How to lend money to something and take part ownership

katy123

I'm not entirely sure on the terminology but the idea is quite simple. Say house worth £100k, friend lends £50k to another friend but wants this to be in the form of a loan, repayable on death (no interest). Is it a charge or restriction that is entered or something else?

There is no mortgage on the house and in sole ownership.

macman

You can put a charging order on the house: the lender is then repaid out of the proceeds of the house when sold. The estate receives the balance of the sale price minus the loan.
However, the lender does not then actually have part ownership-but they do have security against the loan-though it could be decades before they can redeem it.

Mojisola

katy123 wrote: »

Say house worth £100k, friend lends £50k to another friend but wants this to be in the form of a loan, repayable on death (no interest).

What would happen if the lender died before the borrower?

The executors would want the debt repaid so that they could sort out the estate.

katy123

macman wrote: »

You can put a charging order on the house: the lender is then repaid out of the proceeds of the house when sold. The estate receives the balance of the sale price minus the loan.
However, the lender does not then actually have part ownership-but they do have security against the loan-though it could be decades before they can redeem it.

Would you know what form to use by any chance?

If i am correct, there are other ways such as a restriction and simply a loan agreement. Obviously, a loan agreement is not as robust as a charging order.

katy123

Mojisola wrote: »

What would happen if the lender died before the borrower?

The executors would want the debt repaid so that they could sort out the estate.

Very good point........the executor would need to know about the loan (so i'm guessing besides a charging order, there should be a loan agreement drafted).

getmore4less

See the probate board thread.
There is background to this.

[Deleted User]

katy123 wrote: »

Would you know what form to use by any chance?

If i am correct, there are other ways such as a restriction and simply a loan agreement. Obviously, a loan agreement is not as robust as a charging order.

For the amount of £ involved I would suggest doing nothing without proper legal advice, an internet forum is not the place for something that involves 50k