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Statutory Charge

  • Pilotfield
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04 Jan 21 #515241 by Pilotfield
Topic started by Pilotfield
Is a house in negative equity an asset or a liability.

When my daughter divorced her abusive husband, individually they had no assets and each had substantial personal debts. Their house was in negative equity. There were two mortgages, one was interest only and the other a repayment type mortgage. As soon as the husband was removed from the house by the police, he stopped payment on both mortgages. My daughter was not working and had two young children and was unable to pay the mortgages. The interest only mortgage was then paid by housing benefit. The other mortgage was a repayment type mortgage and the monthly instalments on it then ceased.

At the end of the case a Statutory Charge was levied. This charge can only apply if the are assets in dispute. My question is whether a house in an ever-increasing amount of negative equity can be deemed to be an asset. I would have thought it was a liability and not an asset.

  • WYSPECIAL's Avatar
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04 Jan 21 #515248 by WYSPECIAL
Reply from WYSPECIAL
Whilst in negative equity it has no value as an asset but what will happen to house prices in the future is unknown.

  • Pilotfield
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05 Jan 21 #515256 by Pilotfield
Reply from Pilotfield
My point is that if there were no assets to be disputed, should the Statutory Charge have applied in the first place.

  • .Charles
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07 Jan 21 #515273 by .Charles
Reply from .Charles
The application of the Statutory Charge has changed over the years.

Previously it did only apply to issues in dispute and there was a free £2500 (then £3000) exemption but it later changed to exclude the exemption and to apply to more cases.

Based on the described case the Legal Aid Agency could have declined to register the Statutory Charge on the property and insist that it be paid back by instalments if necessary. However, in the absence of any funds the Statutory Charge was registered on the property on the basis that it was a preserved asset and the Charge would one day be worth something as property prices rise.

As the rates paid to legal aid solicitors is around a third of that paid to privately engage solicitors it would still represent a significant saving.


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