Equity release has come a long way in recent years with interest rates sometimes reducing to more acceptable levels and introducing the possibility of caps on repayment amounts (inheritance protection). However, it is still a complicated and risky area and we normally only provide this service for established clients of the firm where we have had knowledge of your family and circumstances for a number of years.
Our procedures – can we act?
We may be prepared to act for you on an Equity Release but due to our professional obligations might have to refuse to do so in certain circumstances. For this reason we will wish to arrange two meetings with you. The first meeting will take about half an hour and will be solely to establish whether we are willing and able to act for you in all of the circumstances. You will be charged for our initial advice even if we decide that we cannot continue to act for you.
If we are prepared to act we will a second meeting perhaps two or more weeks later, to go through the paperwork and obtain signatures. We may write to you between those meetings, setting out our advice on the terms of the loan and other matters and requesting any further information of paperwork that you will need to bring with you to your second meeting.
Before you instruct us you must take proper independent financial advice on whether doing so is right for you. You should consider the matter very carefully and be prepared to explain to your solicitor why it is appropriate for you in all of the circumstances. There are lots of things to consider here and this exercise should not be undertaken lightly. We cannot act unless this advice is taken by you and it recommends the product as being suitable for your needs in your personal circumstances.
The Equity Release Council recommends that the financial advisor discusses thoroughly various matters with you in addition to carrying out a full fact find and preparing suitability report for you. Click here to see them.
The Equity Release Council has guidance on Equity Release products and a procedure which is designed to protect you. We do not provide advice on unregulated mortgage products outside of their scheme.
Legal Advice – what is the solicitor’s role?
Our role is to advise you on the terms and conditions of the loan, its long term nature and to make sure that you understand what you are committing yourself to legally. We must also be satisfied that there is no undue influence or duress to enter into the loan, such as from family members who wish to benefit from their inheritance before you die. Making such gifts can often change the relationship between family members irreparably and leave the donor in a difficult position if they need financial or other support later on.
There are many types of Equity release loan and unlike mainstream capital repayment mortgages, their terms and conditions can vary significantly. For that reason, this is specialist advice.
Your equity release lender will rely upon our advice and will have their own legal advice to ensure that there is no conflict of interest – after all, these loans are highly profitable for lenders and brokers and to protect themselves they will want to make sure that you are entering into the loan for the right reasons and with full understanding of the consequences. . Since you will have been separately represented, you will be unlikely to be successful in later claiming that you did not understand the obligations you are accepting.
Our advice will (depending on the type of product) include the information contained in a ‘SHIP’ certificate given by us to the lender. An example of that certificate is here. You should consider the matters contained in it carefully.
We also assist the lender’s solicitor with any procedural elements of the transaction – in investigating the title to your property, carrying out any required searches and preparing the application to the Land Registry. On completion, we will receive the money and pay it to you and if necessary, to other parties to redeem any existing loan(s) secured against your property.
If you would like to proceed with an Equity Release or need further information to help you decide then please do not hesitate to contact us, we are here to help.
About the author
Adam Corcoran is a Solicitor and Director of Donnelly & Elliott. He has advised clients in respect of residential property transactions for nearly fifteen years and has experience of wills and probate and other matters enabling him to give knowledgeable advice and assistance.
Donnelly & Elliott Limited Solicitors
38 Stoke Road
02392 505 500
Article published February 2017
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