A warning case for syndicated lenders

Within the bridging market, it’s not uncommon for loans to be advanced on a syndicated basis.

Syndicated loans can be advanced as a single charge with a security trustee, with the funding partners involved agreeing terms of their relationship by discreet syndication agreement.

Such a model has the appeal of keeping the details of the funding participants discreet from the mortgage borrower and off the title, which is public record.

In a 2023 case where a security trustee settled a mortgage at less than contractual value, leaving a junior funder out of pocket, the duties owed between senior and junior syndicators have recently been examined in the High Court.

The claim arose from a £2.75m bridging loan that had been agreed to provide the borrower for the refinance of a property.

The totality of finance for the loan was provided by two funders. The senior funder provided £2.4m of the capital, with the junior providing the balance to make up the total loan advance.

The beneficial interest in the loan was assigned to the two funders in the proportion of capital advanced, with the nominal lender remaining the in place as security trustee.

The parties, which included the nominal trustee in whose name the loan facility was written, entered a separate security trust deed which governed their relationship and how the securities held for the loan, or monies arising from the facility, were to be dealt with.

In this agreement, the senior funder had effective control over debt administration with the power, exercisable on default by the borrower, to require the trustee to resign and assign the legal interest.The documents also provided, in respect of monies arising, that the senior lender interest be repaid in first priority.

The loan ran into default. The senior lender exercised its powers, and the loan was assigned. The assignee agreed a settlement with the mortgage borrower, at £3.5m, a figure which was just short of the amount to clear the senior interest but leaving nothing for the junior funder.

This may well have been sensible commercial settlement. However, the junior funder argued that the securities should have been enforced, and had they been, then a sale of the assets would have raised £5.7m, a disposal at that level would have been sufficient to settle both interests.

The junior sought to recover their losses.

They argued that they were owed fiduciary duties and/or equitable duties analogous to those of a mortgagee when exercising a power of sale. Simply put, steps had not been taken to obtain the best price reasonably obtainable, as any mortgagee would have to undertake to protect the next.

There was also negligence in accepting the borrower’s offer when a better outcome was available.

These claims failed and the High Court determined that the junior creditor was not a mortgagee as such and could not assume the rights of one and in any event, the assignee did not exercise a power of a sale.

The claimants were unable to identify any express duties as claimed, in the security trust deed, nor could these be implied on the facts. The mere existence of loss suffered was insufficient.

This case illustrates a host of issues, and takeaways for lenders and syndicators.  The complexity around syndicated lending and the need for every syndicator to fully understand and agree the terms of the relationship.  Each relationship is by its nature a commercial one.

So always apply the ‘what if’ principle, when agreeing fundamentally crucial terms such as priorities, control, administration.

The decision also provides useful guidance on the narrow scope and application of the mortgagee’s duty to obtain the best price reasonably obtainable for the secured asset, and the limited circumstances in which, and the range of parties to whom, that duty is owed.

Might the result have been different had there been a sale, and the junior funder could have relied on a sub-charge?

Jonathan Newman, Senior Partner

Jonathan Newman named in The Power List 2024

Our Senior Partner, Jonathan Newman, has been named in The Power List 2024 by Bridging & Commercial magazine.

With only 40 industry professionals recognised by the prestigious list, achieving a place is a significant achievement and it’s testament to Jonathan’s contribution to specialist lending sector over more than 30 years, as well as his outstanding work in the last 12 months.

In particular, the Bridging & Commercial feature recognised Jonathan’s work on a recent case in which Brightstone Law, on behalf of a second charge lender, took on a major high street brand.

This case was a big win for the specialist finance sector, demonstrating that the brand name of an institutional lender is no guarantee of integrity of action and showing that tenacity, perseverance, expertise and experience are key to successful litigation.

These are all qualities that Jonathan exhibited in winning this ‘David v Goliath’ case, and that he continues to demonstrate in representing the interests of his clients and the industry as a whole.

You can read the full feature here:

https://issuu.com/bandcmagazine/docs/issue_31/60

Lenders must now factor Land Registry delays into the decision-making process

Like most conveyancers, I am extremely frustrated with the continued Land Registry delays, which I estimate have increased my workload by roughly 20-30%. The delays mean we receive many more emails chasing us for the updated register, be it from other conveyancers acting for borrowers, our clients or in some instances, the borrowers themselves.  At Brightstone Law, we ensure that we lodge all applications even though we do not act for the borrowers, we act for the lenders. We like to have control to ensure the application is completed and mistakes are not made.

