Loan agreement questions

[Ellierk1]

Hi,

 

I had a few questions on loan agreements.

 

 

I was considering lending a large sum of money by virtue of a loan agreement (commercial purposes).

 

 

However, I am unsure as to its enforceability and I am concerned about this.

 

 

I was considering putting a clause under enforceability that enters into a secured loan agreement of property.

 

 

My question is that

 

 

how do I enforce this clause if for example, the borrower ends up selling the property without me knowing.

Will just mentioning the secured loan in the agreement be sufficient or do I have to take other steps?

[steampowered]

Hello - I've moved you into the General Legal Issues forum.

 

The answer to your question is that inserting a clause into your loan agreement will not be enough to create legally enforceable security over property.

 

There are two reasons for this. The first reason is that there are special legal formalities which need to be complied with in order to create a security interest in land - most importantly the instrument which creates the security must be executed as a deed, which has special signing requirements.

 

The second reason is that your security would need to be registered with the land registry, probably using form CH1. If you don't register your security, the borrower could sell the property without you knowing and pocket the cash.

 

It would be worth getting a solicitor to help you. Preparing a simple charge over land and registering that with the land registry shouldn't cost very much. The cost of this is often paid by the borrower or added to the loan amount.

[Ellierk1]

Hello - I've moved you into the General Legal Issues forum.

 

The answer to your question is that inserting a clause into your loan agreement will not be enough to create legally enforceable security over property.

 

There are two reasons for this. The first reason is that there are special legal formalities which need to be complied with in order to create a security interest in land - most importantly the instrument which creates the security must be executed as a deed, which has special signing requirements.

 

The second reason is that your security would need to be registered with the land registry, probably using form CH1. If you don't register your security, the borrower could sell the property without you knowing and pocket the cash.

 

It would be worth getting a solicitor to help you. Preparing a simple charge over land and registering that with the land registry shouldn't cost very much. The cost of this is often paid by the borrower or added to the loan amount.

 

Thank you so much for your kind reply. Appreciate the help!