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Clients: Contentious probate

About the loan

    How does the loan work?

    The loan is a pre-approved facility. The money is used as it is needed, with your approval, and paid directly to your solicitor to settle outstanding invoices and costs associated with your case. You do not have to use the entire loan amount and interest only accrues once the money is sent to your solicitor’s account. So, while funding is always available, you only pay for what is used.

    You do not need to service the loan. The loan is repaid at the end of your case from your settlement.

    The loan contract is between you and Novitas. Your solicitor has an obligation to communicate to us any material facts that may affect repayment of the loan during your case and to pay off the loan from any proceeds received as part of your settlement. The remaining amount will be passed on to you.

    This is a fully recourse loan, which means that you, the borrower, are always responsible for repaying the money borrowed.
     

    What can the loan be used for?

    Our loans can be used by either claimants or defendants in cases of inheritance under the Inheritance (Provision for Family and Dependents) Act 1975.

    We may also provide a loan for contentious probate cases that do not come under the 1975 Act, where there is a clear repayment route, e.g. where you are also a beneficiary of the contested will.

    The loan is regulated under the Consumer Credit Act 1974, and can be used to cover the costs of your case, including your solicitor's fees and any related disbursements (costs), such as barrister or forensic accountant costs.

    You may decide to use Novitas for part of your costs and agree with your solicitor a different funding arrangement for the balance.

    How much does the loan cost?

    Our charges are transparent and straightforward. 

    The set-up fee is £500 (or 1% of the facility if the loan amount is above £50,000). This can be added to the loan or paid up front.

    Interest is accrued only on the money you use, and calculated at a fixed rate of 18% per annum or 1.5% per month (not compounded), and due only when your case is complete and at loan settlement. Please note that this is not recoverable from the losing party. We take the annual interest rate of 18% (1.5% per month), multiply by the amount you have used from your facility and divide by the number of days it has been drawn down. For example, if you use £10,000 for 6 months, you will pay back interest of £900.

    Initially, you will need to the pay the cost of Counsel's opinion, which is required to determine the likely merit of the case, but this can be added to your loan if approved, along with insurance, if required. 

    There is no minimum loan period, no early repayment charges and no minimum interest charge.

    Independent legal advice is typically circa £300 (and cannot be added to your loan). This is required to ensure you fully understand all the implications of the loan arrangements.

    You may also take out After the Event (ATE) insurance for adverse costs. This is not mandatory, and the cost will be agreed between you and the ATE insurer directly. Speak to your solicitor to find out more about this. 

    Representative example:

    Total Amount of Credit: £70,000
    Total Charge for Credit: £16,864, includes:

    • £300 Independent legal advice (estimate)
    • £857 setup fee (£700 setup fee plus £157 interest)
    • £15,707 loan interest (assumes full loan amount drawn down on day 1)

    Rate of interest 18% per annum (fixed)

    Duration 15 months

    Total Amount Payable £86,864
    Representative APR 19.3%
     

    How long do I have to repay the loan?

    We agree a time period for each loan, often based on an event such as the sale of a property or a settlement. While we put a time period of 12 months on the loan contract from the date of the agreement, we understand that this needs to be flexible and will roll on the loan on a 30-day basis according to your individual situation.

    How much will you lend?

    The minimum amount we will lend is £10,000. The maximum amount depends on the specific circumstances of your case. Your solicitor will be able to provide an initial view on whether Novitas will approve the amount you require.

    Am I required to take out ATE (After the Event) insurance?

    You will need to discuss this with your solicitor. There is no requirement under the loan to have ATE insurance to cover your opponent’s costs if your claim is unsuccessful, but we do not accept any liability for adverse costs.

     

    Does the other side need to know about the loan?

    Yes, but only once the loan is in place. There will be a letter that you sign and send to the other party’s solicitor explaining that you have assigned the proceeds of the case to Novitas to repay the loan, after which all proceeds will be returned to you.

    This letter is for their information only and they are not required to approve anything. 

     

    What is the lending criteria for a probate case?

    Our loans are available when the following conditions are met:

    • UK resident aged 18 to 74
    • Eligibility under the Inheritance (Provision for Family and Dependants) Act 1975
    • Confirmation by Counsel of at least a 60% prospect of success achieving settlement amount
    • Funding for pre-trial stages
    • Security or insurance available
    • Satisfactory credit history

    We may also consider loans that exceed our maximum loan amount or where your credit history is problematic, as well as adult children cases, cases that have already reached trial stage and other contentious probate cases.  

     

    Which Counsel (barrister) can I use for provisional advice?

    This is at the discretion of you and your solicitor. You will need to pay for a barrister’s initial opinion on your case as there is no guarantee it will be approved for a loan. Some barristers may act on a deferred fee basis and if you are approved, the cost can be added to the loan and repaid to you. This barrister can act for you after the initial advice, or you and your solicitor can instruct another barrister.

     

    Will Novitas fund the trial (final hearing)?

    If a case is not settled and has the potential to go to trial, we may first ask for a new opinion from Counsel before agreeing to fund a trial. We have the right to decline further funding (typically if Counsel believes a current offer should reasonably be accepted).

     

    Is it in my solicitor’s interest for me to use a Novitas loan?

    Your solicitor is independent so receives no financial incentive from Novitas and cannot recommend us to you. Our loan service is a funding option available for you to consider, and only you can decide to proceed with a Novitas loan.

    Does every solicitor have access to the Novitas scheme?

    No. Our loan service is only available through approved firms. Check with your solicitor to see if they are approved; if they are not they can contact us about becoming an approved Novitas partner.  

    What happens if my solicitor is suspended from practice by the SRA during the term of the loan?

    You can cancel your loan facility which will require immediate repayment or transfer the loan facility to another solicitor.