Charging Order? The myth

DAKOTA45 · 25 February 2015 at 9:34AM

AMAZING thread!!! I have just taken THREE days to read it all… phew!!

Of particular interest were the problems encountered by Wembley14, as I am in the same position, having had a standard Form K restriction in place, only for the creditor's solicitor to make an application, (without notice) for a second, modified version, invoking the 14 day notice period.

LRR asks why a modification would be deemed necessary and their reason was that a standard Form K does not provide adequate security for the debt.

(I would be interested to hear from LRR about this, as most creditors seem willing to accept the standard form K).

I don't understand this argument, as the judgement creditor lives next door, so I am hardly likely to be able to sell without him knowing!

I am wondering whether the 2nd application was unlawful; as well as preventing me (and my blameless partner) from making any representations at court, any application to vary the original CO would have had to be made within a 21 day period, or so I am led to believe.

Wembley14's modified form K occurred 5 months after the original order… was there an application to the court for this purpose? They would have needed permission to vary the original.

If they were out of time to make the application for a modified form K, does the original ruling apply, or has it been rescinded/revoked by their application?

I would appreciate any advice, as I am now petrified, having seen how difficult it has been for Wembley14 to sell his house.

Gas442 · 25 February 2015 at 10:35AM

Hi all I have been following this thread for a while, as i knew it would come in useful when I had to deal with a particularly nasty DCA (Link).
Anyway here is my situation, which I'm hoping someone can advise or offer some help on, and many thanks in advance.
I have a CO Restriction for an ex GE Home loan obtained by Link on me, which I am paying monthly as instructed by court after recently having a suspended attachment of earnings. I never defended or went to court as my wife was diagnosed terminally ill at the time, so didn't deal with it as I should of!
Link being the !!!!!! they are have hounded and hounded me and my wife causing great distress. They have now decided to almost double the debt and claim contractural interest based on original loan agreement? I thought they were not allowed to do this?
Unfortunately my wife passed away recently (a lot sooner due to these vile pond life) and I am now left to sort this mess out. My head is a lot clearer now and I am ready to fight these nasty people with every tactic in the book (just like them),to safeguard my kids and their futures.
Any advice is very much appreciated.

Land_Registry · 25 February 2015 at 10:39AM

DAKOTA45 - interesting to note that you are in a similar position to Wembley14. As mentioned previously in my experience the extra modified restriction is rare and whilst two examples don't suggest that is changing it would be useful to know why a creditor does apply in this way but I guess only a creditor would be able to tell us?

LRR asks why a modification would be deemed necessary and their reason was that a standard Form K does not provide adequate security for the debt. - we are aware that the modified restriction is applied for as the CO and form K restriction are deemed inadequate security for the creditor but presumably the creditor has to demonstrate this to the court in some way? That is really the question asked previously.

I would be interested to hear from LRR about this, as most creditors seem willing to accept the standard form K - it is really for others to comment as Land Registry are not privy to the court process or the decisions made as we deal with the resultant application to protect the CO on the registered title

I don't understand this argument, as the judgement creditor lives next door, so I am hardly likely to be able to sell without him knowing! - what is the argument though?

I am wondering whether the 2nd application was unlawful; as well as preventing me (and my blameless partner) from making any representations at court, any application to vary the original CO would have had to be made within a 21 day period, or so I am led to believe. - something that eggbox or others might be able to advise on although I would assume that if the court approved it then there is an appeal process?

Wembley14's modified form K occurred 5 months after the original order… was there an application to the court for this purpose? They would have needed permission to vary the original. - I don't think we established any details around why and how the creditor obtained the modified order but something that would shed light on what happens and why

If they were out of time to make the application for a modified form K, does the original ruling apply, or has it been rescinded/revoked by their application? - another one for others or those familiar with COs and the court process

I would appreciate any advice, as I am now petrified, having seen how difficult it has been for Wembley14 to sell his house. - I think your circumstances may differ a little here though as Wembley14 did manage to sell the house but it was the registration by the buyer which then failed as the modified form K was not complied with. I say this not to inflame the situation but simply to emphasise the point eggbox has made many times re how conveyancers/solicitors vary as to the advice they give their clients.

Whilst I understand that in some cases challenging why and how the creditor achieved the modified CO/restriction might be helpful I would suggest that greater emphasis might be better placed on what happens next where you seek to comply with the modified restriction and the creditor refuses to provide the confirmation required. It is this point which remains unanswered as well with regards how the court would view such a refusal?

I suspect the answer to that conundrum is that you would have to go to court to demonstrate how you have done everything asked of you but the creditor is now at fault but can anyone confirm or otherwise? Are you using a solicitor for the sale who can perhaps advise on that point?

DAKOTA45 · 25 February 2015 at 5:51PM

LRR… Well, this new 'double whammy' technique seems highly irregular to me!

Blake Lapthorn are basically saying that a form K restriction is not 'fit for purpose' and that it does not provide adequate security for the debt… hence the need for a modified version.

The main reason they gave on the application form was that my property could be sold and they would only be notified of this AFTER the sale has completed.

