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Thomas
Thomas, Lawyer
Category: UK Property Law
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Experience:  BA (Hons), PgDip, Practising Solicitor
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Hi there, I am buying a property with a partner as an investment.

Resolved Question:

Hi there,

I am buying a property with a partner as an investment. I am managing the refurb and they are funding the project and deposit. We intent to split any equity 50:50 at the end of the project.
To offer security for the money they are 'loaning' me I have agreed in principle that a 2nd charge be placed on another property in my own name, for the duration of the project and then removed.
My question is, what is the difference in this case between a property restriction and a 2nd charge? Is there a preferred option in this case or should I be doing something else entirely?
Thanks in advance :-)
Submitted: 1 year ago.
Category: UK Property Law
Expert:  Thomas replied 1 year ago.
Hi

Thanks for your patience.

It’s not a case of one or the other. The charge holder gets the second charge and this second charge is registered in the form of a restriction on the registered title for the property over which you are granting the second charge.

A “restriction” is the form of entry that the Land Registry makes on the registered title for a property when the title for the property cannot be transferred to another person without reference to the subject matter of the “restriction”. The Charge is the subject matter.

So, in the case of a charge (whether first or second) the charge holder wants to prevent the sale of the property unless they are repaid the monies owed under the charge. Therefore, they register the charge against the legal title for the property as a “restriction”.

The subject matter is the charge. The type of entry is the restriction.

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Kind regards,


Tom
Customer: replied 1 year ago.

Hi Thomas,


 


Thanks for your answer, would you know if we would need to do this via a conveyancer or can we just use an application form from land registry? Is it an ap1? Do you have a link/copy? Also would you know where I can get access to a deed of trust template?


 


Thanks again :-)

Expert:  Thomas replied 1 year ago.
Hi,

You could probably submit the applicaiton yourself via AP1, RX1 and CH1 which are all avialable for download from the Land Registry website, but I would urge caution.

You must get the consent of any lender with a first legal charge on your property before you grant the second charge.

You also need to protect yourself in terms of settting out in detail the terms on which the charge will be discharged. If things go wrong and there are grey areas then you coudl end up in litigation.

For this reason I would refer it to your solicitor.

Similaly with a declaration of trust, these are not things that I could advise in good conscience you to attempt to draft execute on your own. Again, a matter for your solicitor.

PLease remember to rate my answer.

Kind regards,

Tom
Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 6517
Experience: BA (Hons), PgDip, Practising Solicitor
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