Putting a charge on a house

DizzyRaskal

Probably the wrong forum but here goes... I've taken over my dad's finances through power of attorney and discovered that over the past few years a large amount of money has been loaned to one of his friend. The friend has agreed an amount and a contract has been drawn up and signed saying the money will be paid after he has sold his house, which is currently up for sale. I want to make sure this happens so is it possible to put a charge on his house? I know I'll need to see a solicitor but was just wondering if my case sounds possible and that it will succeed? Thanks...

silvercar

certainly possible to have a charge on a house, the money is then paid out of the proceeds of the house sale.

the mortgage lender would have to agree to a second charge being put on the property and the recipient agree to the charge. otherwise it would need to go to court, but you still have a good chance of succeeding.

jonesMUFCforever

I disagree slightly in that mortgage lender does not have to agree to second charge - but of course the second charge has to take pot luck that there is sufficent equity after paying the first to be able to repay your father.

silvercar

I'll try and explain why the first charge holder has to agree to a second charge.

When a property is sold, all charges have to be released in order to pass clear title to the buyer. If there was only sufficient proceeds from the sale to pay in full the first charge (mortgage) holder, the second charge holder would be within their rights to refuse to release their charge on the property, hence the sale could not proceed. In this scenario the second charge holder could hold the first charge (mortgage) holder to ransom. ie the mortgage lender would not be in a position to have the mortgage repaid. This has two effects. firstly the second charge holder becomes top dog and can hold the owner and mortgage lender to ransom as they are the ones that have the power to block the sale and secondly the only way the mortgage lender can receive all their funds is by repossessing the property.

This is why mortgage lenders have to agree to another charge being secured onthe property.

bkoenig

so how could a creditor ever put a charge on someones house, most likely no mortgage company would agree, especially if you owe more than the property is worth.
thanks

Barryu_2

Hi

I have an interesting situation where I paid a deposit on an off-plan property in Spain based on an agreement that the developer would provide a guaranteed rental income of 15% of purchase price over three years plus provide a furniture pack worth €20,000.

My solicitor advised me NOT to complete the purchase as the developer had many financial problems & refused to provide any guarantee of rental income. Additionally they refused to install the furniture pack until AFTER the completion date (& all monies had beed paid).

I am now aware of at least 15 other individulas who DID complete but have not received their furniture pack or rental income. They are seeking legal advice.

I plan to take legal action in Spain however the major shareholder & chairman of the developer lives in London. Is it possible I can place a charge on his home until he repays me my deposit which is in excess of €100,000 ?

Thanks for any help or advice

Barryu

epsilondraconis

Hi Barryu, I don't know the answer to your problem, or the OP's for that matter; however I would recommend that you start your own thread by going back to the Loans forum and clicking on the 'New Thread' button.

Cherished

please can somebody tell me how this works, is a second charge payable monthly or yearly, I want to lease a business and this is the only way I can think of doing it. thanks

ILW

Barryu wrote: »

Hi

I have an interesting situation where I paid a deposit on an off-plan property in Spain based on an agreement that the developer would provide a guaranteed rental income of 15% of purchase price over three years plus provide a furniture pack worth €20,000.

My solicitor advised me NOT to complete the purchase as the developer had many financial problems & refused to provide any guarantee of rental income. Additionally they refused to install the furniture pack until AFTER the completion date (& all monies had beed paid).

I am now aware of at least 15 other individulas who DID complete but have not received their furniture pack or rental income. They are seeking legal advice.

I plan to take legal action in Spain however the major shareholder & chairman of the developer lives in London. Is it possible I can place a charge on his home until he repays me my deposit which is in excess of €100,000 ?

Thanks for any help or advice

Barryu

No chance, it will be a limited liability company you are dealing with.
Chances are they will fold and you will just become another creditor.
You may be better to complete as at least you will end up with the property rather than losing everything.
Sorry.