Charging Order? The myth

eggbox · 28 January 2015 at 2:44PM

asparagus18

Hopefully, Land Registry Rep may be able to clarify what you are asking in respect of your partner already being an owner of the property but also wanting to purchase it outright, too?

As long as he has a "new mortgage" to purchase the property I would say it is as easy as that. But I think what needs to be avoided is just transferring your half to him as I don't think that creates overreaching?

But hopefully LRR can clarify what the circumstances are regarding this type of sale?

asparagus18 · 28 January 2015 at 3:04PM

eggbox wrote: »

asparagus18

Hopefully, Land Registry Rep may be able to clarify what you are asking in respect of your partner already being an owner of the property but also wanting to purchase it outright, too?

As long as he has a "new mortgage" to purchase the property I would say it is as easy as that. But I think what needs to be avoided is just transferring your half to him as I don't think that creates overreaching?

But hopefully LRR can clarify what the circumstances are regarding this type of sale?

Many thanks for your reply, very useful.

No, I’m not thinking about “just transferring” my share, as I don’t see that as a workable route. If it was possible for the CO to become overreached that way, everybody would be doing it.

The idea is for him to buy my half of the property, as if he were an unrelated third party, i.e. with a new mortgage and a full sale process. One issue though is the price – it couldn’t be done for the approx. market value as he wouldn’t get a mortgage in his sole name for that amount. It would have to be much less (not a tenner!) – not sure if that could be an issue.

eggbox · 28 January 2015 at 4:14PM

asparagus18 wrote: »

No, I’m not thinking about “just transferring” my share, as I don’t see that as a workable route. If it was possible for the CO to become overreached that way, everybody would be doing it.

I understand what you say but the fact is many people with a CO aren't even aware that they have become "tenants in common" so are unaware of their options? And whilst a transfer wouldn't create overreaching there is nothing to stop you legally transferring your share to your husband (either free or for a charge.)

The transfer would then render the Restriction "superfluous" (as the LR term it) as you would no longer have any Beneficial Interest in the property. If this happened I can see no reason, therefore, why the LR wouldn't have to remove the restriction on this basis? As LRR has pointed out, until somebody has actually attempted to remove the Restriction this way they can't comment on it as its legal advice? So it may be worth pursuing?

But you are at liberty to sell your house for whatever you want (as long as it covers the outstanding mortgage.) There is no law to say it has to be sold for market value as some people strangely think?

Land_Registry · 29 January 2015 at 9:52AM

Both - from a registration perspective overreaching would only occur if the transfer was for money and by two or more proprietors to a third party.

So in this case the answer is No as you are both registered as the owners and you would be selling to someone who was not a third party, namely one of the original joint owners.

Your next question may well then be 'Ok, so why don't we just sell to A N Other (a friend?). The restriction is overreached and then they sell it back to me on my own with a new mortgage'

From a registration perspective that may well be all well and good but what impact that might have in law around the charging order and your partner's beneficial interest is something to be seriously considered before going down that route. The risk of A N Other going back on the 'deal' is also one to consider but I wonder what view the courts would have in such circumstances. And as you know already we are no involved in or privy to the legal aspects involved with debt, creditors and charging orders.

eggbox · 29 January 2015 at 10:33AM

Thanks LRR and that does put a tin lid on that route (but that is useful to know!)

However, the Law (unfortunately) works best for those who know how to use it. So I do now have to ask that as there is no legal obstacle on an owner of property with a Form K Restriction selling (or even giving away) their half share to another party; how would the LR have to treat this action in regards to the Restriction placed on the deeds in the name of an Ex-owner. To me , as long as the Restrictions terms have been met, it would have to be superfluous and removed as the "asset" the CO has been placed on no longer exists?

I also think the Courts view would be limited due to the relative weakness of the Restriction. There is no legal obligation placed on the CO being settled at the point of sale so no rules have been broken. And the Courts would be only involved if the creditors tried to block the move by way of a freezing order which, as I've mentioned, is expensive and carries financial risk for the creditor so would be extremely unlikely. Especially, in the cases of CCA debt (which this thread is primarily based on) which is mostly chased by DCA's as they will have paid peanuts for the debt.

As a side note, the Goverment and the Courts are actually waking up to the problem DCA's are causing. From October the Bankruptcy limit is due to be raised from £750 to £5000. From April there are changes due to be implemented to the Civil Procedure Rules, whereby, a creditor who wants to issue a Court Claim has to send you the paperwork for the loan/credit card up front and allow you 28 days to acquire legal advice on your position.

asparagus18 · 29 January 2015 at 11:07AM

Thanks for the informative posts – looks like that route is closed then.

However, in posts 1698 and 1701, skintbex describes a situation not too dissimilar:

“I am selling my property to my ex and his wife. It's currently in joint names, and he's basically remortgaging and buying me out.”

Is the vital difference here the fact that there is a third party (the new wife) involved, in addition to one of the current owners?

Land_Registry · 29 January 2015 at 11:13AM

eggbox wrote: »

Thanks LRR and that does put a tin lid on that route (but that is useful to know!)

However, the Law (unfortunately) works best for those who know how to use it. So I do now have to ask that as there is no legal obstacle on an owner of property with a Form K Restriction selling (or even giving away) their half share to another party; how would the LR have to treat this action in regards to the Restriction placed on the deeds in the name of an Ex-owner. To me , as long as the Restrictions terms have been met, it would have to be superfluous and removed as the "asset" the CO has been placed on no longer exists?

eggbox - firstly, and I appreciate you may not mean it in this context, but you cannot transfer a half share in a legal title. It is the whole or nothing albeit joint owners can transfer to just one which in effect may be viewed as the same thing.

A transfer not for value whether by 2 to just 1 or even a third party would not overreach the restriction. So if they did transfer from 2 to 1 then the form K would remain. They would still comply with the terms of the restriction but that in itself does not secure removal anyway unless the wider required criteria of a transfer to a third party, as already mentioned, occurs.

eggbox · 29 January 2015 at 11:52AM

Land_Registry_representative wrote: »

eggbox - firstly, and I appreciate you may not mean it in this context, but you cannot transfer a half share in a legal title.

Could you just expand on what you mean by that, please?

Land_Registry · 29 January 2015 at 11:55AM

People often say that they want to transfer their 50% to someone else (joint owner or child or relative etc) or when a joint owner dies they left their 50% to the children and the children then want to register their share.

That cannot be done BUT the actual registered owner(s), the legal owner(s), can transfer the whole of the legal title to themselves and whoever to achieve the same end result.

You have to separate out the legal title (which we register) and the beneficial one (shares, wills, trusts, estates and debts against one persons share).

The significant understanding behind this is that the registration formalities are clear as to the legal ownership but the finer details re the beneficial one, whether it is a form K restriction or say a form A one re tenants in common are less clear. Hence you have to then dig deeper into the world of probate law, charging order law, trust law etc etc to understand them fully.

eggbox · 29 January 2015 at 12:02PM

Thank you (and you are the experts) but when I read on (Solicitors) web pages that Tenants in Common can "sell or even give away their share" are they missing the vital point that it can only be done with the other tenant in common?

Charging Order? The myth

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