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What are we each entitled to in our divorce settlement?

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The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

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Legal fees waived until house sale question

  • cakey101
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19 May 21 #516753 by cakey101
Topic started by cakey101
Hello,
I wonder if anyone can help. I am assisting an elderly relative. She owns her home and the mortgage is all paid for.
I don't know the legal terms.
In the mid 80s she got divorced. As she was a housewife then, she had few funds. Her husband agreed she could have their home as she had two children. However, she was unable to pay the legal fees.
The solicitor had her sign a form waiving the fees until the house was sold in the future. The solicitor or company is still in operation.
I have not found any information online regarding anything like this.
Does anyone know what usually happens in such circumstances?
Can the solicitor be paid before a sale? Will the solicitor be able to force a sale should the lady pass on?
And so on..
Many thanks

  • .Charles
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19 May 21 #516761 by .Charles
Reply from .Charles
It sounds as though this is the Legal Aid Statutory Charge which is a method of deferring repayment of legal fees when a person is in receipt of Legal Aid.

The Solicitor would have acted for your relative under a legal aid certificate and at the end of the case they would have completed a form to defer the legal fees by registering the Statutory Charge against the property.

That form was ADMIN1 for many years but in the mid-80s it was, from memory, possibly a CLA36. That's the form which the solicitor would have completed and the person in receipt of legal aid would have signed.

The form would allow the legal aid board/Legal Services Commission/Legal Aid Fund to register a legal Charge with the Land Registry.

If the property is sold the Charge is redeemed after the mortgage, if there is one. The rather dry legal definition is here: www.legislation.gov.uk/uksi/2013/503/regulation/10

The solicitor would have been paid long ago by the Legal Aid Board and they will not have any interest in (or records for) the matter as it was so long ago.

The financial order will make reference to the property being "preserved" for the use by your relative and there will be a reference to the legal aid act (I forget the exact wording, it was around 2005 when I last saw the wording).

A Charge registered on the property will incur interest which, again from memory, was around 12% at some point but dropped to 8% and possibly was lower at some point. That interest is a simple, not compound rate, calculated on the original sum outstanding. If some is paid off, this discharges interest first then the capital sum and interest is then applied annually.

Normally there would be a contributions order for repayment would in the mid-80s the need to preserve the legal aid fund was not really observed so things were done in a very fast and loose style.

Charles

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20 May 21 - 20 May 21 #516766 by cakey101
Reply from cakey101
Many thanks for your response.
She has not received any letters from the LAA over the years about repayments.
What would happen should she pass on? Is there a right for a sale of property?
To sort this out, what would you recommend be done and who to contact?
Last edit: 20 May 21 by cakey101.

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20 May 21 #516767 by .Charles
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When a person dies their estate is administered either by executors under a Will or by administrators who would normally obtain letters of administration which would allow them to deal with companies and authorities.

Normally all property is sold and liabilities are paid which would include the Charge registered by the Legal Aid Board. Once the property is sold, the proceeds of sale will be used to redeem the Charge and the remainder will fall into the estate and distributed in accordance with the terms of the Will or the rules of intestacy.

As to what to do next, it depends what the goal is. Currently the Charge will stay put and will increase due to the interest. If the Charge is to be paid off, a lump sum would have to be obtained from somewhere if the property wasn't being sold. The amount required to redeem the Charge will have to be calculated up to the date of intended redemption and this leaflet should give some idea of the process.

assets.publishing.service.gov.uk/governm...egal_Aid_Leaflet.pdf

Charles

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20 May 21 - 21 May 21 #516772 by cakey101
Reply from cakey101
Thanks again.
One other question. She has no records of any of this (as far as she knows). Is there any way to find out if she has the statuary charge? Online documents etc.?
Edit: I saw on another site a claim that you can find details of any statuary charges in Land Registry Official documents. The link for the documents is here: www.gov.uk/search-property-information-land-registry
For £3 you can download the document which I did. It did not seem to show anything regarding statuary charges.
Would this document show the statutory charge she may or may not owe? The charges register from the document with redacted names and dates can be viewed here:
www.dropbox.com/s/6g4h3eibiqox3w0/Screen...%2023.27.56.png?dl=0

Thanks.
Last edit: 21 May 21 by cakey101. Reason: more info

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21 May 21 #516775 by .Charles
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It certainly doesn't look as though there is a Charge registered.

It seems odd that there is no record so I shall proceed as though Legal Aid was provided, the Statutory Charge applies, the repayment of fees was deferred and the liability continues to exist.*

In the past I have dealt with files where the Statutory Charge couldn't be registered as a Charge as the property was held in joint names (typically where a couple separates, the property is in joint names due to the mortgage and the Charge cannot be registered as it would require the signature of both parties on the ADMIN1/CLA36).

As there is a Housing Association in involved it might be that they would not sign the form, as they are not bound by the Court order and do not have to cooperate in protecting the Legal Aid Board's interest.

In those circumstances the best the Legal Aid Board could hope for is to register a restriction against the property. This would alert the Legal Aid Board to any possible conveyance of the property as and when that time came.

I'm not sure if it is possible to search for a restriction or if it appears on the Land Registry search (conveyancing is very much *not* in my wheelhouse of law).

It would be possible to contact the Legal Aid Agency to see if there is a charge registered but they would need a legal aid certificate number which, from the 80s, would be would look like this '06 01 123456 F'

Charles

*It may be the case that the fees didn't have to be paid as there was no recovery of preservation. A recovery exists when public funding (legal aid) is used to successfully gain money or assets as a result of proceedings. A preservation is the reverse where public funding is used to preserve money or assets that another party might seek for themselves in proceedings. In days gone by a divorcing couple would each own half of a property in dispute. If the property was divided by Order 60:40, the person with 60% would have recovered 10% more than their entitlement and this would be the maximum amount the Legal Aid Board would have sought to recover e.g.

£100,000 Value of property
£60,000 Amount of property awarded in Court Order
-£50,000 Less amount of entitlement before proceedings
£10,000 Amount to which the Statutory Charge applies

If the costs were over £10,000, the amount the be paid to the Legal Aid Board would be capped at £10,000. If the costs were under £10,000 the assisted person would only pay the amount of the costs.

In the following example, there would be nothing to pay

£50,000 Value of property
£27,500 Amount of property awarded in Court Order
-£25,000 Less amount of entitlement before proceedings
£2,500 Amount to which the Statutory Charge applies
-£2,500 Less Statutory Charge exemption
£0.00 Amount to pay

That's a gross over-simplification as there was an exemption on the first £2500 recovered/preserved although the operation of this was a little sketchy and the application of the Statutory Charge became more aggressive on as it became obvious that Legal Aid was draining the government's coffers at an alarming rate.

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