The pressure is heightened when acting for bridging lenders, as we do, since most loan terms are between 6 and 12 months. However, we have many applications being processed by Land Registry which are taking much longer than 6 months.  There are even a few applications that involved the grant of new leases which were lodged over a year and a half ago and have still not been completed.

Seeking expedition of the application often helps, but if the transaction involves the grant of a new lease or a transfer of part (such as a new build development site), expedition does not assist as the applications are completed in order of receipt.  Our application may well be perfect but if Land Registry must complete another 30 new lease applications ahead of ours, coupled with the already existing backlog and delays, it can still take far too long.

We have an unfortunate situation on our hands to say the least. Therefore, on top of all the major decisions a lender must make before agreeing to lend, it now also must realistically consider how Land Registry delays might impact the proposed exit.  The lenders also must be mindful that recovery proceedings could be impacted by these Land Registry delays.

I have advised certain lenders not to agree to a 6-month term when the transaction will involve a new build property.  Nowadays, it is simply not realistic to expect the application to have been completed and for the borrower to be able to then sell or refinance in that timeframe.

In my opinion, agreeing such a short term for a new build is simply inviting a default situation no matter how confident the borrower may be, as most borrowers will not be aware of the current issues.

Once again, like most conveyancers I suspect, I am hoping the situation improves but I can’t see it doing so soon.  I genuinely hope I am wrong.

Harry Peradigou, Partner at Brightstone Law

Working together for a stronger footing on Breathing Space

Over recent weeks and months, I have been working alongside the Association of Short Term Lenders (ASTL) in its ongoing dialogue with HM Treasury regarding the Breathing Space Regulations.

We had previously attempted a similar engagement regarding the blanket application of the enforcement moratorium during Covid, but we have achieved greater traction this time around with regards to Breathing Space.

There is a common theme behind the government interventions, and there is commonality in the impact they have for the short-term lending market and its customers. Whilst I recognise the positive intentions behind both and acknowledge the role, they can play in helping some customers, based upon my experience, I also know that the blanket implementation of such schemes can also cause significant customer detriment as an unintended consequence.

This is certainly the case with Breathing Space and also reflects the real-life experience of ASTL members. What we have learned as a sector, suggests that a positive customer outcome is very rarely achieved in the short-term mortgage sector. Worse still, many customers find themselves disadvantaged at the end of the process, and there is evidence that Breathing Space may possibly be subject to misuse by debt advisors. At best, despite their assumed expertise, regulated advisors simply do not grasp when and where to trigger in the customers interest, and at worst, abuse system as a delaying tactic, where there is no realistic prospect of a re-organisation of their finance.

This approach may be appropriate in other forms of lending such as traditional long-term mortgages, but in short-term lending, Breathing Space should only be considered where a reliable and feasible plan is available. Further delay where repayment cannot be arranged, often and mostly, leaves the customer in a far worse financial position; the dissipation of any equity they have in the property. Breathing Space was never intended to be a single purpose device for avoiding enforcement.

With this in mind, we have suggested amendments to the scheme that would facilitate legitimate use for the purpose intended in short term lending circumstances. For example, a fixed duration of 60 days may be appropriate in the long-term mortgage market, but it has a disproportionate and negative impact in the short-term sector. We have suggested to HM Treasury that a 28-day Breathing Space may be more appropriate in this area of the market, whilst remaining a practical period to effect change.

We have also offered to contribute to producing specific guidance for debt advisors on the application of Breathing Space on short-term loans, with the view that advisors need to understand the speed at which equity can be eroded on this type of loan and that more informed application of the scheme will help to guard against customer detriment.

I’m delighted that we are now moving beyond initial communications with HM Treasury and appear to be reaching a place of more meaningful dialogue. As an industry, we have a breadth of experience and expertise about our sector and, more importantly, our customs. We think we have important things to say that could help mitigate against the unintended negative consequences regulation can sometimes bring and we firmly believe that proper consultation with policy makers is hugely beneficial.

I’m looking forward to continuing our work on this and hope that we will be able to make a difference. I also hope that this opens the doors to greater ongoing dialogue for the future.

In the meantime, if you are a lender faced with a Breathing Space challenge, there are a number of considerations. And, if you think there has been abuse, there are steps that you can take to ensure the right result is achieved. It’s worth taking the time to speak to expert legal counsel in this area to understand your options.

Breathing Space is one of the regulatory challenges the short-term lending industry faces at the moment, and there will certainly be many more in the future. We hope that the progress we are currently making with the ASTL will help to put us on a stronger footing going forward.

