Q - My husband's business has cash flow problems and the Bank have agreed to provide an overdraft facility subject to my giving them a charge over our house as security. I am happy to do so but the Bank say I must take legal advice. What's all the fuss?
A - The Bank require that you are given advice so that, if you sign the charge document, you will not later be able to claim that you are not legally bound by it. This will give the Bank a first charge over your home as security for all " all monies" owed by the business to the bank from time to time. This would include the initial overdraft facility and any further monies borrowed or guarantees given by the business (even if you are not aware of the same) together with interest, costs and fees due on those monies.
You could lose the property if the business does not prosper or if the borrowing is increased unwisely as the Bank can enforce the security by taking Court proceeding to evict you from the property to obtain repayment.
It is vital therefore that you assess the risks of the business failing and take legal advice before signing the security document.
If you require any further assistance please contact Keith Swan of Patterson Glenton and Stracey Solicitors on 0808 231 7043.
