Registereing a deposit as a legal charge part 2

Habib2342

Hi all,

I had previously raised a thread about this topic somt time ago. We are about to begin the conveyancing on a flat near Heathrow airport. The estate agent has agreed to knock off £500 off the purchase price if we used one of their referred solicitors. They have said that if the deposist is to be put down as a charge, we need to obtain a license from the Financial Conduct Authority ( FCA) in order to ringfence and safeguard the deposit otherwise the land registry will not accept this.

Does anyone know if this is the case ? Two sets of solicitors need to handle the converyancing and the charge due to a conflict of interest arising ( or so i've been told ). Would the 2nd solicitor handle this oris this something done by the 2nd solictor ?

as always, any feedback appreciated.

thanks,

Habib.

Habib2342

last sentence should have read

do we as buyers obtain the 2nd license or does the solicitor do this ?

G_M

1) estate agents don't agree what price a property sells at - the owner/seller does.

2) getting tied into an EA's 'prefered' conveyancer is unwise. Use your own independantly selected firm.

3) I have no idea why "the deposist is to be put down as a charge". Maybe I'm being dmb, but nonetheless, can you explain?

4) Two sets of conveyancers are always required (unless buyer or seller are DIYing) to avoid a conflict of interest: one for the buyer, one for the seller.

eddddy

I think you're confused. Having read your previous posts I think you might be saying the following:

A relative is lending your brother the deposit for a house. The relative wants the loan secured by a charge on the house. (The relative will have a separate solicitor from you to avoid a conflict of interest)

The EA is saying your relative needs an FCA license in order to lend the money. That is complete nonsense - they don't need a licence, and they would never be granted one anyway.


But if you're buying with a mortgage, your lender probably wont allow a loaned deposit. (And they may not allow a second charge either.)

Habib2342

1) For using one out of two solicitors recommended by the estate agent , they have agreed to knock off £500 off the purchase price. The actual purchase price has already been agreed between us and the freeholder.

2)Please explain why it is unwise.

3) My mother wants to ensure the deposit remains under family's control as the property is for my brother who recently got married and we want to safeguard the deposit in the event of relationship breakdown.

4)In order for the deposit to be registered as a charge, two sets of the solicitors will have to be appointed on our side -one to handle the conveyancing and the other to register the charge. The seller will of course appoint their own solicitor..

Habib2342

eddddy wrote: »

I think you're confused. Having read your previous posts I think you might be saying the following:

A relative is lending your brother the deposit for a house. The relative wants the loan secured by a charge on the house. (The relative will have a separate solicitor from you to avoid a conflict of interest)

Its actually my mother who is providing the deposit and wants it secured in the form of a charge. We will appoint two solicitors , one to handle the converaycning and one to register the charge, as previously mentioned.


The EA is saying your relative needs an FCA license in order to lend the money. That is complete nonsense - they don't need a licence, and they would never be granted one anyway.

It's not the estate agent that is saying it, it is the solicitor recommened by them that has said it.

But if you're buying with a mortgage, your lender probably wont allow a loaned deposit. (And they may not allow a second charge either.)

Natwest have agreed to grant a mortgage on the basis the deposit is registered as a charge and not as a gift.

Habib2342

sorry that quote /edit function didn't work out as intended :-)

AnotherJoe

Habib2342 wrote: »

Natwest have agreed to grant a mortgage on the basis the deposit is registered as a charge and not as a gift.

Then you can go ahead. The stuff about FCA is rubbish as I've done exactly this, eg charge against property, or to be more accurate my solicitor did, the brother and partner will need to sign an agreement with his mother that the deposit terms do not require pay back until the property is sold or remortgaged.

eddddy

A couple of extra comments:

Habib2342 wrote: »

1) For using one out of two solicitors recommended by the estate agent , they have agreed to knock off £500 off the purchase price. The actual purchase price has already been agreed between us and the freeholder.

The EA is playing games. The EA hasn't reduced the price, they have persuaded the vendor to reduce the price.

The EA will be laughing about this - by doing this, they've earned themselves a massive referral fee (which will come out of your brother's pocket).

This sounds similar to a scheme that Arun Estates use. Is the EA part of the Arun Estates group?

Habib2342 wrote: »

They have said that if the deposist is to be put down as a charge, we need to obtain a license from the Financial Conduct Authority ( FCA) in order to ringfence and safeguard the deposit otherwise the land registry will not accept this.

If your solicitor said this, my guess is:

They are super-cheap bulk conveyancing solicitors who won't/can't do anything apart from very standard conveyancing. So they don't want to register a charge and so they're making things up to dissuade you.

Note: the solicitor may not seem super-cheap to your brother, because he's also having to pay them the massive referral fee that goes to the EA.

Just for your interest - ask the EA and/or solicitor how much the referral fee is. You may be surprised.

Habib2342

The advert states the following :

'Incentive from Westcombe group, they will offer £500 towards the applicants legal costs should they use one of our referral solictors.'

the conveyancing quote from their solictor is as follows;

[FONT=&quot]ESTIMATE ON CONVEYANCING CHARGES (PURCHASE)[/FONT]

[FONT=&quot] [/FONT]

[FONT=&quot]OUR PROFESSIONAL FEES[/FONT]

[FONT=&quot]Acting for you in your purchase[/FONT]



[FONT=&quot]Acting for your lender[/FONT]







[FONT=&quot]Per Telegraphic Transfer Fee[/FONT]







[FONT=&quot]DISBURSEMENTS PAYABLE TO THIRD PARTIES[/FONT]

[FONT=&quot]Prirority Search[/FONT]



[FONT=&quot]Bankruptcy Search £2 per person[/FONT]



[FONT=&quot]AML Search £7.20 per person[/FONT]



[FONT=&quot]Search Fees (Approximate)[/FONT]

[FONT=&quot](Local Authority, Environmental, chancel & Water & Drainage)[/FONT]



[FONT=&quot]Land Registry Fee (Based on purchase price)[/FONT]

[FONT=&quot]Total excluding Stamp Duty:[/FONT]

[FONT=&quot]Stamp Duty (if this will be your only Residential property)[/FONT]


The 8k stamp duty fee is not applicable here as ownership will be registered to my brother with my mother holding a charge on the deposit.

the estate agent is Anthony James Manser , a quick google search shows no apparent link between them and Arun Estates Group.


'The EA will be laughing about this - by doing this, they've earned themselves a massive referral fee (which will come out of your brother's pocket).'

Not sure what you mean here,as buyers we only have to pay the conveyancing quote. the deposit and the 2nd charge fee. Forgive my ignorance but where is the referral fee payable by my brother applicable ?

I will find out/email the estate agent and solicitor about how much the referral fee is and if it is payable by us.

If in the end, they are going all out to dissuade us from registering the deposit as a charge, we will either pull out or appoint another set of solicitors who will do this.

Habib2342

again that conveyancing quote didn't come out as intended :-0

Total Cost = £3649.20

[FONT=&quot]OUR PROFESSIONAL FEES[/FONT]

[FONT=&quot]1,260.00[/FONT]

[FONT=&quot]Acting for you in your purchase £900[/FONT]

[FONT=&quot][/FONT]
[FONT=&quot]is this the referral fee you are talking about ?
[/FONT]

[FONT=&quot]900.00[/FONT]

[FONT=&quot] [/FONT]

[FONT=&quot] [/FONT]