Can someone talk to me about taking a Lien out on a property?

[Himalaya]

DH's mum and dad took out an equity release scheme on their house, and were paying terrible amounts of interest on it. Meanwhile we had money in the bank earning almost nothing.

We therefore lent the ILs the money to pay off their reverse-mortgage and we have signed a personal loan agreement with them for it (downloaded from £25 contracts website).

All is good, but as the ILs get older we want to make sure that if they have to go into residential care and sell the home to contribute towards the cost that we will be able to get the money back.

I am told that the thing to do is to take a Lien out on the property for the amount of our loan. ...am looking for a solicitor now. I have never instructed a solicitor before so would appreciate any hand holding.

Has anyone done this, or know anything about doing this?

[Collaborate]

What you want is a contractual charge against the property. any competent property solicitor will be able to do one for you.

[Himalaya]

Collaborate

• thanks. Is that different from a lien then? (how)...?
  

...is it that we replace our loan agreement with one that is contractually tied into the property?

...or we have to do something on the property docs themselves?

Thanks for your advice. I have never bought a house/owned a house so this is all a foreign language to me.

[Collaborate]

A lien is something you exercise over property belonging to another which you have posession of. If they owe you a debt, you may have a lien on their property.

A charge is a dealing in land, and will be noted on the title to the property. That is why you need to see a conveyancing solicitor.

[Himalaya]

Thanks - one more question, then I promise to stop bugging you.

I imagine that people who want to pass on their home to their nods and prevent it being sold to pay for care could pretend that they have borrowed money against the house from their children.... Do you know how the authorities would be able to know that we genuinely lent the money, and how would we prove it ?

[Himalaya]

To their kids, not their nods, obviously

[mumblechum1]

You'd need to disclose bank statements etc showing the paper trail. If you don't already have that evidence, you should obtain it and keep copies just in case it becomes an issue.

[Collaborate]

Do you have no shame? Do you think it's alright to try and cheat the exchequer out of money? Christ almighty! You'd think there was a national surplus.

[Himalaya]

Collaborate -

No I don't think it is alright to try to trick the exchequer.

We lent the ILs some money. We would like it back when they sell the house (whenever that is). If the circumstances in which that happens is that one or both of them is going into a home and the house has to be sold to pay for their care, surely that doesn't mean that other legitimate debts they owe have to be written off?

[MrAnchovy]

You need to get a lawyer to draft appropriate documents including the charge on the property (in the UK we normally use the word charge or mortgage in these circumstances rather than lien) which needs to be registered at land registry. This will create an appropriate paper trail (backed up by bank statements showing the transfers of funds) to evidence the loan.

[Collaborate]

Apologies. I misread your post and now see your point. You can get bank statements going back 6 years under the Data Protection Act for £10 if it's proof you want.