Charging Order? The myth

eggbox · 7 October 2014 at 2:13PM

It's true Charging Orders are very difficult to prevent, but you do have the right to object if you feel there are reasons why it shouldn't be registered?

If you don't attend the hearing a CO will definitely be registered; so if you do have any reasons for the charge not to be registered it isbetter to let the Judge hear what they are as you have nothing to lose.

donttakemyhouse · 7 October 2014 at 2:25PM

The only real reason apart from not having any money is that we feel the debt us unfair, if the company my husband was working for had paid him he would have paid the joinery company. They put their company into liquidation and then carried on under a slightly different name. It was a joint project and the joinery company always knew he wasn't able to finance this himself and was totally replying on payments from the main contractor.

I wasn't sure whether this was a valid objection in these circumstances. That is was brought me to this forum.

We haven't got children at home, elderly parents living with us or any disabilities! Which seem to be the normal reasons for objections.

wembley14 · 16 October 2014 at 9:36PM

Hi eggbox and LLR
I'm sorry I have not been keeping you posted but the saga continues and the new owners have still not been registered(sale 23rd may).
Land Registry has cancelled the buyers solicitors application due to buyers not complying with restrictions 14 days notice to creditors. cancelled 29th july. since then the buyers have once again tried to apply for registration but has been refused again by LR. giving the same reason. LR has suggested to them to apply for cancellation RX3 Form due to them not being able to provide certificate.
The LR has been giving conflicting information to my solicitor and myself for months regarding this restriction. On 18th august I received email from LR apparently giving a definitive answer from one of their company lawyers.
It states that the buyers had not provided a certificate confirming they have notified creditors of disposition. The LR also confirmed that 'No acknowledgement was needed from the restrictioners of the notification.' This contradicts their previous info given in earlier correspondence. LR has given the buyers till Nov 6th to comply with their requisite. This requisite states they need certificate from creditors saying they have received 14 days notification. My head is buzzing with going around the same things over and over and getting no where. The buyers solicitor has obviously not and will not comply with the requisite because of the agreement given to them, the holding back of funds from sale if there is registration problems. This I agreed, solely on the basis of all parties complying with restriction order. This clearly has not happened. I have also wrote to creditors with a formal complaint regarding their non sending of up to date statements and requesting a full explanation of their actions. It has been six weeks since letter but no reply as yet.
My partner is getting more and more depressed with this on going saga. It has been 5 months since sale but the poor old people who bought the property are still not registered. What has happened to the LR cancelling without application.
What is the end game once 6th nov has elapsed? How long have you got to register as new owners, will this restriction be left on propriertorship which is named in my beneficial interest? what is the point of the restriction then?
It has all been one big joke. My solicitor who has been left scratching his head. He is just saying you will have to pay the creditors off. Which is exactly the opposite to why I started this saga after reading BLUEBACK and others.
What next I wonder.

Land_Registry · 17 October 2014 at 9:21AM

wembley14 - I can appreciate the frustrations this must be causing everyone concerned

The matter will have to be resolved with the local office so it is difficult o offer anything more than what was said several posts back at #1463 and #1474

The key, from a registration perspective, is that whilst the two restrictions are quite clearly linked the requirements to satisfy each are different.

My original advice was to apply to cancel the second restriction and supply evidence to support that application. I note that you refer to the same advice as being given by the local office as well but from the sound of it no such application has been made.

If you have received conflicting information/advice from the local office then it is important to seek clarification from them. If we have got something wrong then we should explain, apologise and correct this.

As far as you final questions are concerned there is no 'end game' in theory re how long have they got to register but at some point the failure to register will probably lead to them having to take action against their own solicitor in some way if he/she completed on the purchase without resolving the issue around the restriction.

We will not be able to register the transfer and leave the restriction on the title.

Whilst this is an unusual case, the issue as I see it remains with trying to understand/unravel the court's position re the judgement/debt. As I mentioned in my earlier posts it seems likely that the second restriction came about because the creditor applied for additional protection which the court then agreed to.

As also mentioned we are not directly involved in the court process and/or the administration of debts/charging orders but I assume that the court action took place without your direct involvement?
If so then perhaps eggbox's wider understanding of the legal process might be able to help you and the solicitors to understand what happened and why and whether there is a course to take with the court to dismiss the order which led to the second restriction being registered?

