Legal Questions and Answers

Looking for a bit of advice please on behalf of a family member

Hi, looking for a bit of advice please on behalf of a family member. They remortgaged their home in 2004 in order to purchase their parents home for them from the council. A loan agreement was put in place between them and their parents and a security was granted in their favour and secured over the house. They now want to have the security discharged so that it is off the title deeds but they have been told that there is a document they can have drawn up which states that the loan is still in force notwithstanding the discharge. Does anyone know if such a document exists and what it is called? It would effectively be making a secured loan an unsecured loan. We are in Scotland. Thanks in advance for any assistance

 

Answers:

1-I don’t know the legal answers but why would they remove the charge on the house if the loan hasn’t been fully paid off? That’s very risky.

2-thanks for replying. I think the reason is that it’s a family arrangement – no sums have ever been paid and there’s no intention that any of it will be paid. If and when the house is sold when the parents die all of the money will go to them anyway. I think that’s their reasoning. The reason this other document was suggested is incase either of them end up in a care home to ensure they get their money back

3-but if they end up in a care home and the property needs to be sold for fees then without the charge all the money would go to fees; whereas if the charge is left in place they get first call on the equity. Just a thought!

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