A legal charge allows a lender to protect the money they have lent to an individual or company. It is a legal document signed by the borrower which is registered against the property at the Land Registry to alert any potential buyer of the existence of the debt.
Although common types are mortgages from a bank or building society, parents who have lent money to their children to help purchase a property and wish for the funds to be repaid may wish to make use of a legal charge. Here, the legal charge would be tailored to the particular circumstances. This could include details on whether interest would be payable, whether there would be any monthly repayments or indeed whether the funds would be repayable on the sale of the property only.
Another family-based legal charge could be obtained in the form of a Mesher Order. A Mesher Order, sometimes known as an 'order for deferred sale', is an order for the family home to remain in the couple's joint names until a certain trigger event happens, at which point the property would be sold, the sale proceeds divided and a chargeback given to the person in favour of the Order, exercisable on the occurrence of specified events.
You may want to seek a Mesher Order if you wish to remain in the family home with your children but do not have the financial means to take over the mortgage on your own. This would usually mean the property cannot be transferred into your sole name and so you would need your former spouse to remain on the mortgage. This does not necessarily mean they will still have to contribute towards the monthly repayments.
Where there are no children, the court can still make a similar order for one party to remain in the marital home and thus postpone the sale, which is known as a Martin order. As with Mesher order, there is a trust of land and the parties hold the property as tenants in common in defined shares. However, under a Martin order, the resident party is given an entitlement to occupy the former matrimonial home for life or until re-marriage. A legal charge reflecting this trust position is entered on the Land Registry.