Very old second charge on property we’re selling

Land_Registry

GDB2222 said:

housebuyer143 said:

GDB2222 said:

housebuyer143 said:

GDB2222 said:

I fear that this could be difficult. You can get charges removed, but you need some evidence that the charge has been satisfied. In this case, there are no witnesses to testify to this, and there’s no paperwork. So, you are left with your supposition that the charge was satisfied long ago. That’s almost certainly true, but I don’t think the LR will look at it that way.

The guidelines are https://www.gov.uk/government/publications/discharge-of-charges/practice-guide-31-discharges-of-charges

If you can’t get the charge removed, you can still sell the property to a cash buyer who is willing to take a risk, but he will obviously want a discount. I’m guessing 30% maybe. 

It would be worth putting some work into tracking down the charge holder or his executor. 

Would anyone take on a property with a charge on it? They will be unable to register it in their name until it's removed so doesn't sound like a great idea. 

The property can be registered in the new owner’s name, even if the charge remains. They can live in it or rent it out. The risk is that the charge owner turns up and seizes the property. After all this time, it is a risk someone will take, providing there is a big enough incentive. 

Ok, definitely not someone who needs a mortgage then. I don't imagine they will sign off on being charge number 2.

Generally, properties that can only be bought by cash buyers are discounted- maybe 30%.  In this case, there’s a theoretical chance of someone turning up and demanding payment of an old loan, so the discount needed to attract a buyer might be bigger. 

Perhaps @Land_Registry could comment on whether there is any way to remove the charge without evidence of it having been satisfied?  

Sadly not - it’s either discharged as others have explained or a court could order it removed if you could find sufficient evidence to do so. What’s sufficient would be for the court to decide (not HMLR) 

Land_Registry

user1977 said:

Solutions as far as I can see are:

1. find the creditor's successors (i.e. executors, assuming it was in his own name and not a firm etc) and get them to discharge it
2. go to court with persuasive evidence that nothing is due.
3. hunt around for some unregistered discharge if it had in fact been granted but has gone astray.
4. get indemnity insurance (though as above I doubt many people would find that an acceptable remedy as it means it never gets sorted properly).

3, 1 and 2 in that order in my experience 
4 - very unlikely to solve things and if you do 1 and 2 it’s unlikely you’d get a policy as you’ve markedly increased the risk

Land_Registry

Bernard_Coleslaw said:

user1977 said:

Yes, there are frequently old undischarged securities left lying around - who was the lender? What are the conveyancers asking you? This shouldn't be uncharted territory for them...

The original solicitor was the actual lender for the bridging (which sounds very odd to me) so their subsequent disappearance makes this all rather complicated. 

If the legal charge is in the individual’s name then you need to identify his executor to get them to discharge the legal charge IF you can’t find the required discharge etc 

ThisIsWeird

How much was the property worth in 1989? And how much of a mortgage was taken out on it (which was repaid in 2010)?
The charge - bridging loan - on this property could surely not have been greater than the 1989 Prop value minus Mort amount, so why wouldn't an indemnity to that worst case amount not work?
The solicitor's successor/executor couldn't just turn up and repossess the property; the most they could surely do - with the correct records - is ask for that sum, poss including interest if applicable?
I'd have thought?
What is the max amount this loan could have been?

user1977

ThisIsWeird said:

How much was the property worth in 1989? And how much of a mortgage was taken out on it (which was repaid in 2010)?
The charge - bridging loan - on this property could surely not have been greater than the 1989 Prop value minus Mort amount, so why wouldn't an indemnity to that worst case amount not work?

It won't "work" in practice because any (normal) mortgage lender is going to insist on having a first-ranking security. They won't be interested in even thinking about what the old security might be worth or the risks of it ever being enforced.

Grumpy_chap

ThisIsWeird said:

How much was the property worth in 1989? And how much of a mortgage was taken out on it (which was repaid in 2010)?
The charge - bridging loan - on this property could surely not have been greater than the 1989 Prop value minus Mort amount, so why wouldn't an indemnity to that worst case amount not work?