Jonathan Newman, Senior Partner at Brightstone Law

The long-term value of proper legal advice

At what point does a mortgage broker’s responsibility to their client end? If, for example, a client is recommended an interest only remortgage on their home to help finance an offshore property investment, does the broker have a duty of care to ensure that investment is a prudent one?

This was the subject of a particularly interesting recent case – Taylor v Legal & General Partnership.

The claimants, Taylor, had sought the advice of the broker for a remortgage on their residential home, to raise capital for investment in an offshore off-plan property development and to redeem a small existing interest-only endowment mortgage. Their stated repayment strategy was via the sale or refinance of the investment properties or alternative savings if the investment went wrong. With this in mind the broker, Legal & General Partnership, recommended an interest-only mortgage.

The offshore property investment failed and the claimants sought to recover their loss from the mortgage broker.

The claimants claimed that a reasonably competent mortgage broker should comply with the requirements of Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) when advising, arguing that, the broker should not have recommended any mortgage products unless and until the claimants had obtained independent financial advice as to the risks of the underlying investment for which they were raising money. Their argument was that, if such advice had been taken, they would not have proceeded with the mortgage.

However, the court concluded that the scope of a mortgage broker’s duty of care, which is informed by MCOB, is far narrower than that argued by the claimants. The broker’s scope did not extend to consideration of whether the borrower intended to apply the monies in a financially prudent way.

There were a number of reasons why the court ruled against the claimants in this way, but a notable takeaway for brokers is that, in the case of Taylor v Legal & General Partnership, the broker had told the claimants that if they were unsure about the investment they should take independent financial advice on it. And crucially, the documentation – relying on the broker’s file from 2007, clearly recorded that the broker had advised the claimants to take financial advice on the investment if they were uncertain as to the level of guarantee it offered.

Interest only has become a popular area for claims from borrowers who claim to have been mis-sold the product. Interest only is also a feature of short term lending, as is the raising of finance on domestic residential property to fund alternative purposes.

The taking of independent legal advice, and obtaining a certificate to such effect, is highly regarded as an effective tool against lender-debtor dispute, but is typically restricted to the mortgage product itself, not the underlying investment.

When the broker advised on this case in 2007, they probably didn’t anticipate that they would need to defend their advice in court nearly 15 years later. Limitation was an issue in this case, but the borrower pursued a claim on the basis that time ran from the date they became aware of damages, which was some time after the mortgage had been arranged.

It’s very hard to predict what products or parts of the market might attract claims in the next decade, so all that brokers and lenders can do at this stage is to ensure they take a belt and braces approach to everything they do with customers today, to help protect against potential future claims in the future. They should give particular consideration to:

• Investigating thoroughly the purpose of finance
• Recommending independent advice where the circumstances of the lend, and the purpose for which the lending is required merit this recommendation
• Documenting meticulously the broker role, and the extent of the retainer.

Whilst the claim failed, taking the above precautions may well have avoided the human cost and pain of proceedings and trial.

Recent figures from the Ministry of Justice (MoJ) have shown significant increases in possession claims, orders, warrants and repossessions by county court bailiffs. And, while the time taken to reach each stage has reduced since last year, the MoJ says long-term increases in the mean average time from claim to warrant and claim to repossession are due to an increasing proportion of historic claims reaching the warrant and repossession stages respectively in recent quarters. It says this is possibly due to defendants recently breaking the terms of the mortgage agreements put in place at the start of the process.

In the current economic environment, unscrupulous borrowers are going to take desperate measures to fight actions and claim compensation wherever they identify the opportunity, so increasingly mortgage brokers are being considered as targets. Cutting corners, in process and due diligence, will only open up more opportunities for them to expose. So now is the time to invest in high-quality legal advice, with the expertise and experience to protect businesses for the long-term.

Jonathan Newman, Senior Partner at Brightstone Law

Deregulation Act 2015 documents and their importance from the outset

The Deregulation Act 2015 (“the Act”) introduced important changes to when landlords of property let on Assured Shorthold Tenancies (ASTs) can serve a valid Section 21 notice in order to gain possession of property. With Buy to Let properties continuing to be a popular investment choice, deals involving properties subject to AST’s are becoming increasingly common.

A Section 21 notice is an invaluable tool as it enables a lender to serve the occupying tenant with two months’ notice to vacate the property without having to specify a reason for doing so. Moreover, provided the necessary requirements of the Act have been met, possession proceedings can be fast tracked using the ‘accelerated procedure’ meaning there is usually no requirement for a hearing and the Court will consider the application on the papers alone.

