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Private loan friend to friend to pay for a lease extension

edited 8 January at 12:41PM in Loans
82 replies 4.2K views
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  • edited 15 January at 11:10AM
    chucknorrischucknorris Forumite
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    edited 15 January at 11:10AM
    glennstar wrote: »
    I notice during the course of the 4 pages of this post you have grown increasingly irascible, presumably because you aren't hearing what you want to hear. I think the point about a qualified solicitor is valid, as is investigating the leasehold rule changes, neither point of which I can see in any previous posts - although I concede I have not poured over the commentary. The fact that you have chosen to focus on my "bonkers" comment says a lot. I wonder why you have even created this post.

    As for the UK law changes, which, incidentally, has nothing to do with the crackpots running the Scottish government. The 2017 reform proposal stated, as one of its 4 main objectives;

    There was also a statement in October 23019 stating that this legislation would be in place before the end of the next Term. I think anyone in their right mind would wait. What difference (genuinely I don't know) will waiting up to 5 years make to the cost/viability of the lease?

    And on that point, just by the bye, it is a common misconception to think that I need to know you to be able to judge your mental state - not true.

    It is NOT my decision whether to extend the lease or not, it is their decision! We have discussed it, and they want to proceed, if something crops up in time, great, we can reconsider, but they want to proceed with a lease extension this Summer. To wait 5 years would probably add more than £40k to the cost of extending the lease! My decision is limited to whether to lend them the money or not.

    I created this post because I wanted to ensure that I had identified all the significant risks to me, to see if anyone could bring something up which I had not thought of. But since I discovered that I will have the first charge on the property that mitigates most of my significant risk. The biggest risk was that if there was a mortgage and they defaulted on it, and used up all the equity, my second charge would not be protecting me, but I now know that that is not an issue.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • JimmyTheWigJimmyTheWig Forumite
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    First of all I have found out that there is no mortgage lender, they paid off the mortgage a few years ago (just found out today). I also brought that up earlier about the second charge, so why ask! But now that I will have the first charge, this looks quite straight forward.
    It strikes me that the easiest thing to do would be for you to buy an £80k stake in their house.
  • chucknorrischucknorris Forumite
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    It strikes me that the easiest thing to do would be for you to buy an £80k stake in their house.

    The purpose of extending the lease is for them to sell the property, they need to access the equity, for a number of reasons:

    1. They now live in Hastings and the flat is in London (more difficult to manage).
    2. They need to pay off a number of friends who have loaned them money (nothing too major, but it needs to be paid back to them).
    3. They want to pay for some home improvements to their own home.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • JimmyTheWigJimmyTheWig Forumite
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    The purpose of extending the lease is for them to sell the property
    I don't mean that you should buy a stake in the property and that be the end of it. I'm saying that rather than lend them £80k and get a charge put on the house, could you buy into the house for £80k, extend the lease and sell it.
  • If you do loan the money then you need a legal agreement that they will move out and sell the property .... put a charge against it in law. Problem is doesn’t sound like they want to go anywhere and can sabotage any future sale.
  • chucknorrischucknorris Forumite
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    I don't mean that you should buy a stake in the property and that be the end of it. I'm saying that rather than lend them £80k and get a charge put on the house, could you buy into the house for £80k, extend the lease and sell it.

    I would then have to share all the sale fees etc. I would rather stick with what I intend to do. I am very comfortable with having the first charge on the property, I am happy to proceed under those circumstances.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • chucknorrischucknorris Forumite
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    If you do loan the money then you need a legal agreement that they will move out and sell the property .... put a charge against it in law. Problem is doesn’t sound like they want to go anywhere and can sabotage any future sale.

    I was discussing that with my solicitor yesterday, I am waiting for her to come back to me with better information, when I was talking to her, I didn't know then that I would have the first charge, I have since advised her by email. I will have the first charge on the property, which is comforting. They do want to sell, and they did have it in an auction last year but it did not meet the reserve. Because of the low lease there was not much interest, selling on the open market with an extended lease should be much easier to sell. Remember it is an investment property (they do not live in it), so not wanting to go anywhere isn't relevant.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • SeanG79SeanG79 Forumite
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    Can they not agree the price of the lease extension with the freeholder, have the lease extension contracts drawn up, to be paid via proceeds of sale?
  • chucknorrischucknorris Forumite
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    SeanG79 wrote: »
    Can they not agree the price of the lease extension with the freeholder, have the lease extension contracts drawn up, to be paid via proceeds of sale?

    It is possible. but can get complicated (on the timing of things), the simplest way to do it is extend the lease first, then sell.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • JimmyTheWigJimmyTheWig Forumite
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    I would then have to share all the sale fees etc. I would rather stick with what I intend to do. I am very comfortable with having the first charge on the property, I am happy to proceed under those circumstances.
    Fair enough.
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