What does this legal term mean?

karljt2013

A good friend sold me a house 10 years ago with a relatively basic loan agreement to be paid back over 25 years. Unfortunately he died a few years ago and obviously his son is not happy about the agreement we made. It seems to be a very unorhodox agreement because we were good friends. He has just sent me (though his solicitors) a much more draconian agreement which he wants me to sign. I am listed on the title deed as the owner and I think he wants that removed. Do i legally have to sign this form? One paragraph in particular is worrying. What does it mean? I have had to take a photograph of the paragraph. Can somebody please look at it and tell me what it means. Compared to his father this son is an A*****le and I don't want to enter into any agreement with him.

Image of the paragraph below



If anyone can help thanks

Victor_the_Gink

This forum is (obviously) open to the public - I would remove the reference to SJG immediately!


You need urgent legal advice - do not sign any thing until you have taken some.

anselld

What does the original agreement state will happen on death of the lender?
If the original agreement continues then you are not obliged to sign any new agreement.

Miss_Samantha

You are never obliged to sign a new agreement, only to abide by the terms of the existing agreement.

You are the property owner and he cannot change that, nor does he propose to change that.

He wants a charge added to prevent you from selling the house without paying the debt. Basically the loan would be secured against the property, which would turn it into a mortgage.

Since you have no obligation to agree and that is not in your interest you can just politely decline.

steampowered

The extract you posted suggests that the son wants to have a 'charge' registered against the property.

This would secure the debt - just like a mortgage. It would mean the son could seek a court order that the house is sold, if you fail to pay the debt. It would also prevent you from selling the house unless the debt is paid off at the same time.

I can see why the son wants to have a charge. Certainly many people would insist on having a charge in place in your friend's position. But as the agreement is already in place I don't see why you should agree to put a charge on the property.

ThePants999

Essentially, you currently have an unsecured loan. The lender has no direct influence over you - their only recourse is to take you to court if you don't adhere to the terms of the contract between you.

They now want to change it to effectively be a secured loan, where they can prevent you from selling the house without repaying the loan in full. You'd still be the owner, but you wouldn't be allowed to transfer ownership without their consent, which they'd only provide in return for loan repayment.

What they're asking is reasonable, and is the way your friend should have set it up in the first place. It matches the way mortgages are set up. However, it is strictly worse for you, and there's no reason you need to agree. I'd be making a counteroffer that has something for both of you, e.g. a reduction in any interest you're paying.

stator

Does he have anything you want?
Why would you negotiate with him?
Tell him you are happy with the existing agreement and will continue to make the payments as originally agreed.

If you think he has some legal grounds for making a request then you need to see a solicitor.

ReadingTim

Miss_Samantha wrote: »

Since you have no obligation to agree and that is not in your interest you can just politely decline.

...at which point the lender (or their estate) may find a way to terminate the agreement and the OP has to pay the money back, which may cause a problem if they have to sell the house to do so.

OP - while your mate's son might want your name off the title deeds, he can't do that. However, he can, in exactly the same way as a bank or building society does, put a charge over the property to ensure that he gets his money back when you come to sell it (it you haven't repaid the loan beforehand). This isn't unreasonable, whatever you might think of him personally.

jbainbridge

ReadingTim wrote: »

...at which point the lender (or their estate) may find a way to terminate the agreement and the OP has to pay the money back, which may cause a problem if they have to sell the house to do so.

OP - while your mate's son might want your name off the title deeds, he can't do that. However, he can, in exactly the same way as a bank or building society does, put a charge over the property to ensure that he gets his money back when you come to sell it (it you haven't repaid the loan beforehand). This isn't unreasonable, whatever you might think of him personally.

Indeed. The OP needs to carefully read the original agreement and see where he stands.

On face value the OP's friend seems to have trusted him greatly!

Miss_Samantha

ReadingTim wrote: »

...at which point the lender (or their estate) may find a way to terminate the agreement and the OP has to pay the money back, which may cause a problem if they have to sell the house to do so.

Only if they are allowed to call the loan according to the existing agreement, which seems unlikely.

You'll note that I wrote that OP is only obliged to abide by the terms of the current agreement, which, I suppose, OP has carefully read.

mrginge

ReadingTim wrote: »

...at which point the lender (or their estate) may find a way to terminate the agreement and the OP has to pay the money back, which may cause a problem if they have to sell the house to do so.

OP - while your mate's son might want your name off the title deeds, he can't do that. However, he can, in exactly the same way as a bank or building society does, put a charge over the property to ensure that he gets his money back when you come to sell it (it you haven't repaid the loan beforehand). This isn't unreasonable, whatever you might think of him personally.

Personally I think it's totally unreasonable for one party to demand a change of contract terms without offering something in return.