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

Skidoobee

Suzy_M wrote: »

Skidoobee,

Re: Your various replies.

My comments queries were in response to your original postings which led me (and possibly others) to think this may simply have been a touch of "green-eye".

However, now you've given a lot more background it seems the mother may have been subjected to undue influence by the son.

Can I suggest you take a look at the financial abuse section at www.elderabuse.org.uk . There's all sorts of useful signposts on the site and they operate a helpline and have a link to a national associaiton of solicitors who specialise in law for the elderly.

Thanks for link Suzi and trying to make sense of such a complex issue.

Skidoobee

silvercar:


On first look swapping house A for house B is not so big an issue as the son actually paid for both of them.

Agreed but the son put up the money to enable his mother to buy the place. I like to use the analogy that he operated as a building society would; she didn't live rent free, she paid her son every month the cost of his mortgage extension. Sadly this was cash in hand and not through any payment book or the like.

When the son sold house B in 2007, where did the mother think she was going to live? She must have known the house was being sold and she would need to move. (Answered my own question, she became a tenat of the new company.)

You're right she moved onto a one year assured shorthold tenancy.

Selling to a property company where the mother remains a tenant sounds like a rent back scheme ie a quick sale where the price paid is much below market value. Otherwise the mother wouldn't have been able to remain a tenant.

Right again it was sold well below market value.


This is where it gets interesting. The mother's position should have been protected ie she was a tenant with rights, why was she evicted? It really isn't the son's fault that he sold the house to a company that went bust, unless he was connected to the company in some way. Really the mother was made homeless and the council should have rehoused her. Where is she living?

She hasn't as yet been made homeless; her case has been put to the receivers who so far are being understanding but it's only a postponement of the inevitable; and would the council rehouse her that easily, if they see she's got a house in her name down the road? Full circle to the validity of the Legal Charge lol


He put up all the money for the house. So he gets all the money from the sale. He would say.

In the cold light of day that's how I thought it first looked. But there are complexities; his mother at that time didn't have the assets to buy the house outright then [although a year or so later could have done but that's a side issue] but of course could pay for the purchase monthly as described above, and did so, as if it were a loan. She also invested a lot of money [the equivalent in fact of what her son brought her original house for with bills to prove it] on her son's original house which he subsequently sold, with no financial compensation to his mother at time of sale.


But sold it to a company that agreed to keep the mother as a tenant. He would argue.

I'm sure he did that in reasonable good faith although I would have thought he'd have negotiated a longer, more secure tenanacy agreement but he was obviously desparate to sell.

Just trying to put another view. The son was the only one that made a financial investment and he is the only one to have taken a risk and to have seen a gain. Now it seems the girls are looking after the mother and the son is doing nothing, so the girls are naturally aggrieved. I'm not sure of any financial rights they may have.

I think if the mother had been living 'rent-free' in the property all that time and all structural works necessary [new windows, heating, floors etc] had been paid for by her son and not herself, then there are reasonable grounds for this argument. The fact is she paid off ALL of the initial loan her son gave her to buy the house plus 20k's worth of home improvements which means she's forked out the best part of 40k over the past ten years, with no financial gain/investment of her own at the end of it. She would have been better off staying with the council [which she really wanted to do I think if the truth were known] and put it all in the bank.

Thanks for your input silvercar- it's useful to have an 'alternative' view on things which is what I am trying to do as an in-law; step aside from it all and look at it objectively. I do though feel as if there has been iniquitous going-ons here though, particularly as the whole right-to-buy scheme wasn't invented to further the wealth of children who could afford to take advantage of it, although as you said yourself, that hasn't stopped many thousands of people from doing it.

In this particular case I can't help but see a family bend over backwards to assist their son/brother do something they thought was in their mother's best interests only to be shafted- in particular the mother at the centre of it. Families, who'd have 'em lol

Suzy_M

Skidoobee,

Re: your last post - Strewth!!!

Get on to the elder abuse people asap.

carefullycautious

But surely if mums name is still on the deeds of the ex council house she could now in effect evict her son so she can return to live there? She really does need some legal advice about all this. This son certainly knew what he was doing families hey

silvercar

The only reason that people sell at well below market value for quick sale is if they are themselves in a financial mess and need the money urgently. The fact that the son did this suggests that there is more to his finances than you are aware.

By the way, it is totally normal for these buy-me-quick companies to offer 12 month ASTs and promise to renew. If they are borrowing money it is usually all the lender will allow, so there is a safeguard in there in that the lender is acknowledging the tenany, making eviction with no notice unlikely.