It is important therefore that lenders are fully aware of the requirements of the Act from the outset so that in the event of default, vacant possession of the property can be obtained without delay which in turn increases the prospect of realising the asset at the best price achievable.

Validity of a Section 21 notice

The Act requires a landlord to comply with the following requirements before a valid Section 21 notice can be served on a tenant occupying pursuant to an AST:

• Where the tenant has raised a legitimate complaint about the condition of the property with the borrower, prior to being served with a Section 21 notice, they will be protected from retaliatory eviction (i.e. being served with a section 21 notice in response to the complaint). It is therefore important that lenders investigate whether any complaints of disrepair are outstanding pre lend and before serving a Section 21 notice.

• The borrower must comply with certain legal obligations, including providing their tenants with a gas safety and energy performance certificates prior to commencement of the AST. The borrower must also provide tenants with certain prescribed information relating to the borrower’s rights and responsibilities as well as the tenant’s rights and responsibilities under an AST, as set out in the DCLG: How to rent Checklist for renting in England.

• Finally, where the borrower has failed to protect a tenant’s deposit under one of the government recognised schemes and provide the tenant with the prescribed information, within 30 days of receiving it, a valid Section 21 notice cannot be served on the tenant until the prescribed information has been provided and the deposit returned to the tenant. In addition, if the borrower failed to protect the tenant’s deposit within 30 days, then the tenant may have a claim against the borrower, or any other relevant person, for a claim of up to three times the amount of the original deposit.

Key points for lenders

It is essential therefore that when dealing with a Buy to Let property lenders ensure that the above requirements have been complied with by the borrower.

Lenders should ensure that any deposit received by the borrower from the tenant has been properly registered under one of the government recognised schemes. There can be cases where this is not checked by the lender at the outset which results in difficulties post default. Tenants are often very well aware of their rights and of the fact that if they avoid receipt of the deposit then a section 21 notice cannot be served. In the event that a borrower has not registered the deposit lenders should consider insisting that the borrower formally returns the deposit to the tenant with evidence confirming the same prior to completion.

The other significant point to consider is the gas safety certificate. The law is strict on how and when a gas safety certificate should be provided to a tenant. If a gas safety certificate was not provided to the tenant prior to commencement of the AST then as long as a copy is provided to the tenant prior to service of the section 21, any possession claim issued will be valid. However, it is not good enough to provide the tenant with a gas safety certificate which predates the AST. The tenant must be provided with the gas safety certificate which covered the period of commencement of the AST. There can be cases where the gas safety certificate was not obtained from the borrower pre lend and lenders have been unable to track down a copy of the necessary certificate post default. Lenders are therefore advised to request a copy of the gas safety certificate covering the period of any AST from the borrower prior to completion.

It is extremely important that lenders familiarise themselves with the requirements of the Act so that, should the need arise to terminate a tenancy by way of a Section 21 Notice, they are not precluded from doing so.

If you are a lender seeking advice on evicting a tenant, you can contact Jonathan Newman or the team for assistance on 020 8731 3080 or email [email protected]

Thriving through Culture

The Covid pandemic provided businesses with a unique set of challenges. Some closed down temporarily, some even permanently, but the majority needed to find ways in which they could continue to operate effectively, with their staff working remotely.

The challenge in working remotely is far greater than accessing the right technology. The success of any business lies in its unique culture and maintaining a successful company culture is far more difficult when people are not physically in the same place. The danger is that remote working can encourage a more homogenous, process-driven approach, which may get the job done but adds no real value to anyone.

At Brightstone Law, we’ve been very conscious about the importance of our culture and its role in the success of the firm. We pride ourselves on pushing boundaries for our clients, creating precedents and new standards for good practice, and this has made us very successful.

That said, the firm’s responsibility is not only to ensure that legal matters are supervised to safeguard a certain level of standard and productivity, but to make sure employees are mentally and physically well as we recognise employees can easily feel disconnected, and culture can be damaged, and not just as a result of the pandemic.

So, we launched a programme that helps us to identify and articulate the Brightstone Law culture.

The programme is called Culture Club. It’s managed by Penny Michael and Nikki Pearson and has its own independent budget and objectives. Culture Club had a mission to create an environment of greater pastoral care, promote equality and diversity, and to identify, protect and promote the unique culture that has made Brightstone Law so successful.

These are the promises we gave to our colleagues:
• We will accommodate your needs and offer flexibility to help you do your job more efficiently.

