After-sale shared equity procedures: guidance

Guidance to cover after-sale procedures in relation to Scottish Government’s various shared equity schemes.

8. Subsequent Securities

The terms of the Ranking Agreement prohibit the shared equity owner from granting any subsequent securities ( i.e. securities ranking behind both the Primary Lender and the RSL or, as the case may be, Scottish Ministers) without receiving the consent of both the Primary Lender and the RSL or, as the case may be, Scottish Ministers.

Also, the terms of the shared equity agreement which the owner will have entered into with Scottish Ministers provides that, if another security is granted without the consent of Scottish Ministers, this triggers a "payment event" which would require repayment by the owner of Scottish Ministers' equity loan.

As a matter of policy, and in order to help ensure that owners can continue to afford to meet their secured lending commitments, Scottish Ministers will no longer give consent to the creation of any such additional securities, even if the proposed lender is willing to enter into a new ranking agreement in terms of which the new standard security would be third-ranking behind the securities in favour of the Primary Lender and the Scottish Ministers.

If RSLs receive requests of this type, an email or letter in the form set out in Annex 8 should be sent to the owner.


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