Equity Release Agreement Template for England and Wales

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Key Requirements PROMPT example:

Equity Release Agreement

"I need an Equity Release Agreement for a property valued at £450,000, where the borrower is aged 70 and wishes to release 40% of the property value with a no-negative-equity guarantee and inheritance protection clause included."

Document background
The Equity Release Agreement serves as a crucial financial instrument in England and Wales, enabling older homeowners to access their property wealth without selling their home. This document is essential when establishing a lifetime mortgage or home reversion plan, typically used by individuals aged 55+ seeking to release equity from their property while maintaining residence rights. The agreement must adhere to strict FCA regulations and industry standards, including mandatory consumer protections and clear disclosure requirements. It details crucial aspects such as interest rates, property obligations, inheritance provisions, and repayment terms.
Suggested Sections

1. Parties: Details of the lender and borrower, including full legal names and addresses

2. Background: Context of the agreement, property details, and purpose of the equity release

3. Definitions: Key terms used throughout the agreement including financial, property, and regulatory terms

4. Loan Amount and Terms: Details of the equity release amount, conditions, and drawdown arrangements

5. Interest Rate and Charges: Specification of interest rates, calculation methods, and all associated fees

6. Property Requirements: Conditions relating to property maintenance, insurance, and ongoing obligations

7. Repayment Terms: Conditions for repayment including early repayment provisions and associated costs

8. Security Provisions: Details of the charge over the property and security arrangements

9. Borrower Covenants: Ongoing obligations and promises made by the borrower

10. Lender Covenants: Obligations and promises made by the lender

11. Default and Enforcement: Consequences of default and enforcement procedures

12. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law

Optional Sections

1. Portable Terms: Terms allowing transfer of the equity release to another property - included when offering portability feature

2. Additional Borrowing: Terms for further advances and drawdown facilities - included when offering flexible borrowing options

3. Inheritance Protection: Provisions protecting a portion of property value for inheritance - included when offering inheritance guarantee feature

4. Shared Occupancy Rights: Rights and obligations of other property occupants - included when property has multiple occupants

5. No Negative Equity Guarantee: Terms ensuring debt cannot exceed property value - included for lifetime mortgages

Suggested Schedules

1. Schedule 1 - Property Details: Detailed description of the secured property including title information

2. Schedule 2 - Financial Terms: Detailed breakdown of financial terms including interest calculations and charges

3. Schedule 3 - Key Facts Illustration: Regulatory required information about the product and its features

4. Schedule 4 - Risk Warnings: Required regulatory warnings and customer acknowledgments

5. Schedule 5 - Additional Occupier Rights: Rights and consents of additional property occupants

6. Appendix A - Specimen Notices: Template forms for various notices required under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Clauses
Relevant Industries
Relevant Teams
Relevant Roles
Industries

Financial Services and Markets Act 2000: Primary legislation governing the regulation of financial services in the UK, establishing the FCA and setting out the regulatory framework for equity release products

Consumer Credit Act 1974: Legislation regulating credit agreements and providing consumer protection in financial transactions

Mortgage Credit Directive Order 2015: UK implementation of EU rules on mortgage credit, setting standards for mortgage lending and consumer protection

Law of Property Act 1925: Fundamental property law legislation governing real property transactions and mortgages in England and Wales

Consumer Rights Act 2015: Key consumer protection legislation ensuring fairness in contracts and clarity in terms and conditions

FCA Handbook - MCOB: Mortgages and Home Finance: Conduct of Business Sourcebook - Detailed regulatory requirements for mortgage and home finance activities

Equity Release Council Standards: Industry body standards providing additional safeguards and best practices for equity release products

Unfair Terms in Consumer Contracts Regulations 1999: Legislation protecting consumers from unfair terms in contracts, ensuring balance between parties

Consumer Protection from Unfair Trading Regulations 2008: Regulations prohibiting unfair commercial practices and misleading marketing in consumer transactions

UK General Data Protection Regulation: Post-Brexit data protection legislation ensuring proper handling of personal data in financial services

Money Laundering Regulations 2017: Anti-money laundering requirements for financial institutions including customer due diligence measures

Human Rights Act 1998: Legislation protecting fundamental rights including property rights and security of tenure

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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