The Accidental Smallholder Forum
Community => Coffee Lounge => Topic started by: Sudanpan on September 01, 2011, 01:42:40 pm
-
We borrowed some money from a relative to allow us to do our build last year. Originally we were going to repay them this year through the sale of a flat - unfortunately given the property market at the moment selling the flat is not feasible.
Our relative is quite happy to have a delay in repayment of the loan but we want to put a charge against the property to safeguard their interest (just in case).
It looks like I can register a charge by filling in a form for the land registry - or would it be advisable to get a solicitor involved as I might get caught out with various pitfalls?
Thanks for any input
Tish
-
I know it's an added expense, but I would definitely get a Solicitor to do it.
-
+1
There could be implications and pitfalls that aren't obvious to a lay person. Altho solicitors arent infallible, if theres something obvious they should have pointed out and didnt, at least there is some comeback.
Try to find a specialist conveyancer. Since it is a simple affair, it shouldnt cost too much.
-
Hopefully you can find an experienced solicitor who can quote you a modest sum to do this. As it's with a relative it really shouldn't be too onerous, you would think.
The only complexities would be if you have a mortgage or other loan secured against the property or might want to get one.
If you think there could be a circumstance in which that charge had to be enforced, (for instance if you became insolvent, or died, or there was a divorce, or a lender foreclosed on a loan, or some other creditor came after your assets) then I would definitely think a solicitor should have been involved in order to ensure that your relative is at the head of the queue. And I would tell the solicitor what circumstances you particularly want protection for.
-
One thing to bear in mind (from my old banking days this!) is that if the charge on a currently unmortgaged property , then it will be a 'first charge' on the property. This means if you ever need a mortgage then (i) the relatives who benefit from the charge will probably have to consent and (ii) mortgage companies may not be as keen to lend as a standard mortgage is on the basis of them having first dibs. They may still be willing to lend but there may be a higher rate because they do not have as good security as if they were first in line. And if there is currently a mortgage, this charge will sit behind that one but in front of any equity releasing loan you might want to apply for in the future.
So while it is the right thing to do to want to do things properly, it may be that you might want to consider those aspects, as well as anything else the solicitor might raise. There may be other options which will give them comfort but not be so restrictive.