Understanding the Equity Release Process: Key Considerations for Financial Advisers

When clients are looking to release equity from their homes, the process is often perceived as straightforward—after all, it’s their own property, purchased or inherited, and they are simply using the UK legal and conveyancing system to access the funds.

However, in practice, the equity release process can be more complex, with potential issues arising along the way. As financial advisers, it’s crucial to understand these potential obstacles so you can guide your clients through a smooth and efficient transaction.

At Adlington Law, we see many issues that could have been avoided with better upfront information or awareness. In this article, we’ll outline common challenges that can delay equity release transactions and explain how you can help your clients navigate them effectively.

The Steps in the Equity Release Process

Obtaining an equity release offer is just the first step. Here’s an overview of the typical process:

1. Adviser Consultation: Your client’s equity release adviser will begin by discussing the financial aspects of their application, including the lender submission and valuation report.
2. Offer Issue: Once everything checks out, the lender issues an offer. This is when the lender’s legal team will begin preparing the necessary legal documents, including a title examination.
3. Legal Paperwork: The lender will send the offer and legal paperwork to the client’s nominated solicitors, and copies will be shared with you as the adviser. This paperwork will include any special conditions designed to protect both your client and the lender’s interests.

At this stage, issues often arise, many of which can delay the process. Here’s a breakdown of the most common obstacles we encounter and how they can be avoided.

Common Problems and Delays

1. Name Irregularities
   One of the most common delays occurs when there is a discrepancy between the client’s legal name on the property title and the name provided in the equity release application. Even a minor difference, such as a misspelling, can cause complications.

Solution: Ensure that your client provides identification documents, such as a passport or driving licence, to confirm their correct legal name. If there’s a history of name changes (e.g., through marriage or a deed poll), the client will need to provide supporting documentation, such as birth certificates or marriage certificates, to clarify the name discrepancy.

Key takeaway: It’s important to address any name discrepancies upfront to avoid delays later in the process.

2. Divorce or Separation
   If the property is jointly owned and one party is no longer part of the relationship, there may be legal documents that need to be reviewed, such as a decree absolute, financial consent order, or separation agreement. These documents are crucial for confirming that both parties have received independent legal advice and that the transaction can proceed smoothly.

Solution: Ensure clients disclose any divorce or separation proceedings early in the process. Obtaining the necessary legal documents upfront can prevent unnecessary delays.

3. Multiple Restrictions or Charges on the Property
   Issues can arise when there are multiple restrictions or charges on the property title. This might include historic debts that have been sold to different financial institutions. Resolving these can take considerable time.

Solution: Encourage your clients to carry out a credit check to identify any restrictions or charges early in the process. If your client is aware of any such issues, ensure they provide relevant documents, such as court orders or old correspondence, so the solicitors can begin the necessary investigations.

4. Deceased Proprietor or Probate Issues
   If a property owner has passed away, probate must be granted before the equity release transaction can move forward. Without the appropriate documents, such as the death certificate, grant of probate, or the deceased’s will, the process cannot proceed.

Solution: Clients must provide these documents at the earliest opportunity. If probate has not been granted, it may be necessary for a solicitor to apply for it on your client’s behalf.

5. Property in Trust
   If a property is held in trust, it can complicate the equity release process. The property must be removed from the trust before any equity release can take place. This often requires obtaining the original trust documents and liaising with the trustees and beneficiaries.

Solution: Clients should provide the original trust documents as soon as possible. If any trustees or beneficiaries have passed away, you’ll need to provide their death certificates and probate documents as well. Keep in mind that dismantling a trust is a complex and time-consuming process, and it may require independent legal advice for all involved parties.

Best Practices for Financial Advisers

1. Communicate Early and Often
   Ensure that your clients are fully aware of the information they need to provide before starting the equity release process. Early communication can help prevent delays later on.
2. Encourage Full Disclosure
   Advise your clients to disclose any personal circumstances that might affect the property title, such as previous name changes, divorce, or the involvement of a trust. The more information your client provides upfront, the easier it will be to address potential issues.
3. Work with Specialist Solicitors
   Equity release transactions are unique and require specialist knowledge. Working with solicitors who are experienced in equity release, like those at Adlington Law, can help avoid delays caused by misunderstandings or unfamiliarity with the process.
4. Monitor the Process
   Stay engaged throughout the process to ensure that your client’s case progresses smoothly. Keep track of the documents needed and any legal or procedural steps that may arise.

Conclusion

The equity release process involves several legal steps, and potential obstacles can arise at various points. By understanding these common issues and proactively addressing them with the help of specialist solicitors, you can help your clients navigate the process more smoothly and avoid unnecessary delays.

As a financial adviser, you play a vital role in ensuring your clients provide the necessary documentation and communicate any potential issues early. By partnering with experienced legal professionals, such as Adlington Law, you can help your clients achieve their financial goals in a timely and efficient manner.

If you have any questions or concerns about equity release cases or legal issues that could affect your clients, don’t hesitate to consult with a specialist solicitor. We’re here to help ensure that the process goes as smoothly as possible.