You mention your solicitor as 'scratching his head' but has this route been considered and if so rejected? If so then why?

I am happy to take a further look at the specifics re the registration and the enquiries/correspondence with us to see if I can shed any further light on the position but we are now a few months on from the original posts/email - if you could contact customer.service@landregistry.gsi.gov.uk again then I can trace the record again although I should again stress that the issue re registration and specific enquiries must be handled through the local office. My involvement would be purely general in an effort to help with understanding in this thread.

eggbox · 17 October 2014 at 10:24AM

Hi Wembley14

The issue is clearly the terms of the Restriction stating that the creditor has to supply the LR with a letter stating that it was notified as per the terms of the Restriction. If that was done then, to me, the notification becomes a techical issue and there is a case for your buyers solicitor making an applicartion to the court to cancel the Restriction on the grounds the creditor is prejudicing their interests in purchasing the property.

Do you know for certain if the buyers solicitor notified the creditor as required?

wembley14 · 17 October 2014 at 7:56PM

Hi Eggbox & LLR,
thanks for your responses. I hope my frustration wasn't too obvious in my recent post. HAHA. but I think im slowly going mad. The wifes got my bags packed.
All because of a 14 day notification. So LLR is it ok for buyers solicitor to give the restrictioners the said notification now, and then wait 14 days before making yet another application for registration. If not, why is the local office making the same requisite for a certificate from creditors to confirm they have had notification from the buyers solicitor ?
Also eggbox I am not sure if they did actually fully comply with restriction when first applying for transfer. My solicitor told me he had supplied the buyers with a certificate in the form of a letter received from creditor on 13 may. This letter was requesting payment for debt out of proceeds. My solicitor felt this would be sufficient for certificate of notification to creditors. The sale was completed on 23rd May and buyers application for transfer was lodged 28th may.
LR then sent requisites to buyers on 2nd June. The buyers did not assist with the requisites citing no cooperation from creditors and on 29th July the LR cancelled the lodged application for transfer. There was nearly a 2 month gap between the lodged application and cancellation by LR yet the buyers appear to have not tried to resolve the certificate requirement.
The option regarding application for cancellation. My solicitor, who has been helping me with this, says the creditors will only block this once they have been notified by LR of the RX3 APPLICATION. What evidence should accompany this application for cancellation. Thanks for any more help regarding this.

Thrugelmir · 17 October 2014 at 8:04PM

donttakemyhouse wrote: »

The only real reason apart from not having any money is that we feel the debt us unfair, if the company my husband was working for had paid him he would have paid the joinery company.

Unfortunately that's the nature of business. Many peoples problems start through no fault of their own. Particularly when a customer defaults. This in itself can create a chain reaction.

eggbox · 17 October 2014 at 8:19PM

Hi Wembley

I'm sure LRR will assist in the RX3 application details but I think you should include evidence that the creditor has been notified (the fact they have sent the letter asking for payment from the proceeds would be proof of this.)

My thinking is that it's the buyer who should be trying to get the Restriction cancelled on the grounds the creditor has been notified of the sale and they have, also, paid money to the seller for the house. Whilst I understand that the wording of a Restriction is crucial to how the LR can act, I would argue that the point of a Restriction is the intention for which it is placed, namely, to notify that a debt exists and the creditor is informed if a sale is being made. That has happened. As there is no legal requirement placed on the seller, at the point the sale is made, to pay any of the proceeds to the Restrictioner; it has to be argued that the creditor withholding notification to the LR is prejudicial to the buyers rights after having paid money to the seller.

Land_Registry · 20 October 2014 at 9:57AM

Whilst I can appreciate the frustration which exists around this matter I think it is important to again emphasise the much earlier postings around how and why the title ended up with two restrictions registered against it, namely the form K restriction and the second modified restriction.

If you focus solely on the form K restriction, the need to merely notify the creditor of the sale and the expected overreaching then that is fine. However if you then take the view that merely notifying the creditor also takes care of the modified restriction as it is the same debt and that the registration process will take care of it then it will be frustrating I'm afraid.

The key, in my experience, is to understand that the sale/purchase cannot be registered until both restrictions have been complied with/overreached/withdrawn/cancelled. The buyers may well argue that the debt is no longer relevant to their property but that is missing the point re the order of events to be followed here.

