FAQs For Solicitors
- > Do we have to give a financial undertaking?
- > What obligations does the solicitor have?
- > Can I recommend your loan service?
- > How does the loan process start?
- > How long does the process take to get the loan in place?
- > How much does the loan cost?
- > How is the interest calculated?
- > Does the client pay interest as they go along?
- > Do you agree the loan upfront for the whole case?
- > Is your loan a draw down facility?
- > Where does the money get sent to?
- > Does the client have control over how we use the money?
- > Do I need to report to you regularly?
- > Does the client need to take out life insurance?
- > Can the client pay the loan off in installments?
- > How long do they have to repay the loan?
- > Can they extend the loan?
- > Can the client repay the loan the early?
- > Do you need security for the loan?
- > Who registers the security over the asset?
- > Do they assign Novitas the proceeds of my divorce?
- > Does the H/W need to know about the loan?
- > Is the loan just to pay for solicitor’s fees?
- > What credit checks do you do?
- > What happens if they change solicitor?
- > Is the loan regulated?
- > Do you have a minimum/maximum lending amount?
- > At what stage can my client apply for a loan?
- > Does the client have to take independent legal advice?
Do we have to give a financial undertaking?
No; there is no requirement for a financial undertaking from the solicitor
What obligations does the solicitor have?
The solicitor signs a single document that has two undertakings.
- To repay the loan from any proceeds of the settlement that you receive before passing onto the client. The client gives you permission for this by signing a deed of assignment with Novitas
- To keep us informed of any material changes in the case. Material changes are defined in the agreement and can be sent on you on request for your review.
Can I recommend your loan service?
No; we should be presented as one of the options a client has rather than one that you recommend above any other funding route.
How does the loan process start?
The first stage is a conversation with you to understand the facts of the case. If we think we can loan, there is a short application form to complete. This can be downloaded from this website. Both you and the client must sign this application.
How long does the process take to get the loan in place?
Once we have received the completed loan application form and associated documents (listed in the application form), we will issue an offer in principle. The next stage is to meet and go through the legal agreements with you and the client. After that meeting, there is a 7 day wait before we send the actual legal agreement to sign (to be compliant under the consumer credit act). The whole process can be as quick as two weeks, but more likely takes about 4 weeks.
How much does the loan cost?
There are no costs or obligations until the loan contract is signed. When you take out the loan there are three charges (all of which are rolled-up into the loan):
- A one-off set-up fee of £500 or 1% of the loan amount if higher
- An interest charge calculated as a percentage of what you borrow. The interest is fixed for the term of the loan and is not affected by changes in interest rates or the cost of borrowing. The client therefore knows exactly what they will be paying for the term of their contract.
- Charge administration fee – cost to apply for a First/Second Charge or a Notice, this is £150.
How is the interest calculated?
Interest is calculated on a simple basis, i.e. there is no compounding of interest. We just take the annual interest rate, multiple by the loan amount and divide by the number of days that they have the loan for.
Does the client pay interest as they go along?
All the interest is rolled-up (as is the set-up fee and the Charge administration fee) so there is nothing to pay until the loan is settled. Because we do not compound there is no cost penalty for waiting until settlement.
Do you agree the loan upfront for the whole case?
We loan up to an agreed milestone, such as Form E or FDR. At that stage, we then review the case to see if anything material has changed. If everything still stacks-up we lend to the next milestone. The client just signs an addendum to their contract for the loan amount
Is your loan a draw down facility?
The money to that milestone is paid upfront into your client account
Where does the money get sent to?
The loan monies are sent to your client account in one payment.
Does the client have control over how we use the money?
Yes; you can only draw the money against invoices the client has approved. This gives the client protection in the event of a fee dispute.
Do I need to report to you regularly?
No; only communicate with us if you will require further funds or there is a material change in the case. We do not need regular reports
Does the client need to take out life insurance?
Not unless the loan is unsecured.
Can the client pay the loan off in installments?
No, the loan needs to be settled in a single payment.
How long do they have to repay the loan?
We agree a time period for each loan. In practice, this is often linked to an event such as the sale of the property or a settlement. So whilst we will put a time-period of say 6 or 12 months in the loan contract, we understand that this will need to be flexible to take account of your situation.
Can they extend the loan?
The loan will have an agreed term. We understand that it can be hard to predict when, for example, a house will sell to repay the loan. We aim to be flexible in understanding your specific situation and having a practical approach to when the loan can be repaid.
Can the client repay the loan the early?
Yes. There are no penalties for paying the loan off early. We calculate interest daily so the shorter time you have the loan, the less they will pay in interest.
Do you need security for the loan?
We look to take security where possible over UK assets. This is usually a property but may be shares or land. We will discuss the options with the client at the start and once the loan is repaid any charge is immediately removed. If a property is in joint names, we will need the consent of the other party for a legal charge. If this is not forth coming, we may also consider an equitable charge which does not need the consent of the other party.
Who registers the security over the asset?
Novitas will undertake the registration. If there is a mortgage, you / your client will need to contact the mortgage company to get written permission for Novitas to add a charge behind theirs on the property.
Do they assign Novitas the proceeds of my divorce?
Yes. The client assigns the proceeds of their settlement to Novitas. For example, any lump sum payments or proceeds from a property sale are used to pay the Novitas loan before being passed to the client.
Does the H/W need to know about the loan?
Yes; but only once the loan is in place unless we are requesting their permission for a legal charge over an asset which needs permission in advance. There is a letter they sign and send to their H/W once the loan is in place saying that they have assigned the proceeds of the divorce to Novitas to discharge the loan, after which all proceeds are returned to the client.
Is the loan just to pay for solicitor’s fees?
The loan is used solely to pay the solicitors fees and any disbursements.
What credit checks do you do?
We ask the client to provide a credit check from, for example, Experian. These can be done on-line and are one of the documents we ask for with the application form.
What happens if they change solicitor?
The loan is linked to you as you have obligations to Novitas under the agreement. If they wish to change solicitor we would need to be comfortable with the new solicitor before allowing the loan to be transferred.
Is the loan regulated?
Yes; the loan is regulated under the consumer credit act and the clients rights are fully documented in the loan agreement.
Do you have a minimum/maximum lending amount?
We have no maximum. Rather, when deciding on the amount to lend, we look at the specific situation of each case and make a decision on the amount we are comfortable lending.
At what stage can my client apply for a loan?
We are happy to look at very early stage lending, such as pre-Form E or at the First Appointment stage. We look at each situation and make a decision based on the facts at that point, regardless of where in the divorce proceedings things are.
Does the client have to take independent legal advice?
Yes; once they have the loan documents we ask that they take independent legal advice. This ensures that they understand the loan and the implications if they do not repay it.