Challenging valuation of property under CRAG

[sue38]

When I say 'joint owners' I mean either tenants in common or joint tenants.

Seeking and registering a charging order against one owner's interest in a property that is owned by more than one person is a very technical area, and one on which professional legal advice should be sought, but as far as I'm aware joint tenants or tenants in common makes no difference.

 

[vernumamy]

When I say 'joint owners' I mean either tenants in common or joint tenants.

Seeking and registering a charging order against one owner's interest in a property that is owned by more than one person is a very technical area, and one on which professional legal advice should be sought, but as far as I'm aware joint tenants or tenants in common makes no difference.

Hi Sue38,

I will give you an example.

You and I are unrelated work friends who buy a house together as tenants in common on a 50/50 basis.

The property is worth £100,000, £50,000 owned by you and £50,000 owned by me.

I get a charge registered by the local authority for non payment of a bill, they place a charge on the property of £50,000 to cover the debt.

The house market crashes and the property is now only worth £80,000, we have to sell.

However the £50,000 charge registered, kicks in, and you the innocent party only receive £30,000.

In a house worth £80,000, you have a 50% share and I have a 50% share, both worth £40,000 each.

You have just had £10,000 taken out of your share, to cover part of my debt.

When three or four unrelated friends own their house as tenants in common, they will be objecting to any charge order caused by somebody else, from covering any part of their %.

 

[Kevinl]

Hi Sue38,

I will give you an example.
You and I are unrelated work friends who buy a house together as tenants in common on a 50/50 basis.
The property is worth £100,000, £50,000 owned by you and £50,000 owned by me.
I get a charge registered by the local authority for non payment of a bill, they place a charge on the property of £50,000 to cover the debt.
The house market crashes and the property is now only worth £80,000, we have to sell.
However the £50,000 charge registered, kicks in, and you the innocent party only receive £30,000.
In a house worth £80,000, you have a 50% share and I have a 50% share, both worth £40,000 each.
You have just had £10,000 taken out of your share, to cover part of my debt.
When three or four unrelated friends own their house as tenants in common, they will be objecting to any charge order caused by somebody else, from covering any part of their %.

I can't see that being right, although I've never looked into it, what happens if they run up £100k of debt, do you get nothing? I always understood no one was liable for someone else's debt in this country, maybe someone has been told that and gone along with it but I can't see it standing up in court, But as I say I don't know for sure.
K

 

[Kevinl]

This is also interesting. You may already know about it.

http://www.ageuk.org.uk/Documents/E...rmanent_care_home_provision_fcs.pdf?dtrk=true

Two interesting quotes from section 5 of Clover's link:
"Where a care home resident is joint owner of a property the local authority has to base its valuation on the sale value of the resident’s beneficial interest in the property to a ‘willing buyer’ on the open market. The local authority should not simply assess the value of the property as a whole (or equivalent properties) and then divide it up into the shares owned to achieve an assumed valuation for the means test; and then assert that this is the true value of the beneficial interest."
"The Local Government Ombudsman has previously suggested that a local authority should have ‘significant evidence or opinion giving it reason to disagree’ when refusing to accept that an interest in jointly owned property had a low or nil value".
Would someone who has been "misled" albeit accidentally by the SS have a claim against them for the loss they have incurred?
K

 

[WILLIAMR]

Two interesting quotes from section 5 of Clover's link:
"Where a care home resident is joint owner of a property the local authority has to base its valuation on the sale value of the resident’s beneficial interest in the property to a ‘willing buyer’ on the open market. The local authority should not simply assess the value of the property as a whole (or equivalent properties) and then divide it up into the shares owned to achieve an assumed valuation for the means test; and then assert that this is the true value of the beneficial interest."
"The Local Government Ombudsman has previously suggested that a local authority should have ‘significant evidence or opinion giving it reason to disagree’ when refusing to accept that an interest in jointly owned property had a low or nil value".
Would someone who has been "misled" albeit accidentally by the SS have a claim against them for the loss they have incurred?
K

Hi Kevin

The people I helped were initially told they would have to sell the houses which were jointly owned.
Some may have taken the word of the council.
I think the council would try and say the other joint owner took the decision to sell and the council was entitled to a share of the proceeds.
A daughter was told by a social worker she would be living in a 6 bedroom house on her own and this was not reasonable.
Knowing the council could do nothing about it she just refused to sell and continued to live in the house and waited till her father died.
She stayed in the house until her father died, got probate and the house was sold about 6 months after his death and she purchased a smaller bungalow and presumably using the proceeds to enjoy her retirement.
Some people may say this is morally wrong but she has not acted unlawfully.

William

 

[WILLIAMR]

Hi Sue38,

I will give you an example.

You and I are unrelated work friends who buy a house together as tenants in common on a 50/50 basis.

The property is worth £100,000, £50,000 owned by you and £50,000 owned by me.