• We will offer a safe and welcoming work environment.

• We will provide you with full equipment to enable you to work without issue.

• We will listen to you if you have a problem and work with you to find a solution.

• We will support you on your work/life journey.

Our work within Culture Club started with a questionnaire to find out people’s views on the firm, the people, and how employees felt about working from home and from the office. We developed the activities around the results of the questionnaire, and we have since repeated the survey twice to ensure that we are continuing to align our culture with the needs of our people.

The most recent questionnaire has highlighted a number of improvements that have already been delivered by Culture Club. The results evidence that the firm now does more to show it cares for the mental health of our employees; we have organised events, and we changed the atmosphere in the office and for those working from home. At Brightstone, we always try encouraging those working from home to get involved and engage with those in the office and we include them in all of the gestures we put forward to our office-based employees. For example, when we celebrate ‘national days’ in the office, we send similar hampers to those at home.

We do a lot to engage our people. We send regular staff emails including ‘Motivational Monday’ and ‘Wellness Wednesday’ and we make a special effort to celebrate occasions such as Easter, Christmas, birthdays and national days. We marked Daffodil Day in aid of cancer awareness and ’Dress in Blue Day’ in support of colorectal cancer, and we promote random act of kindness days. Two of our most popular improvements to date are the addition of a day off on each member of staffs’ birthday, and an outdoor seating area. We also make an extra special effort to celebrate the accomplishments of our people, such as exam results and significant career progression.

As part of Culture Club, we support mental health by offering mindfulness workshops and have a wellbeing coach available to everyone on an anonymous basis. There’s an education angle to Culture Club too. We have made a new legal database accessible, updated the books we make available and opened a personal reading library. In offering training to everyone we help them achieve what they want in their careers.

Culture Club has been a great way of re-engaging everyone following an extended period of remote working and we are seeing the benefits. As the running of Culture Club is independent of the firm, with little to no partner involvement in the decision-making process, it provides a great development opportunity for individuals to take a leadership role in driving the firm forward and making a tangible difference.

By better defining and articulating our own culture, the efficiency of our work has improved as has the overall happiness of our staff, and as we strengthen and further imbed these customs over time, it will enable us and our people to continue to thrive.

by Penny Michael and Nikki Pearson

Lenders must be cautious in pursuit of development opportunities

Many bridging lenders have, in recent years, decided to try development lending – lending to a borrower for the purpose of development or a combination of purchase and subsequent development. In this article I am referring to ground up developments rather than refurbishments or conversions.

It is well documented that there is a housing shortage in the country, so property development is popular among investors and represents a viable, and often profitable, market for lenders who want to diversify their offering.

There is a danger here, however, if a lender is not used to lending in such circumstances and does not have the staff with the expertise to adequately monitor the development. It is also wise for the lender to know whether the borrower is an experienced developer or not. In recent years, I have seen many borrowers, who have spare land at the rear of their property, try to develop it themselves without the requisite expertise – and this rarely ends well.

In my opinion, it is paramount for a lender to have experienced staff in-house, supported by an external quantity surveyor (QS) involved from the outset of a ground up development. The surveyor will need to make multiple visits to the site, review the planning permission and approved plans in detail; speak with the planning department, building control inspector and relevant structural warranty company to monitor the development and ensure that the final product is going to be what was agreed from the outset.

I have seen a few cases where a QS was not involved, and the lender relied on a chartered surveyor to attend the site and provide updates before further tranches of funds were to be released by the lender. On occasion, I have seen instances where development funds were released with no advance site visit at all.

One such instance, where I am certain a QS was not instructed, involved a borrower who decided to build a detached garage for the property outside the boundaries of the land that he owned. The alleged rationale was that he had an informal agreement with the neighbour to buy the land and that it would all work out well. When he defaulted on the loan, after he and the neighbour had a dispute, the lender found out about the garage being on someone else’s land and had to resolve the situation (I fail to recall whether the garage had to be demolished, or the neighbouring land purchased). This burdened the lender with significant additional cost, which reduced the overall loan to value and loan to gross development value.

This was, of course, an unwelcome surprise and one that could have been avoided if a QS were instructed. A QS very likely would have gone back to the original boundary plans at all the relevant stages, referred to the planning permission approved plans, and raised the issue to the lender. In turn, the lender would not have released any more funds until the proposed course of action was varied. It certainly would not have gotten to the stage of even laying foundations for the garage – let alone being fully built.

