How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Joshua Your Own Question
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 26070
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
Type Your Property Law Question Here...
Joshua is online now

I have placed a deposit on a flat and am likely to complete

This answer was rated:

Hi I have placed a deposit on a flat and am likely to complete in July. Because of previous bad investments, i am being threatened with bankruptcy. I would like to take a loan from family to enable me to compete the flat purchase but want to protect any loan I take to purchase the flat from being available to existing creditors. What is the best way for me to do this?
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience. May I ask if you have already exchanged contracts on the flat purchase please?Will there be a mortgage involved in the purchase?
Customer: replied 2 years ago.

Yes I have exchanged contracts but there is no mortgage on it .

many thanks. There are three principal ways in which you can achieve this aim. the first is to continue with the purchase in your own name but take a loan for the full value of the property from a family member and for additional safety, secure this loan with a charge against the property in your family members favour. The charges essentially like a mortgage but of course rather than being a mortgage to a commercial lender, it would be to your family member. It is important that any loan you take is documented with a loan agreement and if you wish to ensure that none of the property is available to creditors, that loan should be for the full value of the purchase price so there is no equity of your own in the property whatsoever. Providing the loan is properly documented and ideally, secured with a legal charge over the property in favour of your family member, the property would not be available for a claim by your creditors. The alternative approach is to assign the benefit of the contract to your family member, have your family member refund you any deposit you have paid and allow that family member to complete the purchase in their own name. This may be more difficult because you would need to obtain the permission of the seller in order to assign the benefit of the contract unless you have already negotiated determine the contract providing you with the right to assign the benefit of the contract. Standard residential purchase contracts prohibit assignments of the contract without the permission of the seller. If you were to obtain the permission of the seller and did this, then the property purchase would be made by your family member. They can allow you to live in the property or rent it out but the property would belong to them and so would not be available to creditors to claim against. The third way which you could approach the matter is by use of the trust. This is quite similar to the first option in my first paragraph above but rather than involving a legal charge, it involves the preparation of the trust deed which provides that you hold the property as legal owner as a trustee for your family member who actually paid for the property. This arrangement would also prevent your creditors claiming the property providing there is clear financial evidence that your family member did pay for the property but it is not really provide for a loan arrangement with your family member and if this is what is envisaged, the option in paragraph 1 is likely to be the better approach. I hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me I'd be very grateful
Customer: replied 2 years ago.

Probably the first option sounds easiest, but how do I get a loan agreement with a legal charge on the flat? Do I ask my family to engage a solicitor or can we draw one up ourselves and if so how is it registered on the deeds?

If there is to be no mortgage on the flat then you can either ask your solicitor to prepare a loan agreement and charge to support the agreement to register at the same time as your purchase (the cost is likely to be £350-500 + VAT) depending upon how competitive the solicitors fees are. Alternatively I would be happy to prepare documents you can use and which you can give to your solicitor to register at the same time as your to purchase. I would be happy to prepare the above for £190. Alternatively you could simply prepare a basic loan agreement yourself with your family member but it would not be underwritten by a charge would be sensible if there is a genuine risk of insolvency. An insolvency practioner would inevitably target the flat if you were made bankrupt and it would be vital to have robust legal documentation in place to properly defend a claim against it. A home made loan agreement may succeed but it may be a battle and if there is a defect it could fail. If I can assist any further with the above please let me know. I hope the above is helpful? Can I help you with anything else or has the above answered your questions satisfactorily? If you could drop me a quick message to let me know I'd be very grateful.
Customer: replied 2 years ago.


I will approach my solicitor and if the charge is significantly greater, I will get back to you. Please let me know how I would contact you if I need to ask you to draw up the documents.

Best wishes

Shane George

Of course. Please do. He will need to prepare a loan agreement and a charge deed - not just a charge. If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today. Your feedback is important to me. This will also save the thread to your account and you can return to it at any time either from a link you should have received by email or from your customer homepage.If all else fails, you can contact me using the below link which you can bookmark:
Joshua and other Property Law Specialists are ready to help you