Carefullycautious has a good point. There is nothing stopping the mother now returning to "her home", presuming that it is still in her name.

saver_sam

Skidoobee wrote: »

Yes this is what struck me funny at the outset- the same solicitor that did the conveyancing for my mother-in-law was instructed by her son and that same solicitor drew up the Legal Charge to his benefit. Clearly she signed on the line but isn't there a conflict of interest/ lack of independent advice issue there?

A solicitor is permitted to act in the same conveyancing transaction if the parties are blood related and both parties agree in writing. This is permitted under rule 3 of the Solicitors Code of Conduct-just covered this briefly in my ILEX course this morning.

alm721

Personally I think I would be annoyed if I were the siblings. The brother has clearly seen an oppotunity to financially benefit from his mothers long term council tennancy and has not openly dicussed this with the other siblings before putting up the money to buy the house. I appears to have been done quite decietfully. If the mum had borrowed the monry from a bank to buy the house then all the siblings would presumably benefit equally from this discount. If mum has been paying rent to the son and paying for maintenance on one of the house (which she wouldn't have done if she was still with the council) then he has been the one to gain and she has in effect lost.
And with regards to him taking on a risk, what risk? Even with prices falling as they are things have to be really really really bad for him to have taken a risk on buying a new house with 40% off current price, in my mind he's seen this as a way of making making and has on the face of it tried to do so without including his siblings,
I'd be mad too.

kunekune

It is the mother's house at law. She contributed at least the amount of the RTB discount, so it is partly her house at equity as well. Although there is a presumption, as I said, that someone who puts money into the purchase of a house retains a beneficial interest, but this can be rebutted. Initially I was thinking that it was hard to argue it was a gift but that's not the only possibiltiy. It's arguable that by putting a legal charge, the son was demonstrating that this was a loan, rather than a case of him taking a share of the house. If it was a loan, and your mother has paid it off, then it is now entirely her house again. The fact that nothing is in writing does not mean a court won't be persuaded. What mother needs to do now is get her house back. The son is NOT the legal owner, having a charge doesn't mean it is his house. The worry is that this is likely to be a slow and unpleasant process.

silvercar

I read this thread and I still can't decide whether the family (the mum mainly) wanted to take advantage of the council discount to gain some easy money in years to come or if the son was trying to make a financial killing at others expense.

Posting in this undecided gain, I am posting as devil's advocate, mainly because no one is putting the son's views and its a useful discussion (also a lesson on family disputes).

It's arguable that by putting a legal charge, the son was demonstrating that this was a loan, rather than a case of him taking a share of the house.

It could be that a legal charge for the whole amount was put on the property to prevent its sale to pay for care fees in the future.

It could be that the mother wanted to take advantage of the discount and wanted to swap houses to help her son. Maybe she didn't need the larger property and her son/s growing family did.

And with regards to him taking on a risk, what risk? Even with prices falling as they are things have to be really really really bad for him to have taken a risk on buying a new house with 40% off current price, in my mind he's seen this as a way of making making and has on the face of it tried to do so without including his siblings,

In hindsight it isn't a risk. At the time it was a risk. No-one initially knew that there would be a market in ex-council properties. Some people have actually ended up being repossessed as they couldn't afford the upkeep/ didn't understand that houses require maintenance. Also some people bought when it was easy to get a mortgage, lost their jobs and then couldn't get benefit to pay their mortgage whereas benefit would have paid their rent. I'm going back to the 80s here, but there were definitely people who bought council houses and then found there were construction issues that meant the couldn't be sold. There were houses bought on dodgy estates and paths (instead of raods) that weren't resellable. There were flats bought were the new owners couldn't afford the maintenance bills when the council decided to update the blocks. Homes bought in areas that were eventually bulldozed and the owners never profitted. We may not now think there was a risk, at the time there was.

The brother has clearly seen an oppotunity to financially benefit from his mothers long term council tennancy and has not openly dicussed this with the other siblings before putting up the money to buy the house

There is no obligation to discuss finances with siblings. Mother has friends who buy and get discounts, sons offers to buy in her name, promises to look after mother, mother gets discount, son gets mortgage, they swap houses, both happy. Then son needs money urgently, sells his house to a quick-sale company, pays off his own mortgage, mother is a tenant, all OK until the company goes bust. Not really sons fault.

Suddenly the siblings come along and want to know why they weren't involved. Maybe their interest is only because the son is now living mortgage free and they would have liked some of the money? If the little scheme had failed would they now be bailing him out?

gauly

But doesn't the mother still "own" the original council house? She is obviously not going to be re-housed by the council since she owns a house. In fact, what she should do is simply evict the son and move back into her house if thats what she wants. Having a charge on the property doesn't give the son the right to live there. The son can then go and buy himself a property with the money he got from the sale of his house.