Legal Charges- can they be for all the equity in a property?

Skidoobee

hi just wondering if anyone can help.

My mother-in-law bought her council house ten years ago with money put up entirely by her son. It went through and she bought the house with her sole name [as it still is] on the title deeds.

At the time her son had a legal charge put on the house which is fair enough- you would expect him to want to be covered for his initial investment [like a bank would with a mortgage]- but it appears that his legal charge is for the FULL value of the house, should she sell it i.e. initial investment + the equity.

She obviously signed something because the charge is shown on the Title Register but it sounds a bit dodgy to me- can you really sign over the entire interest in your house whilst staying the sole owner on the title deed? I haven't seen the exact wording of the charge yet but I didn't think even banks could do something like that which is saying something lol

Any comments on how to tackle/challenge this situation most welcome.

ALIBOBSY

Sounds like a very dodgy way to try and get out of capital gains for him and for a son pretty greedy. But I am sure those more knowledgeable than me will be along to advise.

ali x

Skidoobee

ALIBOBSY:Sounds like a very dodgy way to try and get out of capital gains for him and for a son pretty greedy. But I am sure those more knowledgeable than me will be along to advise.

ali x

Hi Ali thanks for getting back- I hadn't thought of the capital gains advantage as well.

Letters from the solicitor at the time outline concerns of the son that the house may be subject to a council charge if my mother-in-law needed to go into care- she was 76 at the time- which has never happened and isn't ever likely to now as she is being looked after by one of her daughters.

Just seems like a good ruse to get his hands on the whole house however there are cracks- it looks like he got the one solicitor's firm to do the whole deal- conveyencing, charge drafting etc- so doesn't that smack of conflict of interest, no independent advice for mother-in-law? etc if anyone's got any thoughts on this as well, comments most welcome!

Suzy_M

Has the mother ever repaid any of this money?
Who paid for any maintenance or repairs?
Did any of her other children make a financial contribution?

Did the son put up all the money for the initial purchase and pay for maintenance and repairs
and
did the mother repay any of this money or pay for any maintenance or repairs.

If the mother did not pay anything to her son she has in effect been living in the property 'rent-free' for 10 years.

Robert_Sterling_3

Did your mother get a discounted price from the council?
If so what %?

kunekune

Legally, this is quite tricky.

What the legal title says is not necessarily what the courts will say, there is a distinction between "legal" and "equitable" ownership, and the son here is arguing that despite his mother's name being on the title (legal ownership) he has an enforceable right to all or part of the house.

There is a presumption that someone who has paid for the house gets an interest in the house, even if their name isn't on the title. But in certain special relationships there is a presumption that money given is a gift. Based on current legal precedents, I think the son would have a good case - transfers from children to parents aren't presumed to be gifts, and his mother would have to prove that it was meant to be a gift rather than the son having to prove that it wasn't. It might be different if she has been paying the mortgage all these years, but even then the son might still get a share of the house.

I do think that legal advice will be needed here: the whole question of undue influence is probably a bit of a red herring, the burden is going to be on mum to negative the presumption that the person who paid for the house gets the house. I suspect this isn't what you want to hear, sorry.

alm721

Just a thought but if the house were to sell for or be worth less than was paid for it (unlikely even in this climate if it was bought from the council) then would he get any other money back form elsewhere or would he just get what the house was worth when mum died any therefore loose money?

We had a similar situation in my hubbys family. Basically one sibling put up the money to buy a council house for their dad without telling their other two siblings. (Was very cheap as he had been in it so long). When he died the house passed in entity to the daughter who had put up the money for it. I seem to think the price paid was about £6k and it was worth about £40k when he died about 10 years later so not a bad investment!. It caused tremedous tension in the family as you can imagine especially as the other siblings could have found 2k each and jointly put the money up but were never told this was happening.

Robert_Sterling_3

That is why I asked if there was a dicount.

It could well be that the son paid half the price that the house was worth and the mother had the other half at the expense of the council so to speak.

So far so good.
Now I consider that the son has a moral right to half the equity in the house. The mother or your mother's estate, has the right to the remaining half.

However if the son has not taken up residence in the house and the mother has paid no rent for his half share. He gets more credit from me. However it might be the case that he has done well by his mother ( and himself perhaps ) but if she has daughters who help her in other ways that might equate to the sons free rent arrangement

So:

Son gets 50% rest Equal shares to all siblings including the son.

..............................................................................
That was just put in to start a discussion.
............................................................................

EdInvestor

It would be easy to show that the mother had a "beneficial" interest in the property equivalent to the discount. The reasoning on care fees might make sense however, tricky one.

hethmar

It does sound dodgey to me too. I cant see how he could have got the solicitor to make a legal charge in the first place. Secondly, a lot of rules have changed in the last ten years and it may be that he is on a hiding to nothing re the care charges etc.

See a legal rep at the Citizens Advice Bureau.

Richard_Webster

Now I consider that the son has a moral right to half the equity in the house. The mother or your mother's estate, has the right to the remaining half.

I'm not an expert on all this but I think that if she did go into a home the state might try to argue that the discount belonged to the mother and was beneficially hers and the existence of that could reduce or remove her entitlement to any benefits.