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Equity release company demanding payment but one parent stil alive


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Guys, I'm asking about this for a friend so I'll try and give you the facts I have:

 

Friends Father dies ealier this year and on death Friend discovers Father had released equity over the previous few years on 3 seperate occasions with the same company (don't know their name yet).

 

The amounts were not huge but add up to roughly mid twenty thousands in total (I have asked for exact amounts).

 

Friend was surprised to find out he had done this but wasn't worried as Mother still alive, however, Mother was admitted to a full time (NHS) care home last month with dementia, Mother is non compus mentus.

 

Friend is now in receipt of letters from Equity Release Company demanding payment on sale of the house and they are adding interest until house os sold at what seems to be an alarming rate (don't know exactly but have asked for figure) as the debt is now according to the Equity Release Company up to £66k and rising.

 

Friend's brother is sole executor but has disengaged from situation and Friend is down as next of kin for both parents. It looks like Mother will not be coming out of care and is receiving end of life care but that coudl go on for some time by when the interest added by the Equity Release Company will take a considerable chunk, if not all of the value of the Mother's property.

 

Friend has been told by a solicitor (keeper of the will I believe) that she cannot sell the house or have 'power of attorney' to enable her to sell the house whiel her Mother is still alive as the Mother is not able to grant that in her current mental state.

 

I have told friend that they need to check the T&C of the Equity Release to see if there's a clause to pay them back if both parents are dead or in full time care - I'm guessing there will be the latter.

 

So, is this correct? Can they add interest until the house is sold? Any ideas on how Friend can get authority to sell the house?

 

I have suggested she join here to get advice direct but she has a lot on her plate at the moment so if I can explain things to her it might be easier for her to deal with them.

 

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I've no experience with equity release but have had some dealings with Power of Attorney (PoA).

 

The solicitor is correct that friend's mother can only grant PoA while she still has mental capacity. As it seems that friend's mother no longer has mental capacity a PoA is not possible. And obviously the Executor has no role in this because the mother is still alive.

 

I'm surprised solicitor didn't explain what the alternative is, applying to the courts for a Deputyship. Read up on that here  Deputies: make decisions for someone who lacks capacity - GOV.UK (www.gov.uk)  Then ask the solicitor if they think it's the best route to take.

 

Unfortunately applying for Deputyship is considerably more expensive, time-consuming, and burdensome than a PoA.

 

As a matter of interest who is paying the care home fees? How did they get authorisation to do that? 

 

 

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Homer, can you get hold of a scan of the equity release policy document please? As you say, the clue could be in there. I hope it's easy to obtain.

 

HB

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Illegitimi non carborundum

 

 

 

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How does the Equity Release company know that your friend's mother is not living in the house?

 

As others have asked, what do the T&Cs of the equity release document say?

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17 minutes ago, Manxman in exile said:

How does the Equity Release company know that your friend's mother is not living in the house?

Good point. And also wouldn't the equity release company have to know that friend's mother has permanently moved out into long term care? So they'd have to know enough information to assess her medical condition wouldn't they? People can go into care temporarily until well enough to return home, eg if they've broken their leg. So who gave them information on her medical condition?

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A General term on most of these polices......

If your friends father took equity release out with another co-owner, it works on a 'second death' basis. Meaning that the plan does not come to an end until the second owner passes away. You and your partner retain the right to live in the property until the last one of you dies or moves into long-term care.

For plans held in joint names, when one partner dies, it would typically be the surviving plan holder who contacts the lender to let them know. However, you are free to ask another person to do this at this difficult time.

The lender will write to the remaining plan holder requesting that the original death certificate is sent to them. This will typically be returned by recorded delivery. The lender will then note the death and no further action is needed.

The surviving plan holder may continue to live in their home, and the equity release plan will carry on until they pass, or move into long-term care.

 

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So what happens if the surviving plan holder goes into long term care and no longer has capacity to sell the house?  If there's no POA is it Deputyship?  Isn't that very expensive - and time consuming?

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I believe the Executor of the estate can deal with the sale....but a lot depends on who the policy is with, the T&Cs and what type of Equity Release plan (Joint Plan) ....which the OP is yet to advise.

 

Andy

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31 minutes ago, Andyorch said:

I believe the Executor of the estate can deal with the sale....

Although wouldn't that depend on the legal ownership status of the house Andy?  If the house was jointly owned ('Joint Tenancy') by friend's father and mother, commonly the case with married couples, wouldn't friend's mother automatically have sole/100% ownership  on death of friend's father? Hopefully OP can give us more information on this point as well.

