Legal Aid Charge on property

jocymru75

Please excuse the long thread but there's alot i need to know!
My mum is worried sick and she desperately needs some advice!

My mum & dad seperated 21 years ago this year. They argued in & out of court for approx 12 years. During this time my mum was on a low income & received legal aid for the 12 yrs. A charge was made on the property for what my mum owed to legal aid, this was when my father signed the house over to her @8-9yrs ago.(approx £12,000).

My mum has solely owned the property since then and there is no mortgage owing on the property. No payments have been made to legal aid as yet,(mum only earns @£5000 a yr, if that!) as the solicitor acting on her behalf stated that the charge will stand until it is paid off or the house is sold. (Mum really can't face up to moving!)

Due to a busy road being built in front of my mum's home, she has been told that she would be compensated for this & has been offered a very nice sum of money.

Does the compensation money have to pay off the charge on the property before my mum gets any?

What are the interest rates on these so called charges-on property's?

Is there any way my mum can appeal against a decision, if it has to be paid back!

Thankyou for any correspondence in advance

aussielle

I don't think your mum will be under any obligation to pay her compensation off the statutory charge, however, after such a long time a dread to think what she must owe with the accrued interest.

The house cannot be sold or money borrowed against it until the charge is cleared.

hope this helps

I believe the interest rate atm is 8%

fatbelly

As you say, the charge stays on the property until the debt is paid, or it is taken from the proceeds of a sale of the property.

She's not selling the property at present, so the charge isn't affected.

As for what interest is being applied, your mum needs to look at the original terms and conditions. I would guess that a standard rate of interest would have been applied (maybe 8%) but that's just a guess.

8% doubles in 9 years, so if my thinking is correct, paying off the charge might be a good move!

cpjackso

You can find out what charges are associated with a property by purchasing the land registry copies from www.landregistry.gov.uk. It costs approx £3 per document, and there are usually 2 documents. Unfortunately, unlike the rest of the net, the landregistry site is only open during office hours.

The charge might be a proportion of the property value, rather than a fixed sum.

HTH.

fatbelly

aussielle wrote:

hope this helps

I believe the interest rate atm is 8%

Yep, your leaflet gives the answers.

It's 8% now but was 5% until 30 Sept 2005, so jocymru's mum can calculate how much is now owed and by how much the debt is growing. As she's not going to get 8% interest on her savings, she should concentrate on repaying this secured debt.

jocymru75

Downloaded 2 copies regarding the charge from the Land registry and it gives a bit of sense?!

Thanks aussielle I will try to get some advice from the legal services commission in the morning.

Keep you posted!!

Bossyboots

Interest on the statutory charge only became payable in recent years and is not retrospective for one as old as this.

The LSC has tried an exercise in asking people to repay their charges to try to recoup money into the fund and there was a suggestion that all charges would be interest accruable from about two years ago. However, when legal aid was granted to the OP's mum her contractual term with the LSC was for a interest free loan and there should therefore be no interest payable. Although they may not stop them trying to move the goalposts when she comes to pay it off but they will back down when reminded of how old the charge is.

aussielle

Bossyboots wrote:

Interest on the statutory charge only became payable in recent years and is not retrospective for one as old as this.

The LSC has tried an exercise in asking people to repay their charges to try to recoup money into the fund and there was a suggestion that all charges would be interest accruable from about two years ago. However, when legal aid was granted to the OP's mum her contractual term with the LSC was for a interest free loan and there should therefore be no interest payable. Although they may not stop them trying to move the goalposts when she comes to pay it off but they will back down when reminded of how old the charge is.

Please can you just explain that to me in a little more detail...

are you saying that prior to a certain date legal aid statutory charges did not accrue interest?

If so, do you know what date that became applicable?

I ask because the op says the charge was added about 8/9 years ago. I had a charge added around 91/92, I paid off half the charge immediately but by the time I was in a financial position to pay it off it was back up to the original amount!!! That was in 2002.

Bossyboots

I will have to check the dates but as far as I can recall, I thought interest only went on about 6 years ago.

Mind you I would be the first to admit my memory isn't what it was and time is passing at an alarming rate so it might have been longer. I would be very surprised if interest was chargeable in 1992 and knowing the Legal Aid Board/LSC as I do, I wouldn't be surprised to find they have overlooked completely the first payment you made or have applied interest where it may not have been due.

aussielle

I'd be really grateful if you have the means to check this out..

Also, do you know if I would have any chance of claiming the money back if this was a mistake?

It was roughly about £3,300 initially and I paid off £1,400 to £1,600 (can't remember exactly off the top of my head) Settlement figure was £3,355.85 and I nearly collapsed with shock!

doubi_2

aussielle wrote: »

hope this helps

I landed here from Google and found the discussion helpful. Unfortunately the LSC have reorganised their site and the leaflet referred to here is gone.

After some looking around, rediscovered a more up to date version here:

www "dot" legalservices "dot" gov "dot" uk/docs/cls_main/LSC_PayingForLegalAid_leaflet_2010.pdf

(sorry for the weirdness, this forum won't let me post the link properly 'cause I'm a "new user")

Hope it might be of help to the next person to happen along!