Liferent and a mortgage

fifiscamp · 16 May 2018 at 8:10PM

I've bought the family home so we can move in and look after dad. Part of the agreement when we purchased the house was to include liferent entitlements for dad. I think this may be unique in Scots Law, but gives dad entitlement to live in the house for as long as he wants to. Our plan all along was to then build an extension and carry out some refurbishment, which we would fund via a mortgage. I had the mortgage offer, and the building work has now started but just as I was expecting funds to be placed in my account, my solicitor has said that many lenders will be reluctant to lend where a liferent arrangement exists as they cannot repossess the property in the event of payment defaults. I am now waiting to hear whether the mortgage offer is null and void, and if so we will have to amend the title deeds to remove the liferent reference. Obviously this is highly stressful and impacting on our entire family. Our house is not habitable now, I have no money to pay the builder, and I am in limbo waiting for a decision. Would be grateful to hear if anyone else has experience of getting a mortgage where liferent entitlements exist.

antrobus · 16 May 2018 at 9:02PM

fifiscamp wrote: »

I've bought the family home so we can move in and look after dad. Part of the agreement when we purchased the house was to include liferent entitlements for dad. I think this may be unique in Scots Law, but gives dad entitlement to live in the house for as long as he wants to. ...

I think that liferent is Scottish for life interest. As in person X dies and grants person Y the right to live in the property for the rest of their life, after which the property passes to person Z etc. It's a kind of trust.

fifiscamp wrote: »

Our plan all along was to then build an extension and carry out some refurbishment, which we would fund via a mortgage. I had the mortgage offer, and the building work has now started but just as I was expecting funds to be placed in my account, my solicitor has said that many lenders will be reluctant to lend where a liferent arrangement exists as they cannot repossess the property in the event of payment defaults. I am now waiting to hear whether the mortgage offer is null and void, and if so we will have to amend the title deeds to remove the liferent reference. Obviously this is highly stressful and impacting on our entire family. Our house is not habitable now, I have no money to pay the builder, and I am in limbo waiting for a decision. Would be grateful to hear if anyone else has experience of getting a mortgage where liferent entitlements exist.

The questions would be, who are the executors of this liferent, who gets the property after dad?

I wouldn't have thought you can amend the liferent just like that. I believe that the life interest can be surrendered, but that means the property passes to the named beneficiary. So it would matter who they are.

davidmcn · 16 May 2018 at 9:12PM

fifiscamp wrote: »

Part of the agreement when we purchased the house was to include liferent entitlements for dad. Our plan all along was to then build an extension and carry out some refurbishment, which we would fund via a mortgage. I had the mortgage offer, and the building work has now started but just as I was expecting funds to be placed in my account, my solicitor has said that many lenders will be reluctant to lend where a liferent arrangement exists as they cannot repossess the property in the event of payment defaults.

And did you discuss your plans with your solicitor before you put the liferent in place?

Liferent and a mortgage

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