used to pay off debt. 

Many trust deeds  are set up to become a protected trust deed. That means most creditors are bound by it and can’t take separate action to chase you as long as you stick to the terms.

How a trust deed affects your home

Your home is one of your biggest assets, so it’s always part of the conversation when you look at a trust deed. The trustee can seek out the full value of any assets you own, including equity in your family home, unless the home has been formally excluded from the trust deed.

In practice, that doesn’t always mean you’ll automatically have to sell your house. Citizens Advice points out that if you have little or no equity, it may be possible to set up a protected trust deed that doesn’t include your home at all, as long as it’s your main residence.

If your home’s included and you have equity, the trustee will usually want an agreement early on about how that equity will be dealt with. That might be a later remortgage, a lump sum from a family member, extra payments over time or in some cases a sale. The key point is that the trustee has a legal duty to look at the value in your property on behalf of your creditors.

Can I sell my house in a trust deed?

In many cases, yes, you can sell your house while you’re in a trust deed, but not on your own terms. The trustee has a legal interest in the equity, so you can’t just put the place on the market and pocket the profit.

When a property’s sold during a protected trust deed, the trust estate’s entitled to the full amount of equity that’s released, unless the home was formally excluded at the start.

That means if you sell while your trust deed is still running, the trustee will normally have to approve the sale and will expect any equity to go into the trust deed to pay creditors and the costs of the arrangement. If you have very little equity, they might agree that a sale won’t raise much and look for another way to deal with things, but that’s always their call, not yours.

What happens to the money if you sell?

If your home’s part of the trust deed and you sell, the process is simple enough. The mortgage is paid off first, then selling costs are covered, then whatever’s left is the equity. That equity belongs to the trust deed, unless an exclusion was agreed.

In most cases that means:

• You’re unlikely to see a lump sum yourself while the trust deed’s still in place
• The equity will be used to increase the total pot for your creditors
• Your trust deed might be able to finish earlier if a large chunk is paid in

If your trust deed didn’t include the home, or the trustee formally gave up their interest, then you have more freedom. That’s why it’s so important to dig out your paperwork and get a clear explanation from your trustee before you do anything.

Who should you talk to before you decide?

Before you decide anything about your house, it’s worth getting some independent debt advice alongside whatever your trustee tells you.

Citizens Advice Scotland have clear guides on trust deeds, how they affect your home and what your alternatives might be, including the option to ask the sheriff court to delay a sale in some circumstances.

MoneyHelper and the Accountant in Bankruptcy site also set out all the main debt solutions in Scotland, from trust deeds and bankruptcy to the Debt Arrangement Scheme, so you can see how your home would be treated under each one.

A faster way to move on

If you’ve reached the point where your house feels more like a burden than a home, you might decide that selling up is the cleanest way to move forward, either now or after your trust deed has finished. The open market can work, but when you’re already under money pressure, months of viewings, negotiations and chains falling through can feel like the last thing you need.

That’s where we can help. At Sell House Fast we’re a cash house buyer with funds ready, so we can buy your home without waiting on mortgages or a long chain. Our website explains that we can often complete in a matter of days, and you never pay estate agent fees or hidden charges because we cover the usual selling costs.

Here’s what you can expect if you choose to sell with us:

• A personal, tailored service and a named contact who keeps you updated
• A simple, transparent process with no fees to pay and no last minute add ons
• Fast, cash-based purchases, often completing in a matter of days
• We buy any house, flat or bungalow UK-wide
• Registered with The Property Ombudsman

If you’re ready to find out what a quick, certain sale could look like, you can start in just a few seconds. Just pop your postcode into our form and get a free, no obligation cash offer. We’ll talk everything through in plain English so you can decide if a fast house sale is the right step for your situation.