Putting a charge on sibling's property

farangfarang

I am helping my sibling buy a house by lending a significant sum. I trust my brother and do not necessarily expect any of it back, but I would still like to put a charge on the house and when I am ready to gift the money rather than lens, I can remove the charge,

Is it necessary to have a solicitor draw the charge up or can I use a template? I'm keen to avoid unnecessary fees for what I suspect is a pretty standard document, especially as I don't really expect to see the money back.

user1977

You don't need to use a solicitor, no. Are they going to have any other mortgage over the property? I'm guessing not, since mortgage lenders generally won't allow other contributions to the price to be borrowed.

AskAsk

the solicitor that does the conveyancing can put on the charge at the same time.  my husband was selling a flat and he agreed to sell it to the buyer where there will be a charge on the property with an agreed interest rate payment and a fixed payment date with penalty for non payment or late payment, and the conveyancing solicitor did this as part of the conveyancing process.  there was an extra fee for this on top of the conveyancing fee.

it never did go through as the buyer pulled out at the last minute.  that was a bit complicated charging so the wording had to be right but i am surpised to hear from user1977 that you don't need a solicitor to put on a charge on a property and can do so yourself.

if the property is bought on mortgage, the bank may not accept a charge on the property from yourself though.

user1977

AskAsk said:

i am surpised to hear from user1977 that you don't need a solicitor to put on a charge on a property and can do so yourself.

You don't need to use a solicitor for any conveyancing transaction - but it helps if you know what you're doing.

But like I said, if there's a mortgage involved then it's highly likely the lender won't allow another loan to be involved at all, never mind a secured one.

AskAsk

user1977 said:

AskAsk said:

i am surpised to hear from user1977 that you don't need a solicitor to put on a charge on a property and can do so yourself.

You don't need to use a solicitor for any conveyancing transaction - but it helps if you know what you're doing.

But like I said, if there's a mortgage involved then it's highly likely the lender won't allow another loan to be involved at all, never mind a secured one.

i have heard people say that they had tried to do the conveyancing themselves but they found a wall of resistance from the other side's solicitors who will only speak to a solicitor so it never worked.

i would not attempt to put a charge on a property through DIY so unless you know what you are doing, the OP should ask a solicitor to do this if the bank allows the charge but as far as i am aware, the banks will not allow this if they have to approve a mortgage.

Thrugelmir

Are you intending on having a loan agreement drawn up?   

farangfarang

No mortgage involved. Conveyancer said they can't deal with it as it's a conflict of interest (as the house will be my brother's they are acting for him, they cannot also act for me). The are happy to register the charge, just not draft it.

getmore4less

One issue  if this is a very substantial amount and your estate may be liable for IHT.

As this will be a formally documented loan should you at a point in the future decide to make it a gift then the PET clocks starts at that time.

You lose the option, that some on here are using, of having a loan agreement that remains private between the individuals so at the time it changes from loan to a gift you just rip up the agreement and pretend it was a gift all along.

SDLT_Geek

getmore4less said:

You lose the option, that some on here are using, of having a loan agreement that remains private between the individuals so at the time it changes from loan to a gift you just rip up the agreement and pretend it was a gift all along.

I have not heard of anyone on here suggesting that one could later pretend that a loan was a gift all along.  That sounds wrong and if it was to evade tax would be fraud.

AskAsk

farangfarang said:

No mortgage involved. Conveyancer said they can't deal with it as it's a conflict of interest (as the house will be my brother's they are acting for him, they cannot also act for me). The are happy to register the charge, just not draft it.

then you can instruct your own solicitor to draft the charge.  it doesn't cost a lot.  the complicated one that my husband had was only £500 so if it is a simple charge without messing around with the wording, as the one we had was complicated and had to be agreed with the other side's solicitors so it went back and forth, then it will be a lot less than £500.

i do think it is best to instruct a solicitor to do this rather than attempt to do it yourself.  the private loan agreement suggested in the thread is ok if you can trust your brother and his spouse/children as you would have to have it as a gift and then have the private loan, but then someone had pointed out that this is effectively fraud as you haven't really made a gift and so the loan may not stand up in court as you have lied about it, and it would be pretty obvious that it was a gift because you would have to declare this when your brother buys his house, so he could argue the loan was not a loan but a gift.

Thrugelmir

farangfarang said:

No mortgage involved. Conveyancer said they can't deal with it as it's a conflict of interest (as the house will be my brother's they are acting for him, they cannot also act for me). The are happy to register the charge, just not draft it.

Registering the charge is the easy part. There'll need to be a legal agreement to accompany it. All the what if's need to be covered.