I get a charge registered by the local authority for non payment of a bill, they place a charge on the property of £50,000 to cover the debt.

The house market crashes and the property is now only worth £80,000, we have to sell.

However the £50,000 charge registered, kicks in, and you the innocent party only receive £30,000.

In a house worth £80,000, you have a 50% share and I have a 50% share, both worth £40,000 each.

You have just had £10,000 taken out of your share, to cover part of my debt.

When three or four unrelated friends own their house as tenants in common, they will be objecting to any charge order caused by somebody else, from covering any part of their %.

Hi Again Kevin

I could see another side to this.
A house could be worth £100k at the time court proceedings were started.
The debt could be 50k.
If the market suddenly crashes the house may have to be sold for £80k.
The creditor may argue if it had been sold earlier he would have recovered the amount he was owed.
I doubt if this would stand up in court however as there would be no conclusive proof the property would have sold for £100k.

William

 

[vernumamy]

I can't see that being right, although I've never looked into it, what happens if they run up £100k of debt, do you get nothing? I always understood no one was liable for someone else's debt in this country, maybe someone has been told that and gone along with it but I can't see it standing up in court, But as I say I don't know for sure.
K

Hi,

This is my point, there is a difference between joint owners and tenants in common, but my understanding is that a charge can be put on if joint owners, but not if tenants in common.

I believe there is a restriction that can be put on but not a charge order.

However as sue38 mentioned, it is a technical nightmare.

 

[sue38]

Unless all owners (whether tenants in common or joint tenants) consent to the charge then it will not be registered as a legal charge. That doesn't stop a creditor from seeking a charging order against one owner's beneficial interest in the property.

In the example you mentioned earlier where a group of friends own a property, the debts of one would not be paid out of the others' share, unless they had consented to a legal charge.

I think this thread is going a little bit off topic . The point is that if (and that's a big if) the LA could establish a value of the person in care's share of the property, then they could seek to enforce the debt against their share, even if the property is owned as tenants in common.

 

[Kevinl]

A specialist solicitor has advised to just keep going back with the same point and I will go through the LA complaints procedure and then the local govt ombudsman if needed.

I think from all that's been posted here the solicitor seem to have given you some good advice. As long as you own half the house and don't want to sell then your Mother's half has Zero value, however the LA aren't likely to give in too easily so as you've been advised just keep making the same point over and over and escalating through the complaints procedure.
I've no idea what the implications for the LA would be if you prove the point, would they have to stop using this line, refund everyone they have taken money from in this way, I somehow doubt they'd want to test it in court from the look of things.
K

 

[WILLIAMR]

I think from all that's been posted here the solicitor seem to have given you some good advice. As long as you own half the house and don't want to sell then your Mother's half has Zero value, however the LA aren't likely to give in too easily so as you've been advised just keep making the same point over and over and escalating through the complaints procedure.
I've no idea what the implications for the LA would be if you prove the point, would they have to stop using this line, refund everyone they have taken money from in this way, I somehow doubt they'd want to test it in court from the look of things.
K

Hi Kevin

With regard to refunding money to tenants in common owners I think it may cause difficulties and disputes if past cases came up.
Somebody may have sold on the wrong advice of a social worker and divided the proceeds.
As a result cash was available to pay the fees.
He may come back and say if I had been given the correct advice I would have not sold till after the residents death particularly if a son / daughter was living in the property.
Would this show in the notes of meetings?. If it did how long are these notes kept for?.
If it was not noted they could try asking the social worker but he or she may have moved on or may not remember.

That said I do know of 2 cases where offspring had their own property and also owned half of the parents bungalow on a tenants in common basis inherited from the deceased parent.

When the parent went in to care they told the council they were not selling and sold their own house and moved in to the parents bungalow and got full title when the second parent died.

Some people may say this was immoral but it was not unlawful.

I know these offspring were in their 60's and were also thinking within a few years they would like a bungalow anyway.

William

 

[Roysie]

CRAG valuation

Is this still an issue for people? We are having issues with the local authority and valuation of the beneficial interest in jointly owned property.

 

[jenniferpa]

Is this still an issue for people? We are having issues with the local authority and valuation of the beneficial interest in jointly owned property.

Roysie - I think you might be better off starting your own thread.

If you click the following link that will start a new thread in this forum.

http://forum.alzheimers.org.uk/newthread.php?do=newthread&f=60

 

[Prudence]

Hi Roysie

My dad died leaving his portion of the house to his children, my mum subsequently had to go into a care home. We could not find an estate agent to provide a valuation of the beneficial interest as per CRAG and upon advice from age UK requested the LA to obtain one. The LA appear to have disregarded mums share of the house and are funding her care. However this has taken 6 months and I have yet to receive anything in writing regarding the disregard. We are renting the house out and the LA are taking mums share of the rent into account in their assessment, our share goes to pay the top up fees.

