Transfer of deeds with a registered charge

Chellylouise

Hi all.

I'm looking for a bit of advice if possible. basically my Mum passed away a few months ago. She lived in a shared ownership property where by she owned 25% and housing association 75% in her will she left her share of the house and a small amount of money that was in her bank to the sole benficactor my brother. 

Probate has now been granted. However we recently discovered there is a registered charge against the house. The debt was initially with HSBC but has now been passed on to restons solicitors. It appears my mum had been paying this debt off slowly since 2007. 

As my brother (the benefactor) is low income and any money left from the estate has been used towards settling 2 other small debts. paying rent since mum passed away on the 75% housing association own.  and funeral costs. We cannot afford to repay the remaining balance of the debt off in order to get the charge removed. We also cannot afford solicitors fees to deal with the deed transfer. So my question is can we transfer the deeds from the my mum's name to my brother while the registered charge is still there ourselves?. And if so how much more complex does this make the form filling with land registry? 

We understand this will in effect make the benefactor (my brother) responsible for this debt. And we will have to deal with that. but for now we really need my brothers name transferred onto the deeds and are getting conflicting advice on whether land registry will allow it or reject it based on there being a registered charge still live.

Just to add we have already been in touch with Citizens advice. Law hive and various others places. They all say they can't help and we need a solicitor but as stated we cannot afford one so are not sure what to do. 

itsthelittlethings

I would have thought you need to sell the house to satisfy the charge, or your brother needs to take out a loan to pay off the charge.

Chellylouise

Yes. That's kind of the conclusion I have came to but was hoping to avoid selling as the rent on mum's house is much more reasonable than what it would be if my brother sold up and moved to rent fully privately. 

But thought I'd ask incase anyone knew of another way to proceed without selling. I suppose a loan is an option too. 

silvercar

It would have been easier to sort the charge on the property before clearing the other debts. That way the charge could have been removed, if there was enough money. 

One solution would be for the beneficiary to take a loan or mortgage to clear the debt. If the property isn’t sold then the charge doesn’t have to be paid. Although it is tidier to transfer the property to your brother, is there anything stopping him living there and keeping it in your mother’s name? 

Now that you have probate, you need to make sure your brother’s income is sufficient to pay the rent and service charges, claiming any benefits he may be entitled to in order to help that. Otherwise he needs to consider whether he can afford to keep the property. 

FreeBear

The charge would need to be satisfied regardless of the property being sold or transferred. As the executor, it is your responsibility to ensure all charges & debts are settled before distributing the estate. Failure to do so means you could be held personally liable.

So if you want your brother to inherit the property, someone is going to have to take out a loan (or mortgage) to pay off this charge. How this loan is repaid is a matter for you and your brother to discuss.

Chellylouise

Yes I assumed the charge would need to be settled before land registry allowed a transfer. Although a couple of places we contacted such as swift property transfers and land registry them selves indicated (so I thought ) it's possible to transfer the deeds while the charge is still live this is what land registry said..

Me. Can I ask if land registry allows the transfer of deeds from the now deceased current owner to the sole benefactor of their will while there is a registered charge on the properly with a balance still remaining

They replied

If there is a registered charge on the title 
And no corresponding restriction then the transfer from the executor to a benificiary can usually be registered and the charge remains on the title. 

From that we Initially thought we may be able to transfer the deeds then perhaps continue the repayment plan my mum appeared to have in place with them before she passed away in order to settle the debt at an affordable rate.
 I think I've misunderstood at first the part where it says 
'And no corresponding restriction"  I assume now there is a corresponding restriction due to it being a debt with with restons solicitors? 

Because since then other places like a solicitor we contacted for initial advice suggested deeds cannot be transferred while a charge is in place it has to be fully settled. It gets removed. Then you can transfer deeds

So really that's what caused the confusion. I guess a loan looks like the only possible option in order to avoid selling. 

Chellylouise

We may have made mistakes as executor as well unfortunately because my mum left the 25% of the house. Just over 2k in her bank account and her personal belongings all to my brother. This was agreed as my brother had lived with mum and became her carer when she was  diagnosed with a brain tumour which sadly resulted in her death. 

As it turned out the money hasn't gone to benefactor because 2 small debts we knew about were settled. The rest of the money has covered the past few months rent to the housing association and around 300 towards funeral costs. So by time restons solicitors contacted us saying they were owed money (they didn't inform us at first about the registered charge) the estate was close to bring broke. I'm not sure if we were  were supposed to not put 300 towards funeral costs and not pay any rent while we waited to see if any other credits came forward first. 

FreeBear

Chellylouise said: I'm not sure if we were  were supposed to not put 300 towards funeral costs and not pay any rent while we waited to see if any other credits came forward first. 

The reasonable cost of a funeral takes precedence over other debts (but not the costs of a wake). Then costs legal costs relating to the administration of the estate (e.g. probate fees, solicitor bills) come next. HMRC, DWP, and local council debts are next on the list, followed by secured debts (in your case, the charge held by Restons). All other unsecured debts such as utility bills & rent are at the bottom of the list. If there are insufficient funds in the estate after selling assets, then it is insolvent.

If you haven't already done so, you should post a notice in the Gazette - This should protect yourself as the executor for any claim from an unknown creditor.

Chellylouise

Also silver car thank you for your reply and to everyone else who has replied too. Basically the housing association who owns 75% and whom my mum paid rent to. Have said my brother can take over the tenancy and continue to pay rent as my mum did. Which is good because the rent works out to be alot cheaper than if my brother moved into another private house/ flat.

However they said he cannot be added to the tenancy until his name has been transferred on the deeds. For this reason he cannot apply for any help from anywhere as he is not officially a tenant at this moment.

He has now been referred to the restart scheme by UC in order to find work. But this could take some time for him to find a job potentially. So whilst they assist him in getting back to work after being mums carer. He could do with some help towards rent. But cannot apply for anything as he is not on the deeds. 

Chellylouise

Thank you free bear. It looks like the one thing we shouldn't have been paying from what you wrote is rent. So we should have held that money back and paid restons once they made us aware of the debt. So that is as mistake on our part. 

I guess this does mean either selling or getting a loan as we suspected as it seems transfering the deeds and then paying the debt off at an  affordable rate is not an option . 

RAS

Presumably the mortgage also has to be redeemed in order for the transfer to be actioned? Has anyone clarified that situation?