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5. Contributions

5.4. Securing contributions with a charge over real property

5.4.1 Taking a charge where the applicant has real property

  • A legally aided person who owns real property will be required to give a charge over the property to secure the total costs and expense of providing the legal service where the costs of proceedings are estimated to be over $2,000, unless it is an exempted matter
  • Taking a charge over the property will be a condition of the grant of aid
  • A title search must be obtained to ensure the client has an interest in the land
  • You must give your client the information sheet about giving a Charge
  • The client must sign the charge within fourteen (14) days of the grant of aid being made and, where a client refuses to sign the charge, legal aid must be terminated (see Termination policy and Termination guidelines).

Note: If the property is the subject of a terms purchase agreement with the Department of Housing, the Department of Housing’s consent must be obtained.

Note: The requirement for the legally aided person to give a charge over real property also applies to any financially associated person. See the Means Test 7.3: Whose means are considered when applying the Means Test?. See also Policy 7.6.2 for Asset test in all other matters.

5.4.2 Important points when preparing a Charge

  • The standard terms of the Charge should not be varied.
  • The Charge must be signed by the chargor and dated and witnessed.
  • Any amendments or insertions made must be initialed by the chargor and the witness.
  • It can be witnessed by any person aged 18 or over; the witness does not have to be a lawyer or a Justice of the Peace.
  • A Charge taken by Legal Aid NSW is an equitable charge. It is a form of security over land similar to a mortgage except that it does not convey or assign any legal title in the property.
  • The Charge gives Legal Aid NSW a caveatable interest under the Real Property Act 1900 (NSW). The effect of a caveat is to place a notice of Legal Aid NSW’s interest on the Certificate of Title so that any prospective dealing with the property cannot be registered without prior notice to Legal Aid NSW.
  • If the property is owned by two or more persons:
    - As tenants in common, the Charge only applies to the client's undivided share of the property
    - As joint tenants, the Charge applies to the whole of the property, even if the other joint tenant or tenants have not executed the Charge.
  • If the property is under the old system of conveyancing, a Caveat cannot be lodged. Instead Legal Aid NSW will prepare a Deed of Mortgage for execution by the mortgagor and Legal Aid NSW as mortgagee. Any matters involving property under the old system of conveyancing should be referred to the Accounts Receivable Unit, Legal Aid NSW.
Note: All charges are managed by the Accounts Receivable Unit. Once a charge is executed it must be sent to the ARU.

5.4.3 After the Charge is signed

Once a Charge has been signed by the client, the file manager must forward the original Charge to ARU to arrange for lodgment of the caveat.

The file manager must forward to the ARU:

  • a memorandum requesting lodgment of the caveat and specifying the amount to be secured
  • a current title search
  • the original signed Charge, and
  • a Statutory Declaration as to change of name (if applicable).

A caveat must be lodged at NSW Land & Property Information as soon as possible after the charge has been executed:

  • to avoid any fines being imposed (if more than two months have lapsed since the date of the charge), and
  • to protect the security of Legal Aid NSW by noting its interest on the Certificate of Title.

Note: The Charge must be forwarded to the ARU to lodge a caveat two (2) weeks after the Charge has been signed.  If the charge is forwarded more than two months have lapsed, the memorandum must indicate the reasons for the delay.

5.4.6 Charges taken prior to the commencement of this policy

If a Charge was obtained prior to the commencement of this policy and at the conclusion of the proceedings the s.46 determination made in the matter is Nil, then any Caveat lodged by Legal Aid NSW to secure the Charge must be withdrawn.

If this is the case, refer the file to the ARU with a memorandum requesting that the Caveat be withdrawn.

5.4.7 Calculating whether a charge must be given

Where it is determined that a legally aided applicant will be required to give a Charge over the real property to secure the costs and expense of providing the legal service, Legal Aid NSW will estimate the costs of proceedings by calculating the average costs paid to private lawyers for a particular type of matter.

The charge will initially protect costs of $16,000 as the stamp duty is a flat rate up to this amount.

Last published on 21/12/2018