Age UK Provide a factsheet, Factsheet 38April 2015 , they were also very helpful when I contacted them. One surveyor I contacted had not heard of the CRAG guidelines and accused me of trying to defraud the council, I pointed out it was the council who were not following the Government guidelines and sent him a copy of the fact sheet.

I hope this helps.
P

 

[Roysie]

Thanks for that. Our Council is taking the opposite view. We asked for an assessment in September 2010. The Council said that she owned half a house therefore no contribution from them. The house was in joint names and had been since 1980 when it was bought. When i waved CRAG in front of them they said that because it was rented out CRAG 7.017-7.020 did not apply. The Ombudsman has twice found them at fault for not commisioning a valuation. In November 2014, 21 months after the resident died, they got a report which estimated that there would have been a market for half a house in 2011 and therefore the valuation stands. Our argument is that if the valuation had been done in 2010/11 we could have tested the market to see if it did have a value. Has anyone any information or help that would be useful? The resident was paying all of her income to the care home but a debt was mounting up and the care home is now threatening to sue her estate for the debt which her estate cannot meet. (This is a very truncated version of the events of the last four and a half years).

Hi Roysie

My dad died leaving his portion of the house to his children, my mum subsequently had to go into a care home. We could not find an estate agent to provide a valuation of the beneficial interest as per CRAG and upon advice from age UK requested the LA to obtain one. The LA appear to have disregarded mums share of the house and are funding her care. However this has taken 6 months and I have yet to receive anything in writing regarding the disregard. We are renting the house out and the LA are taking mums share of the rent into account in their assessment, our share goes to pay the top up fees.

Age UK Provide a factsheet, Factsheet 38April 2015 , they were also very helpful when I contacted them. One surveyor I contacted had not heard of the CRAG guidelines and accused me of trying to defraud the council, I pointed out it was the council who were not following the Government guidelines and sent him a copy of the fact sheet.

I hope this helps.
P

 

[CLAIREDAY]

Thanks for that. Our Council is taking the opposite view. We asked for an assessment in September 2010. The Council said that she owned half a house therefore no contribution from them. The house was in joint names and had been since 1980 when it was bought. When i waved CRAG in front of them they said that because it was rented out CRAG 7.017-7.020 did not apply. The Ombudsman has twice found them at fault for not commisioning a valuation. In November 2014, 21 months after the resident died, they got a report which estimated that there would have been a market for half a house in 2011 and therefore the valuation stands. Our argument is that if the valuation had been done in 2010/11 we could have tested the market to see if it did have a value. Has anyone any information or help that would be useful? The resident was paying all of her income to the care home but a debt was mounting up and the care home is now threatening to sue her estate for the debt which her estate cannot meet. (This is a very truncated version of the events of the last four and a half years).

Hi Roysie

I think as your case is not straight forward you need to get legal advice.
You can see in my recent post the LA tried to say I had no title to the house as my name was not on the land certificate when my father was admitted to the hospital with dementia.
This was because my mother had passed away and her half of the house was willed to me but my father was the named executor and I was the executor had my father not been alive.
I had to apply for permission to be the executor which took some time to obtain which was the reason my name was not on the land certificate as my father clearly did not have the capacity to be the executor.
Unfortunately councils are short of money and I think they are using any anomaly to try to avoid paying and hope that people will not take the council to court.

Claire

 

[realist1234]

I think the LA is correct in valuing this lady's mother's share in the property as 50%. The issue is whether or not they could get a 'willing buyer' to buy 1/2 a property. As per the Crag guidance, as this is highly unlikely, the LA's option is to accept a lower offer from the co-owner of the property. But I do wonder if the LA can, legally, opt to wait for whatever number of years until the property as a whole is sold on the open market by this lady, and then reclaim the full 50% share? I recently sold my mum's house which was similary owned as tenants in common with her and the children, following my dad's death. The only reason we felt we had to sell was for the family to be able to use our share to pay the expensive top-up fees for my mum's care home which cost more that £5000 per year. We never thought we would end up paying £'000s for our parents care! Given that most homes are now privatised, the vast majority charge a top-up.

Just because they've always done it that way, doesn't mean they have been doing it correctly, as you recognise.

How anyone can look at 7.019 and say the value should be split in half is beyond me. I don't envy you being a trail blazer over this, but somebody has to be I suppose.

