Legal aid charge on property - can it be transferred?

G_M

Have another "casual conversation with a conveyancer we know".

Annisele

I agree; it doesn't look as though a charge was registered.

Lack of registration doesn't necessarily mean no charge exists. But (I think, but am not sure) it means that any charge that does exist won't bind a new buyer. So, OP could buy the house without paying off the charge.

Given OP's mother's confusion over the interest rate, is it possible she was similarly confused about existence of the charge?

I think G_M's suggestion of another chat with the conveyancer is a good one!

audigex

It's very possible - to add to the confusion, she put in a complaint with the solicitor at the time over their conduct (after paying ~£3-4k of legal aid contributions) and gave them her book at which point they agreed to pay some of her contributions.

She understood that this would be the payments she was making as contribution at the time and were unrelated to the charge, but it may be that the solicitor settled the account entirely or she had paid off more/had less liability than expected. They may have also waived some later fees (which, after all, they would have had to contribute to under the above agreement that they would take over some/all of the payments), This is all a question for monday morning when we can get hold of the proper title register and look into it further, but your reply certainly eases the mind a little that it may actually be the case.

As mentioned this is from 16-18 years (a third of her lifetime) ago at a very stressful time with a lot going on, so there's a fair amount of fuzziness over details and sequences of events. I'm getting cautiously hopeful that there isn't a charge, however, and that's why she wasn't given more information regarding interest rates - this would explain a lot, as my mother is very conscientious regarding money, the only debt she has ever had is her mortgage and this charge. And I'm even more cautiously hopeful that between the contributions she made and the solicitor taking over the payments, she may not have a debt at all, but that's less of an immediate problem than a charge over the house.

Thanks and apologies for confusing the question with a little too much background information!

macman

audigex wrote: »

The house price has certainly not increased by 128% in the last[/B] 16 years. And of course she's had the last 16 years, but as far as she was aware (incorrectly, obviously) it was interest free and simply deferred. She should perhaps have understood and researched it better at the time, but without going into personal details she had much more important things to consider at the time and either was misled or misunderstood. If she was aware of the debt/interest it would have been paid off several years ago: she wasn't aware so it wasn't paid. That's just the situation, "should've/would've/could've" discussion is academic: the fact is that there's (possibly) a charge on the house.

I think we're perhaps getting bogged down in the "You should have paid it off", "You should have realised it was a debt", "You should have understood the interest" - this is irrelevant: there was a misunderstanding for whatever reason and she never had reason to question it so didn't. It wasn't ignored, it simply wasn't relevant: it would be paid off with £5k of equity in the house at the appropriate time, planned for in her downsizing move before retirement.

Let's forget the discussion of whether the debt is fair, whether it should have been paid off etc.... perhaps I shouldn't have mentioned those details as it's distracting from the point in hand. The debt exists (or we're assuming it does until proven otherwise), and if it does will be paid off in the next 2-3 years. The debt itself isn't the problem, and my surprise that the interest rate is 8% is irrelevant (although surely it should track the base rate in some way?)

Regardless: the questions we have now are
1) Can the charge/debt be transferred to another house? The situation would be the same except that the charge would be against £10-22k of value in a different house to the one it is currently against. Or would this simply not be an option?

2) Does the above title register show that in fact there isn't a charge against the house? Or at least suggest it (we'll be checking properly ASAP, but would like to avoid a weekend of stress if possible)

3) Is there any reason to believe the above title register wouldn't hold the necessary information or could be incorrect? It was retrieved from the land registry website and I have no reason to believe it's not the correct title for the property, but I'm not sure if it's the document I should be looking at, nor whether it would include the information I'm looking for

Right now we're just trying to ascertain if there is indeed a charge against the house, and what we can do about it (other than paying the debt off immediately) to enable me to buy this house and her to buy another.

The average UK house price in that period has increased by 180%, obviously we don't know the specifics of region or original purchase price, but I'd be surprised if it hasn't reached 128%.
Technically the charge could be transferred, but I too can see no possible circumstances in which the beneficiary would agree-why would they?

AdrianC

First things first, find out exactly what size of debt you're talking about. Is it £5k, £11k, £16k or £23k?

Does her current property have a mortgage?
She's selling a £95k property to buy an £88k property - with the intent of being mortgage-free?
Can she get a lower-than-8%-interest loan of some kind to pay that off? Perhaps a small mortgage on the new property?

Would YOU be willing or able to assist your mother with clearing this debt?

audigex

I guarantee the house hasn't risen by 128% in the last 15 years (note "risen by", not "risen to" - the house isn't worth 228% of what it was worth 15 years ago, or even close

We can't find out the size of the debt without sending away, which is obviously the next step but we'd like to start planning ASAP

The current property has no mortgage: it is (/was) being sold for £80k - ie the remaining £15k was a gift to me to reduce my mortgage while coinciding with her downsize. So no, I'm in no position to assist: if I'm unable to buy this house I'll have to take out a larger mortgage on another property anyway.

And she could perhaps find a lower-than-8% loan, but actually the loan would have to be below 4% as Legal Aid interest is only paid on the initial amount, not the interest (which would now be larger than the original amount.

As mentioned the discovery of the debt, while a nuisance, is not the end of the world: the timing of it is the problem.

AdrianC

audigex wrote: »

And she could perhaps find a lower-than-8% loan, but actually the loan would have to be below 4% as Legal Aid interest is only paid on the initial amount, not the interest (which would now be larger than the original amount.

So "ASTONISHING" in the original post and "pretty insanely high" in a follow-up might have been just a tad tabloid, don'chathink? What with not being able to refinance it at a similar or lower rate...

silvercar

The current property has no mortgage: it is (/was) being sold for £80k - ie the remaining £15k was a gift to me to reduce my mortgage while coinciding with her downsize. So no, I'm in no position to assist: if I'm unable to buy this house I'll have to take out a larger mortgage on another property anyway.

So you could just as easily take out a larger mortgage on her property as on any other?

audigex

AdrianC - at the time I didn't realise the 8% wasn't applied to the interest... 8% on something provided to low income families to allow them legal assistance seemed high. Frankly I still think it's an un-necessarily high rate, but that's by the by: the situation is what it is and further discussion of the debt at this stage is just confusing the thread

Silvercar - not really, that would push my LTV up too much: the current sale is only really able to go ahead because of the equity gift. I was more stating that I wouldn't be in a position to assist with her finances as my own would be significantly more difficult (or at least, wouldn't allow much leeway in my finances). The actual situation is probably more that I wouldn't be able to buy at this stage. Short answer: no, I can't.

And guys please, I know that MSE is often faced with debt cases and debtors seeking advice but let me reiterate: the debt in general isn't the issue, it's just an unpleasant surprise to discover that we were mistaken about the interest. We don't really need debt planning advice or discussion on the debt.... we're just trying to work out how we could go forward with the sale at this stage with the charge over the property, without borrowing money. Ignore the initial comments discussing the nature of the interest rate etc.

Either way I think this thread is probably done now: I have the information I need which is essentially "Check if there's a charge against the property, and you have virtually no chance of moving it if there is."

If there's a charge we'll have to either take out a loan or postpone things a couple of years, it's a nuisance but it's not the end of the world. If there's no charge we carry on as planned and double check with Legal Aid that there's no outstanding debt.

As I said before, apologies for not being clear enough in the initial post as to what the question was and confusing things with discussion of the interest rate. That wasn't the real issue, just the cause of the concern.

pleasedelete

So she was selling to you for £15k then at he market rate? Simple- sell it on the one market and it will pay her debt off. She then wont be any worse or better off.