I have seen other similar cases of a borrower adding extra bedrooms, bathrooms or otherwise failing to follow the planning permission approved plans which, again, are avoidable situations. Before diving into development lending, the relevant lender must ensure that it has the relevant know-how and external support to ensure that such issues are avoided.

Harry Peradigou, Partner at Brightstone Law

Is Now the Time for a Full-Fat Approach?

For some time now there has been concern that expansion in the bridging market has been as much about the appetite to lend than a natural growth in sensible lending opportunities; with scalability king and margins squeezed.

It was thought and hoped by some that Covid might reset the market, helping it return to its traditional values and a re-evaluation of the risk, of which established lenders are all too aware, but perhaps newer entrants have not yet experienced.

If anything, Covid appears to have simply turbo-charged demand.

Inflation is on the rise, significantly, as the general media are all too keen to publicise. Equity markets are now showing volatility and vulnerability, and interest rates have moved upwards, twice in succession. Whilst the traditional risks of fraud, valuation and regulatory issues have not gone away.

So, could a much-anticipated reset in the property market be next? And if it is, is now the time to re-think the one-dimensional skinny approach bridging lending?

Without doubt, it is time for most lenders to remind themselves that this is not the mainstream market, where loans are easily originated and recovered en masse and with a light touch – where margins are thin and costs are stripped down.

The danger in skinny lending is that every part of the process becomes commoditised and transactional to the extent that a damaging individual transaction may meet basic requirements, only to be uncovered by digging deeper. When volume becomes the main driver, risk control and expertise can be sacrificed. This includes the way in which a lender works with its partners, such as its legal advisers. With a skinny model, documents are produced and contracts are executed to a relatively basic level, with little else by way of added value.

This model can work in some markets – and does – but in bridging, where circumstances can be complex and flags deliberately concealed from lending principals, relationships are key, as is time, diligence, expertise and experience. A healthy property market disguises mistakes, a regressive one often lays poor judgment bare.

I’m a firm believer that this sector thrives with a multi-dimensional, full-fat approach to lending. This means something that is trusted relationship based and service driven, with thicker margins to allow for sensible process proportionate to the lend and security, caution and diligence. Full-fat is not particularly fashionable at the moment, but in the longer term it can be more nourishing in delivering a healthier more robust and future-proof market.

From a legal perspective full-fat means proper diligence, sensible investigation, and the right level of time commensurate with the value of the transaction – and added value too; lawyers used to be seen as persons of wisdom, not just another service supplier. Lawyers also have a broad range of experience and can support lenders in better understanding the pitfalls of their business and the issues within it, which the lenders may not have experienced themselves; identifying solutions and supporting best practices and development. The standard contractual stuff is a given, but it’s in this partnership-based approach that the bonus value lies and a skinny model simply does not allow for this.

A natural response to this might be to say “well, you would say that wouldn’t you”, but as a provider of legal services to the industry, my business is predicated on the success of my clients.

So, where our interests are aligned in bridging, full-fat may be the healthy option in an ailing property market.

Jonathan Newman, Senior Partner at Brightstone Law

Digital Assets

Do you know what happens to your digital assets on your death?

In our fast-evolving digital world, it is now becoming increasingly important to consider your digital assets and what should happen to them when you die.  Digital assets don’t just include online only bank accounts or investments that you may have.  They include social media accounts, email accounts or e-commerce accounts.  Your Facebook account for example, or your Instagram account are accounts with hundreds of pictures that you have uploaded in your lifetime that your family may want to have to remember you by.  And what about your Air Miles? Or your Nectar points?  Over the years it is very easy to accumulate a significant stash of loyalty points and Air Miles, especially for those who fly regularly for business.

Digital assets are not as easy to deal with as one may imagine.  Merely leaving your login details and passwords for your executors to manage your accounts is considered an offence under the Computer Misuse Act 1990.  Although it is unlikely that an Internet Service Provider (ISP) would take action against a personal representative dealing with the administration of an estate, it is best practice for us to advise that the terms and conditions of the ISP should not be breached.  There are also considerable differences in how different companies navigate this grey area.  At present, the law does not deal adequately with how a personal representative may gain access to your digital assets, so it is up to the individual companies to implement their own policies.  These policies and restrictions are usually hidden away in the small print of loyalty schemes and many people will be unaware that certain schemes require an express clause dealing with any points or Air Miles to be contained within a will.

When you make a new will with Brightstone Law, or update your existing will, we will advise you fully on the most up to date recommendations for dealing with your digital assets on your death.  This will ensure that your wishes are respected and ensure your loved ones are able to deal efficiently and effectively with your estate.