If you haven't you also might want to push the relevant section of the underlying law (National Assistance (Assessment of Resources) Regulations 1992 ) 27(2)

 

[CLAIREDAY]

I think the LA is correct in valuing this lady's mother's share in the property as 50%. The issue is whether or not they could get a 'willing buyer' to buy 1/2 a property. As per the Crag guidance, as this is highly unlikely, the LA's option is to accept a lower offer from the co-owner of the property. But I do wonder if the LA can, legally, opt to wait for whatever number of years until the property as a whole is sold on the open market by this lady, and then reclaim the full 50% share? I recently sold my mum's house which was similary owned as tenants in common with her and the children, following my dad's death. The only reason we felt we had to sell was for the family to be able to use our share to pay the expensive top-up fees for my mum's care home which cost more that £5000 per year. We never thought we would end up paying £'000s for our parents care! Given that most homes are now privatised, the vast majority charge a top-up.

Hi realist

I think there would have to be a change in the law.
Some sort of charge would have to be put on the property and it does say on the land certificate I have got in front of me, No sale, transfer or charge to be given without the consent of all owners all owners being myself and my father. I would not have given my consent for a charge to be put on the house.
From a practical point of view a friend inherited a bungalow from her parents 10+ years ago and the LA could not sell it when her mother went in to care as she was a joint owner.
She now has the full title and since her mother's death the bungalow has had a kitchen extension, new bathroom, rewire, garage built on the side and a new roof to my knowledge.
I know the mother was in care for 3+ years so I would imagine the fees would have been substantial.
If the LA was entitled to take half the sale proceeds they would be taking some of the daughter's money as the bungalow must be worth more now than what it was when the mother was in care.

Claire

 

[blueand white]

I thought the burden of proof was on the LA to prove that there was a willing purchaser and thus they would have to engage someone to conduct the valuation? However, I can see why they wouldn't since it's not in their interests. I've not heard of anyone getting to this stage recently (there was someone about 6 years ago, but they haven't posed since and I think in their case the LA ended up caving with the valuation). Good luck and do keep us posted.

hi I'm just starting to explore presenting a rics certified valuation of my mothers 50% share of her property to the LA, up until consulting a solicitor on the matter the only guidance the LA has given is that the whole property will need a full market valuation of which on sale half will be used against my mums care fees, although the LA referred us to age concerns factsheet 38 they've made no reference to the guidance that seems relevant to us under section 7 of crag which factsheet 38 basically explains. I'm left very confused do LA's operate outside the guidance? Is the specific government guidance not relevant? can it simply be ignored?
I should explain my father has recently passed away, while he was in hospital my mother who has Alzheimer's went into care, my parents were tenants in common. My fathers will splits his share of the house between his 4 children with me having a right to purchase the house/ other shares. Has anyone been through a similar process it seems very hit and miss when speaking to solicitors, almost as if crag section 7 is relevant but that's not how it works. I've spoken to a solicitor who deals with estates that works at the practice dealing with my dads will and he's advised me to get a valuation for my mums 50% from a relevantly qualified person and present this to the council as an offer for my mums half for either purchase or financial assessment purposes. Do we even need to sell the property if crag section 7 is relevant, would her half share simply not be included in a financial assessment.

 

[canary]

Hi @blueand white and welcome to DTP.

I thought I would draw your attention to the fact that the post you have quoted is from 2013 and there have been updates to CRAG since then - in particular where is comes to how homes that are owned by more than one person are valued.

I am not sure about the exact details and I hope that someone with more knowledge will post, but I do know that the particular clause you are talking about has been changed

 

[Kevinl]

hi I'm just starting to explore presenting a rics certified valuation of my mothers 50% share of her property to the LA, up until consulting a solicitor on the matter the only guidance the LA has given is that the whole property will need a full market valuation of which on sale half will be used against my mums care fees, although the LA referred us to age concerns factsheet 38 they've made no reference to the guidance that seems relevant to us under section 7 of crag which factsheet 38 basically explains. I'm left very confused do LA's operate outside the guidance? Is the specific government guidance not relevant? can it simply be ignored?
I should explain my father has recently passed away, while he was in hospital my mother who has Alzheimer's went into care, my parents were tenants in common. My fathers will splits his share of the house between his 4 children with me having a right to purchase the house/ other shares. Has anyone been through a similar process it seems very hit and miss when speaking to solicitors, almost as if crag section 7 is relevant but that's not how it works. I've spoken to a solicitor who deals with estates that works at the practice dealing with my dads will and he's advised me to get a valuation for my mums 50% from a relevantly qualified person and present this to the council as an offer for my mums half for either purchase or financial assessment purposes. Do we even need to sell the property if crag section 7 is relevant, would her half share simply not be included in a financial assessment.

Hi blue and white, welcome to TP
I think it's worth pointing out that this is a very old thread, over 4 years in fact.
Since this thread the CRAG guidelines have ceased to exist and have been replaced by the 2014 Care Act which can into force on 1st April 2015 so you can forget anything said in the CRAG rules as they no longer exist or apply.
It might be better if you start a new thread in the legal and financial and ask for advise there but forget any reference to CRAG as that's history now, I'm surprised if you spoke to a solicitor that they didn't tell you of the change in the law.
K
Edit, beaten to it by Canary