 

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Absolutely....there are numerous details we are still not aware of....was it a joint mortgage....joint equity release plan..reading between the lines from the OPs post and I hope it is an error on behalf of the Equity Release Company...that Mother does not exist ?

 

Im sure Father couldn't hide this fact...but Ive seen stranger things happen.

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OK, thanks for the answers and it's clear that my friend needs to join and update the details you have asked for, I have sent her the link to this thread and suggested she joins.

 

I can answer the one about how the Equity Release Company know, the family solicitor told them about the death of the Father and the commital of the Mother.

 

The fees for the nursing home are being met by the NHS as it's an NHS resource (not particularly nice but the care seems to be ok).

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I can answer the one about how the Equity Release Company know, the family solicitor told them about the death of the Father and the commital of the Mother.

 

Then they are fully entitled to request payment/sale...as for any extortionate interest being applied then that would have to be checked with the T&Cs of the plan.

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So if mum owns the property but lacks the capacity to sell it and there's no POA, does that mean it goes to the Court of Protection?  Isn't that notoriously long-winded and expensive?  Exactly what the OP's friend does not need at this time... 

 

If I were the OP's friend I'd be asking the family solicitor - unless there's some conflict of interest - and I suppose there could very well be.

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I wouldn't think so T&Cs of the Equity Release Plan always stipulate clearly what will happen at the end of the plan....unless optional cover has been selected to avoid a sale.

 

 

 

 

.

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1 hour ago, Manxman in exile said:

So if mum owns the property but lacks the capacity to sell it and there's no POA, does that mean it goes to the Court of Protection?  Isn't that notoriously long-winded and expensive?  Exactly what the OP's friend does not need at this time... 

 

If I were the OP's friend I'd be asking the family solicitor - unless there's some conflict of interest - and I suppose there could very well be.

 

Yes, it would be the Court of Protection if OP's friend needs to get hold of mother's finances and be able to sell the house. It is long-winded, expensive and not what OP's friend needs at this time, but then again, no-one goes to the Court of Protection unless they have to and it's never at a good time.

 

That said, as part of the process of applying for deputyship, OP's friend would need to declare as much knowledge of what's in their mother's bank accounts and what they have in terms of assets, so knowing what the equity release plan covers would come under that anyway.

 

Chances are, OP's friend may have to go down the COP route anyway, but one step at a time, find out what's in those T&Cs before deciding what needs to be done next.

Any pearls of wisdom that I give on the CAG forums is based on previous experiences and knowledge I have gained from being on these forums.

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Hi the Mortgage was in both parents names. I notified them that my dad had passed and mum had gone in to a nursing home for palliative care,  so she will not be going back home. I have a year to sell the property with  3 monthly checks on progress

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Hi Lesley,

 

Do you have a concern about what is happening? Something you'd like support and advice on here?

 

Do you have the legal power to sell it now? In what capacity? Executor? Presumably your solicitor has advised you on this.

 

 

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Hi 

  Dad left everything to mum in is will so me and my brother can't sell whilst she is still alive as she doesn't have the capacity to give us permission.  My main concern is the Mortgage and the amount of interest it is accumulating ever day. 

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What happens if you don't sell within 12 months and what do the three month checks consist of?

 

(I think several previous posters have suggested it might be helpful to see the T&Cs of the equity release in respect of the situation you are in.  And what does your solicitor advise you do... ?)

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I don't have to T&Cs and wasn't even aware they had taken this out .

The 3 months checks are just a progress check to see how we are getting on with the sale of the house. 

 Solicitor advised to wait as mum was given a few weeks to live that was 8 weeks ago now and is doing ok at the moment.  

  Solicitor did say could apply for Deptoship but could take up to 2 years and is very expensive. 

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HI

 

Do you think there's a policy document amongst your parents' papers, Lesley? Or do you know which company the equity release is with and when it was taken out?

 

HB

Illegitimi non carborundum

 

 

 

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If you can get hold of this policy and check.... if its a Lifetime Mortgage there is no requirement to sell anything to the equity release provider, but you will have given them a legal charge over your home (like a mortgage) which will become repayable, together with accrued interest, when either die or move into a care home.

 

If its a Home Reversion Plan you have to sell part or all of your property to the equity release provider. In return, you will receive a lump sum or agreed instalment payments and retain the right to live in the property (rent free) for the rest of your life. Following a death, the property will be sold and the proceeds of sale used to settle your equity release debt.

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Is that the same solicitor who advised(?) the parents when they took out the equity release (or whatever it actually is)?

 

If so, he/she must know the terms of the arrangement and what can/can't be done in this situation?

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