Statutory charge

PDF download, 596 KB

This information is general and is not a substitute for legal advice. The Legal Services Commission provides free advice for most legal problems. Contact the Legal Helpline on 1300 366 424 or visit www.lsc.sa.gov.au or www.lawhandbook.sa.gov.au

What is a statutory charge?

When you receive a grant of legal aid, Legal Services will pay a lawyer to represent you. However, legal aid is not free. 

If you own real estate, you may still be eligible for legal aid to cover your legal costs, but you may be required to pay back these costs.

By law, Legal Services is entitled to register a statutory charge (charge) over your real estate to make sure that you repay the whole of your legal aid costs eventually. 

A charge ensures that when your real estate is sold, refinanced or transferred, your costs are repaid.  

Why can Legal Services register a charge?

Eligibility for legal aid is partly based on your ability to pay your legal costs. However, while you may own real estate, the equity in your real estate may not be as accessible as income or savings. If this is the case, you cannot be expected to take out a loan or sell your real estate to pay for a lawyer to represent you. Nor should you have to represent yourself or discontinue your case. 

The ability of Legal Services to register a charge over your property ensures the repayment of your legal costs without causing you financial hardship.

Will the charge affect me?

Your legal costs may be secured by a charge if:

• you or a financially associated person own or are buying real estate, and
• your case costs more than $2,500.

A financially associated person includes anyone who usually helps you financially, anyone you usually help financially, and anyone who could reasonably be expected to help pay for your legal services. This includes a spouse or de facto partner, and may include parents or other family members, a company, trust or other financial entity. 

Real estate includes any house or other land that you or any financially associated person own or have an interest or share in. This includes your principal place of residence or family home. A charge may be over property owned by a financially associated person even if your legal costs have nothing to do with them.

Ask your lawyer if you are unsure whether the charge will affect you. By accepting legal aid, you accept all of the conditions including the charge. Once the legal costs are incurred, the charge will be registered.

Is GST included in the charge?

No. Goods and services tax (GST) is not payable on the amount secured by the charge. 

Does the charge cost anything?

Yes. There is an administration fee of $300 which is added to the amount secured by the charge. This covers our costs of administering and removing the charge. We recoup this fee when the costs are repaid.

If you choose to repay your legal costs early, we will reduce the amount secured by the charge. If you pay in full within 6 months, we will discount the amount secured by $300. If you pay within 2 years, we will discount it by $150. If you pay within 4 years, we will discount it by $100. Otherwise, you will need to pay all of your legal costs and the fee.

How will I know if my costs will reach $2,500?

Nearly all family and civil cases cost more than $2,500. Very simple criminal cases like guilty pleas and short trials may stay under $2,500. Longer or more complicated cases will go over. 

It is your responsibility to find out whether your costs will go over $2,500. You can ask your lawyer to tell you when your legal costs are nearing $2,500. 

The funding cap

Commonwealth and State Funding Guidelines impose limits on the amount of legal aid funding that can be provided on a single case. A funding cap is applied to all grants of aid including those where a charge has been registered.

What if I have a mortgage?

If you have a mortgage, you should ask your lender whether their consent is needed before a charge may be registered over the property.

How does the charge work?

You and your financially associated person (if applicable) will be required to sign a consent to a charge. The consent must be signed before we will extend funding past $2,500. 

Even if you refuse to sign the consent, we can still register the charge when the costs are incurred. The charge is registered at Land Services SA (previously the Lands Titles Office) and can be seen on a property search. You will be notified when the charge has been registered. 

Unlike the contribution levied when legal aid was first approved, you do not have to pay the total costs secured by the charge immediately. The charge means that when the real estate is sold, transferred, refinanced, further mortgaged or when you or your financially associated person die, the whole of the contribution secured by the charge is paid back to us. This includes the first $2,500 (less any contributions already paid).

The charge will remain until:

• you choose to repay, or 
• you sell or transfer the real estate to a new owner, or
• you refinance or further mortgage the real estate, or
• you die (or your financially associated person dies, if they own the real estate).

These events might be many years away. We simply wait to be repaid until one of these 4 things happens.

What about repayment options?

While you are not required to repay your legal aid until one of the listed events happens, you can choose to repay at any time, either in full or by instalments of $20 or more.

If you would like to make early repayments, please call us on (08) 8111 5555. 

Can I avoid the charge?

The charge is a condition of your aid. By accepting legal aid, you accept the charge as a condition.

If your case costs less than $2,500 when it finishes, we will not register a charge. However, it is your responsibility to find out how your costs are going. We do not always know the work your lawyer has done, so we cannot tell you.

You can appeal against a decision to charge a property. You will need to explain why the property should not have been charged. Failing to check with your lawyer about the status of your legal costs will not usually be accepted as a valid reason to avoid a charge.

If a charge has been registered, but you are facing financial hardship when the time comes to repay it, you should tell us. We can consider whether to accept a reduced payment. If you are buying other real estate, we can consider whether to move the charge across to it.

What if I need more information?

If you are unsure how the charge will affect you, or if you have further questions, you should ask your lawyer or our Statutory Charges Officer. We cannot remove the charge just because you did not understand how the charge worked. 

If you have any questions, you should raise them as soon as possible. If you do not want legal aid on these conditions, let us know. Call us on (08) 8111 5555 or email lsc.correspondence@lsc.sa.gov.au. 
 

14 October 2024