legal charge on a property

[headlad]

My mother owns 1/3 of a flat since 1989.
The other 2/3 of the property has a charge on the debt raised by the building company that renovated the flats. That building company went into receivership and now the receiver wants to tie up the companies outstanding affaires.
I have been offered the opportunity to purchase the legal charge.
Can someone tell or advice me please?
If I purchase the charge am I buying the other 2/3 or just the debt?

[Openlaw15]

Re: legal charge on a property

My mother owns 1/3 of a flat since 1989.
The other 2/3 of the property has a charge on the debt raised by the building company that renovated the flats. That building company went into receivership and now the receiver wants to tie up the companies outstanding affaires.
I have been offered the opportunity to purchase the legal charge.
Can someone tell or advice me please?
If I purchase the charge am I buying the other 2/3 or just the debt?

Hello, Headlad

A land charge is usually security against the property for a debt. So a bank or building company in your example takes out said security against the property to accommodate their interests in it. In your example you say the charge was used as security to cover the amount it cost the building company to renovate the flat. How much was this? You say you have been offered to purchase said charge by the insolvent company's receiver. The charge only covers the amount the building company would have been entitled to if your mother were to sell the flat. So whatever the current value of the flat is deduct the current value of the charge. So depending on the current value of said charge determines any extra interest your mother has in the flat. Given your mother's share is only a third the charge and her current interest is likely to be less than 2/3s of the property all together. You will be buying the current value of the charge, ie debt plus interest up to now.

[headlad]

Re: legal charge on a property

Hello, Headlad

A land charge is usually security against the property for a debt. So a bank or building company in your example takes out said security against the property to accommodate their interests in it. In your example you say the charge was used as security to cover the amount it cost the building company to renovate the flat. How much was this? You say you have been offered to purchase said charge by the insolvent company's receiver. The charge only covers the amount the building company would have been entitled to if your mother were to sell the flat. So whatever the current value of the flat is deduct the current value of the charge. So depending on the current value of said charge determines any extra interest your mother has in the flat. Given your mother's share is only a third the charge and her current interest is likely to be less than 2/3s of the property all together. You will be buying the current value of the charge, ie debt plus interest up to now.

Hello Openlaw15.
Thank you for rely.
It seems that my mother owns the flat but with the legal charge on the outstanding debt is on the remaining 2/3rds that is owed. The building company must have taken out the charge.
The charge is being offered to me at the 1989 property value (£115.00) without the interest accrued over that time, so I am being offered it for £76,600. The value of similar flats being sold in the area is almost double so it seems to good to be true .... that is why I asked am I buying he other 2/3rds or am I just paying off the debt for my mother, will the 2/3rds go in my name.

[Openlaw15]

Re: legal charge on a property

Hello Openlaw15.
Thank you for rely.
It seems that my mother owns the flat but with the legal charge on the outstanding debt is on the remaining 2/3rds that is owed. The building company must have taken out the charge.
The charge is being offered to me at the 1989 property value (£115.00) without the interest accrued over that time, so I am being offered it for £76,600. The value of similar flats being sold in the area is almost double so it seems to good to be true .... that is why I asked am I buying he other 2/3rds or am I just paying off the debt for my mother, will the 2/3rds go in my name.

Whether the offer is too good to be true depends. How much is the current value of the property? Let's assume the flat/ property were owned as 2/3 by the building company and 1/3 by your mother, this then is absolute ownership and not a debt for a charge. In this scenario if said company went bankrupt normally, what a company owns until it has been made bankrupt (company liquidation) is acquired by the receiver (in trust for the creditors). The receiver is not going to let you or your mother purchase 2/3's of the property for £76,600. The creditors would sue the receiver for damages. The receiver would then have a good case alternatively to get an order of sale or keep the 2/3 interest as mortgagor (ie like a bank). It seems to me you're only purchasing the debt and not 2/3s of the property (which would be too good to be true).