As mentioned in the previous postings as far as I am aware, the modified restriction, tends to only come about as the creditor has applied to the court for additional protection and you could argue that is exactly what they have managed to achieve here. Land Registry is though not directly involved with the court process so I assume the court would be able to advise as to what legal arguments were made at the time and/or how this came about - do you know? It might help others to understand the basis on which the court ordered such additional protection?

How that is applied for, achieved and then enforced is not something Land Registry are directly involved with. We are responsible for recording valid interests on the register, ensuring that they are complied with as appropriate from purely a registration perspective and for their subsequent removal as appropriate. In many cases this is quite straightforward, especially where the restriction is complied with or overreached.

In this case the form K restriction is both complied with and then overreached but importantly the modified restriction is not, hence the need to apply for it's cancellation and to provide suitable evidence to support that cancellation.

eggbox mentions 'I would argue that the point of a Restriction is the intention for which it is placed, namely, to notify that a debt exists and the creditor is informed if a sale is being made' - the first part is quite accurate but the modified second restriction states quite a different intention.

Post #1454 refers to the wording of the restriction and I have editted and emboldened it for emphasis

NO DISPOSITION OF THE REGISTERED ESTATE IS TO BE COMPLETED BY REGISTRATION WITHOUT A CERTIFICATE ............OR WITHOUT A FURTHER ORDER OF THE COURT WHICH ORDERED THIS RESTRICTION.

So, notifying the creditor is one thing but in this case you then need them to supply the certificate, which in turn could then also lead to cancellation of the restriction.
If they don't supply it then the clue is in the wording and I would imagine you go back to the court which issued the order and argue the case which would presumably rely on satisfying the court with regards the reasons why they granted this 'additional protection' in the first place? eggbox refers to this as well above

From a registration perspective there is also the opportunity to apply for a cancellation in the manner already advised by the local office. I cannot really advise as to what supporting evidence you would supply as it sounds to me as if it is not as simple as we need x, y and z I'm afraid as you need to prove a point as to why the interest should no longer be protected against the title. Based solely on the information you have provided in this forum it seems logical to me that any evidence would rely on proving that you have complied with any legal requirements re the debt/charging order and as such that may rely very much on the court providing the evidence you need.

Whilst proving that point may mean going back to the court which issued the original order it is your legal advice you must rely on here as well.

Please note that I am not seeking to deal with the actual specifics of this case here as that must be done by the local office. I have tried to cover the general points as I see them. Whilst I did ask for further email contact to re-establish the specifics of the property/title this has not been supplied but I am not too sure it would change anything with regards the advice given by the local office.

I will of course continue to monitor the thread as always but I suspect there is little more I can usefully add and it is your own legal advice and our local office guidance which needs to be followed. If you can answer the questions re the court order then this may open the door for others to offer some wider advice as well of course.

wembley14 · 21 October 2014 at 1:59PM

Thanks once again for responses from Eggbox and LLR.

I have no idea why they wanted to modify original restriction. But reading practice guide I noticed that when applying for modification, you are supposed to remove original using RX4 form. They obviously did not do this, as the original, which was filed 5 months prior to modified one, was left on proprietorship register and it was this one that caught the overreaching rule. So the modified one should not have been allowed by Land Registry. The creditors were informed by my solicitor of the forthcoming sale months before sale. Therefore fulfilling the 14 day notice requirement. The creditor then acknowledged the notification by saying and accepting that the original restriction will be overreached but they will not accept that the modified restriction will be overreached, and they will not provide certificate needed. Even though this was not a consent restriction.
Since my last post my solicitor has been in contact with local Land Registry and has highlighted the continuing conflicting and contradictory info given to me and him previously. They have now suggested that the new owners solicitor should apply for DISAPPLYING the restriction, using the notices given to creditors as evidence to do so. They (LLR) have said to my solicitor that a lawyer will look at application. This again is different from info given previously. DISAPPLYING, according to practice guide, it states that this application is usually used when creditors/restriction holders are now dissolved. My creditors are very much solvent. CONFUSED. YOU WILL BE. AS AN OLD SITCOM USED TO SAY.

Charging Order? The myth

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