(I can email the application form to you if you think it may help).

Surely, if the standard form K was not fit for purpose, LR would have amended it?

I smell a rat… Blake Lapthorn were present at the hearing for the Final CO but made no mention about needing to modify the restriction. It was over a month later that they made the (without notice) application, which sought to deliberately prevent myself and the co mortgagee from making representations.

The 14 day notice acts to ensure that the debt is paid up front as they (seemingly) refuse to supply the notification certificate until the debt is settled.

There was no reason at all for them to have modified the standard restriction and I am just amazed that the court went along with it.

DAKOTA45 · 25 February 2015 at 6:07PM

LRR…

I am not selling at the moment… I had secured a sale long before the Interim Charge was placed, but the creditor interfered with the sale by threatening my buyers, causing them to withdraw….

DAKOTA45 · 26 February 2015 at 10:34AM

WEMBLEY14

Did they go through the courts to obtain the modification and if so, were you notified? I, too, have been sent a modified form K, (after a JO for a standard form K was agreed). It seems very odd as there were no special circumstances.

I think this shows that the modified restriction added was so rare, that the LR was not sure how to deal with it, The LRR has already confirmed this rarity. He says that their must have been other factors involved when the courts permitted this application. But I can confirm that there were no other issues to aid this decision to allow modification to original standard worded restriction, which was added 5 months prior.

DAKOTA45 · 26 February 2015 at 10:55AM

Hi LRR, WEMBLEY14 & EGGBOX….

I thought you might be interested to hear the reasoning behind Blake Lapthorn's application for a modified version of form K;

"I confirm that the standard restriction Form K contained within Schedule 4 of the Land Registration Rules 2003 provided by the Land Registration Act 2002 for the scenario where a Creditor has the benefit of a Charging Order over the beneficial interest of the Customer under a trust:-

1. Fails sufficiently, adequately or in any way protect my client's interest and/or security

2. Frustrates the purpose of the Charging Order and the Charging Orders Act 1979 in that it fails to protect my client's interest and/or security and thereby does not secure payment of the money due under the Judgement.
Consequently, pursuant to section 46 of the Land registration Act 2002, it is necessary or desirable for the Court to make an Order requiring the Land Registrar to enter the restriction sought to protect the Claimant's right or claim in relation to the registered estate or charge.

3. The standard form restriction only requires the applicant for registration to confirm that they have notified Mr. XXXXXX of the disposition. Therefore notice about the sale is to be given to the Claimant after the sale has taken place. That is of no use since the Defendant can dispose of the sale proceeds in any way he pleases, leaving my client with no security".

Land_Registry · 26 February 2015 at 1:03PM

Thanks DAKOTA45 and all of this helps the discussion around the subject.

From a registration perspective an amended form K restriction is only likely to be registered if the application submitted to us includes a court order instructing us to register it. If it is not lodged for example then we should reject the application.

If a court order is submitted but does not specifically instruct us to register the modified restriciton then we will advise the applicant that if they still want to register the modified restriction then they will have to go back to court to get an amended order.

In essence, the decision to order/instruct that a modified form K restriction should be registered is initially the court's decision.

As you will appreciate I can't speculate on what the applicant's motivation is re such an approach.

As you can see from Blake Lapthorn's application to the court they have applied and presumably the court accepted their request and issued an order instructing that a modified restriction be entered.

My understanding is that such applications to the court are based on the contention that the form K restriction frustrates the intention of the Charging Orders Act 1979 because it could allow the proceeds of sale to be dissipated before the creditor learns of the sale or the existence of the proceeds. It is the COA 1979 which is the key piece of legislation here and how the court views that and any application. It is not the subsequent registration process.

eggbox and others are I suspect likely to have a better 'feel' for how such matters are currently being viewed by creditors and the courts as well as solicitors or those advising debtors. This thread has sought to address some of the issues which have arisen around a form K restriction down the years and the misinterpretations/misunderstandings some have experienced.

Whether some solicitors, who are aware of the perceived limitations attached to a form K restriction and how it may be overreached, are now of the view that they need to go one step further on behalf of their client, the creditor, I do not know and as mentioned such applications remain rare.

It will be interesting though to see if there is a shift in their approach as after all the issues faced by debtors/creditors relate to the COA 1979 and how such matters are then viewed by the courts who then issue the orders - as it is a question of law there are always likely to be challenges and differing views, hence the need for an arbiter, the court, on such matters.

JMSCV · 27 February 2015 at 8:46AM

eggbox wrote: »

Thanks for clarifying JMSVC, hopefully LRR can now clarify what the situation is?

Hi LRR
Did you manage to find out what the situation maybe here?
Thanks
JMSCV

Land_Registry · 27 February 2015 at 9:40AM

Apologies JMSCV but I thought I had clarified the position in the earlier posts #1763 and #1765 but I should have repeated that after eggbox's post

Your application would presumably need to demonstrate that you have no BI in the property now and that the Transfer by the OR was not made subject to the NRAM order for example.

Charging Order? The myth

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