When you borrow money from a Bank or other lender they will invariably take a charge over your property to protect their ‘investment’.
Types of charges commonly used in Jersey
Charge over Freehold, Flying Freehold (or leasehold)
If the property is a freehold or flying freehold then the Bank will secure its loan by means of either (i) a simple conventional hypothec (‘HCS’), or (ii) a bond or acknowledgement of indebtedness registered in the Royal Court (hypothec judicaire or ‘HJ’). The HCS and HJ are both versions of Jersey mortgages.
Once you sign your offer letter from the Bank (sometimes called the facility letter) the Bank will instruct its lawyer to draft the legal documentation. To avoid any hold ups with the purchase completion date, it is important to ensure that you return your signed offer letter back to the Bank as soon as possible.
As soon as we receive the Banks security documents we will endeavour to send the documents to you as soon as possible to give you time to read over prior to our meeting. We will of course answer any questions you may have when we meet.
You should bear in mind the requirements of the Bank in relation to an HJ (freehold or flying freehold property). The Bank will require that the HJ is renewed within 10 years of the initial registration. You will be required to sign an irrevocable authorisation permitting the Bank to do this on your behalf. You will incur additional costs if and when a re-registration is required.
It should also be noted that in addition to the documentation that you will be required to sign, Parslows will also be required to provide a certificate of title to the Bank.
In essence this document will declare to the Bank that the property you are buying is suitable for a charge to be registered against it.
This certificate will require us to confirm that the title to the property is satisfactory; that the relevant consents from the various States departments are in force (e.g. Housing consents); the various search letter replies are satisfactory.
We are obligated to disclose any material adverse factors affecting the property, and the company and the shares in the case of a security interest.
Payment of Stamp Duty
Please note that a loan secured against freehold or flying freehold property will attract stamp duty. This is in addition to the duty or tax that you will pay to purchase your property. You may qualify for reduced stamp duty if you are a first time buyer.
You will need to pay into our clients’ account cleared funds for stamp duty (if any) in cleared funds prior to completion.
Payment of proceeds of loan
HCS or HJ – your loan is usually paid by the Bank on the Tuesday following registration.
Please remember that your loan will not be provided gross. The bank and its lawyer will in most circumstances deduct its fees and charges prior to transfer (unless you have arranged otherwise).
Funds which arrive in our account too late on the day in question to forward them on will be dealt with the next day. We cannot influence the speed of the banking system. In some circumstances this may involve you in having to account for a day’s interest.
Jersey HJs require re-registration after 10 years. As such when you sign the relevant banking documentation you will be required to enter into a document giving the bank permission to re-register the charge over your property at that point in time.
How Parslows can help
Parslows conveyancing and property team provide an exceptional service to all our clients, whether you are a first time buyer or some way up the property ladder.
Our conveyancers and property lawyers are focused on providing you with expert residential conveyancing advice with a truly personal service.
We advise on all aspects of property law: whether it be advice on private loans, financing, off plan and building contracts or option agreements, landlord and tenant advice or regulatory advice we can assist.
Our clients are pleased with our service and fees, we are confident you will too.
For further information or a fixed fee for your conveyancing work please do not hesitate to email us at firstname.lastname@example.org or call 630530;
The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, We are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it