Q: Five years ago I lent my daughter a large sum of money to buy a property, on the understanding that she would pay me back when the property was done up and sold at a profit. Because of the recession, however, she couldn't sell the property to repay me, so last year she provided a mortgage on it in the interim to secure my loan by way of a charge. Now my daughter's husband has filed for divorce and his solicitors have applied to the Court to have my charge removed. Can they do this?
A: The short answer is yes, but under certain conditions. When applying for a financial settlement as part of divorce proceedings a husband or wife can apply to set aside a transaction made by the other, such as putting a property in another's name or granting a charge to the benefit of a third party, if certain conditions apply.
If such a transaction took place less than 3 years before the date of the divorce financial application and the court is satisfied that it is a transaction of matrimonial money or property, the court will presume that, unless proved otherwise, the person who disposed of the property did so with the intention of defeating the applicant's claim for financial settlement in the divorce.
Your son-in-law can therefore challenge the charge on your daughter's property as the charge was placed less than 3 years previously, and wasn't done at the same time as the money was lent. You and your daughter will need to provide evidence to the court that the charge was placed on the property for the good reasons that you have said, i.e. it was a genuine loan. It may be necessary for you to be joined in as a party to the application, therefore you should consult a solicitor for advice as soon as possible.
01/04/2013