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    • Penitent
    • By Penitent 6th Jan 18, 12:34 PM
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    Penitent
    House sold to fund care, owner has other debts
    • #1
    • 6th Jan 18, 12:34 PM
    House sold to fund care, owner has other debts 6th Jan 18 at 12:34 PM
    I know this is a stupid question and I should have resolved it at the time, but there was a lot going on at the time and it didn't occur to me to check this. I don't need to be told I'm an idiot, I'm already aware.

    I lent a family member some money a few years ago and we have a signed/witnessed agreement that they'll pay it back when they're able. It was used to pay off part of their mortgage. Since the person is on a low income and I would inherit from them when they die, the intention was to get the money back when their house is sold during probate (hopefully many years from now).

    What I forgot to check at the time was what would happen if the person had to go into care and the house was sold to pay for that care. Would I be able to claim back the money owed at that point, with the Council taking the remainder of the house proceeds, or would the Council have priority?
Page 1
    • Margot123
    • By Margot123 6th Jan 18, 12:40 PM
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    Margot123
    • #2
    • 6th Jan 18, 12:40 PM
    • #2
    • 6th Jan 18, 12:40 PM
    There is an order of priority for payments from estates, funeral expenses, taxes, and debts to The Government.

    You could try posting here: http://forums.moneysavingexpert.com/forumdisplay.php?f=217
    • Penitent
    • By Penitent 6th Jan 18, 12:43 PM
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    Penitent
    • #3
    • 6th Jan 18, 12:43 PM
    • #3
    • 6th Jan 18, 12:43 PM
    Thanks, Margot, but I'm wondering what happens if they go into care and the Council force the sale of the property to pay for it, not if they die.
    • ACG
    • By ACG 6th Jan 18, 12:45 PM
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    ACG
    • #4
    • 6th Jan 18, 12:45 PM
    • #4
    • 6th Jan 18, 12:45 PM
    Was your loan secured against the property?
    If secured, you can presumably refuse to remove the charge unless paid with the proceeds of the sale, in the same way any mortgage lender could.
    If not secured, I have no idea.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • theartfullodger
    • By theartfullodger 6th Jan 18, 12:51 PM
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    theartfullodger
    • #5
    • 6th Jan 18, 12:51 PM
    • #5
    • 6th Jan 18, 12:51 PM
    ....I lent a family member some money a few years ago and we have a signed/witnessed agreement that they'll pay it back when they're able. ...
    Originally posted by Penitent
    Well as it sounds like they are not able to pay it back then arguably you need to wave goodbye to that money: Sounds like no way they can every pay it back...
    ....It was used to pay off part of their mortgage. Since the person is on a low income and I would inherit from them when they die, ....
    And if they meet someone else, marry, or change their will - say & leave everything to Battersea dogs home, a fine charity, you'd need to wave goodbye to ever inheriting eh?

    Unless you've got a charge against the property I suggest you assume you may never get that money back.

    Who gave you legal advice over this "loan" (sounds more like a gift...)
    • Penitent
    • By Penitent 6th Jan 18, 1:01 PM
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    Penitent
    • #6
    • 6th Jan 18, 1:01 PM
    • #6
    • 6th Jan 18, 1:01 PM
    Was your loan secured against the property?
    If secured, you can presumably refuse to remove the charge unless paid with the proceeds of the sale, in the same way any mortgage lender could.
    If not secured, I have no idea.
    Originally posted by ACG
    Thanks, ACG. I'll look into placing a charge on the property. You apply via the land registry, don't you?
    • ACG
    • By ACG 6th Jan 18, 1:14 PM
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    ACG
    • #7
    • 6th Jan 18, 1:14 PM
    • #7
    • 6th Jan 18, 1:14 PM
    It might be a little late now. Probably worth speaking to the solicitor who drew up the agreement and getting some legal advice, could be a costly mistake if not.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • moneyistooshorttomention
    • By moneyistooshorttomention 6th Jan 18, 1:25 PM
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    moneyistooshorttomention
    • #8
    • 6th Jan 18, 1:25 PM
    • #8
    • 6th Jan 18, 1:25 PM
    I'd certainly look at getting a charge put on the property in your position.

    After all - if loan companies can get a charge put on a house that someone already has - then I would have thought you could too.

    Without a charge on it - then I'd be rather concerned in your position that the State might count as having "first dibs" on your money - even though you'd be able to prove part of that house equity is yours. AFAIK the State only keeps their hands off if it comes to the other half of a married couple living in the house (in those circumstances they have to accept the spouse continues to own their half of the house and will be living in the house until they themselves die etc).
    Last edited by moneyistooshorttomention; 06-01-2018 at 1:28 PM.
    New Year's Resolution already made -

    Don't get mad....get firm ...
    • Penitent
    • By Penitent 6th Jan 18, 1:41 PM
    • 1,707 Posts
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    Penitent
    • #9
    • 6th Jan 18, 1:41 PM
    • #9
    • 6th Jan 18, 1:41 PM
    It might be a little late now. Probably worth speaking to the solicitor who drew up the agreement and getting some legal advice, could be a costly mistake if not.
    Originally posted by ACG
    Thanks. It was all done in a bit of an ill-thought out rush due to the circumstances at the time, using a template from a local legal rights group. I know it was stupid not to consider care, but my family have a tendency to drop dead, so it's not something any of us have had to deal with. We live and learn.

    At the end of the day, I don't suppose it's the biggest disaster on the planet if I effectively end up helping fund my mother's care, but with my own health and finances having taken a downturn since then, I'd be silly not to try to protect my own financial future.

    I'll speak to my mother tonight and we'll make a start on the legal side of things next week. Thanks again.
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