Charge against a property as a percentage rather than absolute number

commonsensebrother

steampowered said:

The charge just secures whatever is in the loan agreement.

You could say in the loan agreement that the capital is repayable as a percentage of the value of the property upon sale.

I don't see why you would need interest in addition. Surely your "interest" is whatever increases may have occurred in the value of the house by the time it is sold.

Yeah. As I said above the interest is unnecessary.

Sea_Shell

In these circumstances do you also need to be mentioned on their home insurance as an interested party?

I hope you ensure that they have good buildings insurance in place!  The last thing you need is for them to forget to renew and then have a claim!  Or not have adequate cover.

commonsensebrother

getmore4less said:

mrschaucer said:

theoretica said:

If you owned 1/4 of the property you would also be exposed to capital gains tax on sale - I don't know if not being legally on the deeds gets round this, it's something to look into.

The OP will not "own" 1/4 of the property though.  That's what a mortgage is, just a loan BACKED BY the security of property.  Building societies, banks and other mortgage lenders do not own the properties they grant mortgages on.

It is not about the legal ownership it is about the beneficial interest in the property, 

mortgages do not create a beneficial interest they are just a debt.

Not being on the deeds does not get round the beneficial interest.

What counts as a beneficial interest?
- lending the money as a cash charge? Surely not, that’s just the same as a mortgage?
- lending the money as a percentage charge (if this is even possible)

getmore4less

Does not have to be secured. 

Tjee agreement to get a % of the property value is creates the beneficial interest. 

Choosing to hide interest when there a tax implications is tax evasion. 

Any charge can be variable, most probably are. 

commonsensebrother

getmore4less said:

Does not have to be secured. 

Tjee agreement to get a % of the property value is creates the beneficial interest. 

Choosing to hide interest when there a tax implications is tax evasion. 

Any charge can be variable, most probably are. 

Nobody is talking about hiding anything. 

steampowered

getmore4less said:

It is not about the legal ownership it is about the beneficial interest in the property, 

mortgages do not create a beneficial interest they are just a debt.

Not being on the deeds does not get round the beneficial interest.

It wouldn't be a beneficial interest in the property. 

It would simply be a contractual right against the seller - in legal terms a "chose in action".

mrschaucer

https://www.fortunelaw.com/giving-security-by-way-of-a-charge/
Charge on property:
"A charge arises when there is agreement between creditor and debtor that the creditor has an equitable proprietary interest in the secured asset as a security for a debt. When the debt is discharged, the charge terminates."
and
"There is no transfer of legal or beneficial ownership or possession, merely an encumbrance on the asset."

Grumpy_chap

But, the in-laws will only ever have a 75% interest in the property, so the remaining interest in the property must be with the OP

getmore4less

The very definition of beneficial interest is being entitled to 25% of the sale price.
There will be a trust created by the action of expecting 25%.

Also remember that releasing the debt is a disposal for CGT.

davidmcn

Grumpy_chap said:

But, the in-laws will only ever have a 75% interest in the property, so the remaining interest in the property must be with the OP

No, we're talking about the in-laws owning 100%, and the OP having a secured loan, the redemption amount of which will be linked to the property value. That doesn't mean the OP owns the 25%, in the same way that a normal mortgage lender doesn't own £100k-worth (or whatever) of your house.