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Solicitors: Contentious probate

About the loan

    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 Dependants) 1975 Act.

    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 the client is also a beneficiary of the contested will.

    The loan is regulated under the Consumer Credit Act 1974 and can be used to pay outstanding invoices, solicitors’ fees and any associated disbursements, such as barrister or forensic accountant costs. Certain disbursements are paid by discretion only e.g. a possession claim. 

    We fund all or part of the case. You may decide to use Novitas just for disbursements, for fees or combined with an element of the work under a Conditional Fee Arrangement.

    How does the loan work?

    The loan contract is between Novitas and your client.

    The money is drawn down from the facility as it is needed and paid directly to your client account to pay outstanding invoices for your fees and disbursements associated with the case. Your client does not have to use the entire loan amount and interest only accrues once the money is sent to your client account.

    There is nothing for the client to pay until the case concludes as interest is rolled up on a simple basis i.e. there is no compounding of interest. The client instructs your firm to repay the funding from the proceeds of the settlement.

    You will have a dedicated on-line portal to administer the facility, where you can make new applications, make draw down requests, and monitor the status of any applications or draw down requests.

    The scheme is only available to clients of approved firms, and Novitas will consider each case individually.

    This is a fully recourse loan and the client is always responsible for repayment of the loan. If the loan is not repaid by the client, Novitas or the insurer may ultimately take legal action to recover the loan monies.  

    How much does the loan cost?

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

    Our charges are straight forward and transparent 

    • 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 fixed at 18% per annum or 1.5% per month and calculated on a simple basis, i.e. there is no compounding of interest. Interest only accrues on money drawn down from the loan facility. The loan does not require  servicing, which means that the loan funds and the interest can all be paid at the end of the loan. This helps all clients with cash-flow concerns and particularly those with little or no income. 
    • Interest is calculated by taking the annual interest rate of 18% (1.5% per month), multiplying by the amount used and dividing by the number of days it has been drawn down. For example, if the client has drawn down £10,000 for 6 months, they will pay £900 of interest in addition to repaying the £10,000.
    • We ask the client to take independent legal advice on the loan documentation, which is typically circa £300 (and cannot be added to the loan).
    • Initially, the client will need to pay the cost of Counsel's opinion, but if Counsel is willing to wait for their fee to be paid, this can be added to the loan if approved, along with insurance, if required. You and the client are free to choose any Counsel.

    If the client does not have sufficient security by way of assets in their own name, they may be required to take out insurance provided by Novitas. The insurance premium is 10% plus Insurance Premium Tax of 1.2% (as at 3rd December 2017) of the amount that is drawn down and will be added to the loan. Please note that this insurance does not insure the client against failure to repay the loan.

    The client may also take out After the Event (ATE) insurance for adverse costs. This is not mandatory, and the cost will be agreed with the ATE insurer directly. This is purely a decision for the client. Novitas does not accept responsibility for the clients’ adverse cost risk.

    What is the duration of 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 may 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 client's individual situation.

    Who will you lend to?

    We will lend to any UK resident aged between 18-74 years who will receive a lump sum as part of a financial settlement. There must be assets in the UK in at least one of the parties' names for us to consider offering a loan. 

    We will also undertake a credit check on each client at the point of application, and will only consider those clients with an acceptable credit history. Please note that we may not be able to lend if the borrower has a County Court Judgement (CCJ) or Individual Voluntary Agreement (IVA), so contact us in the first instance.

    How much will you lend?

    The minimum amount we will lend is £10,000. The maximum amount depends on the specific circumstances of the case. 

    Each case is considered on a case by case basis, and the amount will be determined depending on the likely settlement outcome, the anticipated legal costs of reaching final settlement, and the funds required by the borrower. This is provided as a facility against which funds can be drawn down.

    What security do you require from the client?

    The Novitas lending scheme requires the client to sign a ‘Deed of Assignment’. This gives Novitas an assignment over the proceeds of the claim, meaning Novitas is repaid first from any settlement monies, before the balance is sent to the client. 

    In certain cases we may be able to provide a loan facility to a client who does not hold sufficient assets in their own name. In these cases Novitas requires the borrower to pay an insurance premium which is added to the loan to insure Novitas in the event that the loan is not repaid. Please note that this insurance does not insure the borrower against failure to repay the loan.

    What is the full 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
    • Satisfactory credit history

    We may also consider the following situations:

    • Adult children cases
    • Trial stage
    • Client has assets of more than 3x the loan amount
    • Confirmation by Counsel of less than a 60% prospect of success
    • Where the client wishes to insure for adverse costs
    • Unsatisfactory credit history 
    • Any other areas of contentious probate

    Will Novitas fund the trial?

    If a case does not settle and is likely to go to trial, we may ask for a new opinion from Counsel at the case management meeting before agreeing to fund the trial stage.

    We reserve the right to decline further funding for trial, typically when Counsel believes a current offer is in the range of possible outcomes and ought reasonably to be accepted.