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Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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House sale. Deferred sale proceeds from purchaser 10% of sale

Customer Question

House sale. Deferred sale proceeds from purchaser 10% of sale price.
If bank agrees to transaction on part repayment of loan outstanding and releases its charge over property being sold, does the bank have any legal right to the deferred proceeds under its original charge?
Bank also take charge over new property to secure outstanding borrowing. No physical repayment of original loan due from deffered sale proceeds ie borrowing is 'ported' to new property.
Submitted: 1 year ago.
Category: Property Law
Expert:  Ash replied 1 year ago.
Hello my name is ***** ***** I will help you.Is there anything in their terms which say they can defer payment please?Alex
Customer: replied 1 year ago.
There are no terms - just a standard Nat West legal charge on the property.Does the banks standard charge extend to deferred sale proceeds if they release their charge? Ie does the act of releasing a charge on property automatically extinguish the banks rights or call on the subsequent deferred proceeds when they are paid?
Expert:  Ash replied 1 year ago.
No it does not, because the Solicitor will give an undertaking to discharge the debt to the banks. If the charge is to continue on a new property then the bank will want to make sure that is in place to maintain security.But they can't delay a charge or repayment. Can I clarify anything for you about this today please?Alex
Customer: replied 1 year ago.
the charge on the new property when taken, will cancel the bank's right to any deferred sale proceeds?The banks charge form suggests that although they take a new security this does not prejudice their rights under the prior charge (I've the one that they are releasing)
Expert:  Ash replied 1 year ago.
they can do that. The new security does not prejudice any prior charge. That is correct.Does that help?Alex
Customer: replied 1 year ago.
Thank you Alex - most helpful.
We are in a situation where an element of original borrowing was not repaid but was ported to fund our new house by the bank. The bank took a charge on the new house.
However, the deferred proceeds were subsequently paid to us by the purchaser of our original house, but the bank now say they are caught by their original charge and are secured to them.
Are they correct?
Expert:  Ash replied 1 year ago.
Ah ok - then I see, they can defer it until they security on the new property.So they are correct.Does that clarify?Alex
Customer: replied 1 year ago.
To be clear - the bank have security on our new house, but they are saying that they can still claim the deferred sale proceeds under their prior charge on our original house.
Essential, despite a new charge being in place on our new house and their releasing their former charge on our old house - are the deferred sale proceeds from the purchaser still 'bank security'
Expert:  Ash replied 1 year ago.
That is correct, the bank is correct.Does that help?Alex
Customer: replied 1 year ago.
Thank you Alex - that has helped greatly.
Expert:  Ash replied 1 year ago.
If I could invite you to rate my answer before you go today please, otherwise the site does not credit me for the time spent with you today. Thanks and good luck. Alex
Customer: replied 1 year ago.
10/10
Expert:  Ash replied 1 year ago.
Can you click on the happy face or stars please. if you cant do that let me know! Thanks