Anyone explain a charge against a house?

[Rockets7]

I’m no business bod that’s for sure but can anyone offer some explanation against the following....

We have viewed a house which is currently marketed at £1.45 million (it is on the market). Seller has a number of small companies with minimal input on companies house bar one. This particular company has a ‘charge’ against the house and appears to be something pension related. The charge is very detailed about what the ‘Director’ can and cannot do with the house in relation to changes of layout / garden / structure etc and is at present ‘unsatisfied’. Would this be settled upon the sale of the house from the funds etc?

A lamens interpretation would be appreciated......

[MrHappy]

I’d assume that the company has lent the home owner a sum to be repaid on a sale of the house. Similar to a mortgage but your solicitor should be your primary contact with regards to this.

[Rockets7]

MrHappy said:

I’d assume that the company has lent the home owner a sum to be repaid on a sale of the house. Similar to a mortgage but your solicitor should be your primary contact with regards to this.

Thankyou that’s pretty much the view we had / have taken, seller is strange, house is in good order just getting a little nervous over that element. I’m guessing it’ll come up on the background / usual checks.

[Dixy]

This is what you pay your solicitor for, if you trust the answer you get here more than an insured professional then good luck. That is an unusual and specific charge.

[tescorank]

The vendors solicitor will retain the funds to satisfy the charge on distribution of the sale proceeds.

[NDA]

tescorank said:

The vendors solicitor will retain the funds to satisfy the charge on distribution of the sale proceeds.

If there are insufficient funds to meet the charge - I wonder what happens?

Many small business owners, for cashflow reasons, will take a charge on their property, it could be business related. If you know the name of the vendor it might be worth looking on Companies House and having a dig around.

[mikeiow]

Dixy said:

This is what you pay your solicitor for, if you trust the answer you get here more than an insured professional then good luck. That is an unusual and specific charge.

I’d agree with this….
…..but I would also suggest ensuring your solicitor is very aware of this, and for them to take steps to properly clarify it. We’re they the one who brought it you your attention already? If so, get them to explain the situation clearly to you.

Yes, this should be teaching granny to suck eggs, but solicitors are all humans, susceptible to error: no harm in pointing out your concerns to get clarified.

[craigjm]

NDA said:

tescorank said:

The vendors solicitor will retain the funds to satisfy the charge on distribution of the sale proceeds.

If there are insufficient funds to meet the charge - I wonder what happens?

Many small business owners, for cashflow reasons, will take a charge on their property, it could be business related. If you know the name of the vendor it might be worth looking on Companies House and having a dig around.

It’s a finance deal so just like if you sold your car that had finance on it and there was a deficit on it afterwards it would have to be settled for the marker to be removed.

OP your conveyancer will do a check to see what charges are on a property beyond just the mortgage and this will be included. For peace of mind you may want to mention it to them

[Rockets7]

Dixy said:

This is what you pay your solicitor for, if you trust the answer you get here more than an insured professional then good luck. That is an unusual and specific charge.

I was looking for general advice, we are at the very early stage of purchasing and was trying to glean some insight into it before calling the solicitor to ensure they’re aware but thankyou.

[Rockets7]

craigjm said:

It’s a finance deal so just like if you sold your car that had finance on it and there was a deficit on it afterwards it would have to be settled for the marker to be removed.

OP your conveyancer will do a check to see what charges are on a property beyond just the mortgage and this will be included. For peace of mind you may want to mention it to them

Thankyou, that makes sense, I wasn’t sure how far and wide the checks go. We have already drawn the conclusion the sellers a drop slippery but it’s no chain either side, slightly over priced but then so are we I guess. Property has served me well and I didn’t want to make a faux pas at this point in life. Thank you.

[NDA]

craigjm said:

It’s a finance deal so just like if you sold your car that had finance on it and there was a deficit on it afterwards it would have to be settled for the marker to be removed.

So the sale could collapse if the charge is a higher amount than the funds from the sale?

[Carbon Sasquatch]

From a buyers perspective - think about it the same as the seller having a mortgage - it needs to be repaid before they can legally sell the house.

Your solicitor should be able to clarify what is outstanding and confirm well in advance that the sale price will cover any outstanding loans secured on the property.

[Mark-ri571]

Your Solicitor will get an Undertaking from the Sellers Solicitor to redeem the Charge on completion in exactly the same way as a mortgage. Before doing so the Sellers Solicitor will obtain from the proprietor of the Charge their redemption requirements.

[craigjm]

NDA said:

craigjm said:

It’s a finance deal so just like if you sold your car that had finance on it and there was a deficit on it afterwards it would have to be settled for the marker to be removed.

So the sale could collapse if the charge is a higher amount than the funds from the sale?

In theory but it wont. What will basically happen is that the amount will be calculated and will have to be shown as paid before final completion. It is basically a loan secured on the property that isnt a mortgage (like any secured loan) and they usually wont be entered into unless there is enough headroom to pay them off because part of the "credit check" would make sure of that.

I think lots of people see the word "charge" and panic thinking its something negative. The mortgage on the property is a "charge" this is just an additional secured loan.

[46and2]

All I would say is always question things with solicitors and read everything they put in front of you, they do miss things.

[Rockets7]

craigjm said:

In theory but it wont. What will basically happen is that the amount will be calculated and will have to be shown as paid before final completion. It is basically a loan secured on the property that isnt a mortgage (like any secured loan) and they usually wont be entered into unless there is enough headroom to pay them off because part of the "credit check" would make sure of that.

I think lots of people see the word "charge" and panic thinking its something negative. The mortgage on the property is a "charge" this is just an additional secured loan.

Thankyou, that’s pretty much the view I took ‘panic’! That’s put my mind at rest and solicitor notified but fortunately already aware.