Equitable charge

If an assisted person gives VLA an equitable charge over their property, then they are giving VLA security for their future payment of a contribution.

The equitable charge does not give VLA any legal ownership of the property. Instead, the equitable charge gives VLA the right to be paid from either:

  • the proceeds of a future sale of the property
  • the proceeds of any other future financial dealing with the property.

When may VLA ask a person to sign an equitable charge?

VLA may ask a person to sign an equitable charge as a condition of a grant of legal assistance in any of the following three situations:

  1. Before VLA provides a grant of legal assistance: The equitable charge will then secure payment of some or all of the legal costs involved in the matter.
  2. When VLA provides further assistance: The charge will then secure payment of some or all of the assisted person’s current and future legal costs.
  3. At the end of a grant of legal assistance: The charge will then secure payment of the amount which VLA calculates as the assisted person’s final contribution.

VLA may ask for the equitable charge instead of, or as well as, requiring the assisted person to pay an initial contribution or a final contribution.

What if the person does not sign an equitable charge before VLA makes a grant of legal assistance?

If VLA asks a person to sign an equitable charge as an initial condition to the grant of legal assistance, VLA will ask the person to sign the charge and return it to VLA in a form which enables VLA to register it.

If the person refuses to sign, then VLA will cancel the grant of legal assistance.

How does the equitable charge secure payment by the assisted person?

If an assisted person signs the equitable charge, then, usually, VLA will lodge a caveat on the title documents for the property.

Equitable charges on further assistance

If VLA asks a person who is already receiving a grant of legal assistance to sign an equitable charge, then VLA will grant further assistance on the condition that VLA receives the signed equitable charge from the person in a form which enables VLA to register it.

If the assisted person refuses to sign the equitable charge, VLA will tell the lawyer for the assisted person that any further cost of acting for the assisted person will not be paid by VLA. VLA will also suspend the grant of legal assistance and write to the assisted person and their lawyer to tell them that the grant of legal assistance is suspended.

The grant of legal assistance will continue if the person:

  • signs the equitable charge
  • gives VLA a satisfactory explanation for not signing the charge
    or
  • asks VLA to reconsider its decision about imposing the equitable charge and the decision is varied.

If the assisted person does none of these things, then VLA will permanently stop the grant of legal assistance.

What if a person who has refused to sign an equitable charge applies for a new grant of legal assistance?

If an assisted person failed to sign an equitable charge in relation to a current or finalised grant of legal assistance and the person then applies for a new grant of legal assistance, then VLA will grant assistance only if the person either:

  • signs the original equitable charge
  • gives VLA a satisfactory explanation for not signing it when originally required to do so.

The person must also, of course, be eligible for a grant of legal assistance (that is, the person must meet all VLA’s threshold requirements relating to type of matter, means and merit).

VLA will also require the person to sign an equitable charge for any new grant of legal assistance before it can begin unless the condition has been waived on reconsideration.

What if the person still refuses to sign the original equitable charge?

If the person refuses to sign an equitable charge to secure the payment of money they already owe VLA, then VLA can put a statutory charge on the person’s (or any relevant financially associated person’s) property in relation to any grant of legal assistance.