Possibly the 1989 value plus any accrued interest since?

user1977 said:

Solutions as far as I can see are:

1. find the creditor's successors (i.e. executors, assuming it was in his own name and not a firm etc) and get them to discharge it
2. go to court with persuasive evidence that nothing is due.
3. hunt around for some unregistered discharge if it had in fact been granted but has gone astray.
4. get indemnity insurance (though as above I doubt many people would find that an acceptable remedy as it means it never gets sorted properly).

With (1), wouldn't the Executors require some evidence the charge was settled and not an unidentified asset of the Estate that the Executors are now required to recover, pay necessary IHT, and distribute as per the Will?

user1977

Grumpy_chap said:

ThisIsWeird said:

How much was the property worth in 1989? And how much of a mortgage was taken out on it (which was repaid in 2010)?
The charge - bridging loan - on this property could surely not have been greater than the 1989 Prop value minus Mort amount, so why wouldn't an indemnity to that worst case amount not work?

Possibly the 1989 value plus any accrued interest since?

user1977 said:

Solutions as far as I can see are:

1. find the creditor's successors (i.e. executors, assuming it was in his own name and not a firm etc) and get them to discharge it
2. go to court with persuasive evidence that nothing is due.
3. hunt around for some unregistered discharge if it had in fact been granted but has gone astray.
4. get indemnity insurance (though as above I doubt many people would find that an acceptable remedy as it means it never gets sorted properly).

With (1), wouldn't the Executors require some evidence the charge was settled and not an unidentified asset of the Estate that the Executors are now required to recover, pay necessary IHT, and distribute as per the Will?

Yes, if they can't figure out for themselves the (non-)likelihood of there being a bridging loan actually outstanding for decades which nobody knew anything about.

GDB2222

The executors are under no obligation to sign the discharge forms, and the ultimate beneficiaries could reasonably complain if the executors sign without proof of the loan having been repaid in full - the OP says there is no proof.

Bernard_Coleslaw

ThisIsWeird said:

How much was the property worth in 1989? And how much of a mortgage was taken out on it (which was repaid in 2010)?
The charge - bridging loan - on this property could surely not have been greater than the 1989 Prop value minus Mort amount, so why wouldn't an indemnity to that worst case amount not work?
The solicitor's successor/executor couldn't just turn up and repossess the property; the most they could surely do - with the correct records - is ask for that sum, poss including interest if applicable?
I'd have thought?
What is the max amount this loan could have been?

You raise a very good point, and we’re meeting with our conveyancers soon about this. My thought is that we might just be better off paying off the charge ourselves. Chances are it has been paid off - I can’t imagine a bridging loan still hanging around after all these years - but in the absence of evidence we might need to take a pragmatic approach.

GDB2222

Bernard_Coleslaw said:

ThisIsWeird said:

How much was the property worth in 1989? And how much of a mortgage was taken out on it (which was repaid in 2010)?
The charge - bridging loan - on this property could surely not have been greater than the 1989 Prop value minus Mort amount, so why wouldn't an indemnity to that worst case amount not work?
The solicitor's successor/executor couldn't just turn up and repossess the property; the most they could surely do - with the correct records - is ask for that sum, poss including interest if applicable?
I'd have thought?
What is the max amount this loan could have been?

You raise a very good point, and we’re meeting with our conveyancers soon about this. My thought is that we might just be better off paying off the charge ourselves. Chances are it has been paid off - I can’t imagine a bridging loan still hanging around after all these years - but in the absence of evidence we might need to take a pragmatic approach.

You can’t just pay off the charge. You need to locate the person who has the benefit of the charge. Then agree how much is owed to them . With compounded interest since 1989 that could theoretically be far more than the amount originally loaned. And there may have been further advances since 1989. 

That’s all rather unlikely, but as you have no paperwork, you just don’t know.