Charging Order? The myth

MIKE770

Distracted wrote: »

Hi Mike

She had the property with her ex, who turned really bad, taking the money she was putting in the joint account to cover the mortgage etc. they split up and got lumbered with the shortfall after the bank repossessed an sold the property.

She started paying money back but her former partners father got a charging order put in place on his sons flat (that he lives in).

Me and my now wife have recently (last 3 years) bought a property and have been pursued for the debt again. The courts are in the process of putting a CO on my property (I understand this will be a restriction, as the debt is soley hers)

My query is if there was already a CO for the full amount against her exs flat then can they also put a CO against our property? I would have thought they could only register an interest to the sum of the debt they are owed, not register it twice, effectively registering an interest for twice the amount of the debt.

If a restirction then that is near non existant, but if you were a joint owner of the old property then hopefully a peep may be able to update onthe regulations relating to this area?

eggbox

Distracted wrote: »

Hi,

There's been a bit of an update on my case and I was after some advice if anyone can help.

It turns out that my wife's former partner already has a charging order for the full amount of the debt which was agreed a few years earlier.

I understand they are able to pursue the debt how they seem fit but if a charging order already exists for the full amount owed are they able to attempt to pursue my wife aswell?

Hi Distracted

The problem is a Charging Order isn't a guarantee of repayment. It only "enforces" the underlying CCJ by legally securing it against a debtors asset. As there is no guarantee that the asset "charged" will repay the whole of the debt (eg, if the house is sold but there isn't enough proceeds to pay the whole of the debt off) the creditor is (probably) trying to make sure it has the debt attached to more than one of the debtors assets to increase it's retrieval chances.

Can I ask what response you received from the Solicitor you were going to see?

Distracted

Hi Eggbox,

Yep that's pretty much what my solicitor said! I'm dropping the paperwork in tomorrow, then I'll see him before the court date.

I emailed him a few questions and he pretty much confirmed that a restriction or form K is all they are able to place on the property. He also confirmed that the restriction falls away upon completion of a sale and our only duty is to inform their solicitor within the 14 day period.

I asked about signing a form to waiver my wife's claims to all but 1% but he didn't seem to think that would hold much weight when they pursued my wife.

One thing I was thinking off, if they do pursue my wife once the sale goes through, if my solicitor has the money from any sale, then as far as I'm concerned he must act under my instruction, if I instruct him to pay me the money then I fail to see how they could ever claim any of the money off my wife. I think she would just choose to go bankrupt.

Phones playing up so I'll post again tomorrow

eggbox

Distracted

A CO takes priority over bankruptcy which is why some creditors pursue them to gain priority over other creditors.

It's good your Solicitor seems clued up but a couple of things to add. You don't need a waiver you need to legally register you and your wife as Tenants in Common and then confirm what percentage ownership both of you have. The proceeds of any future sale then HAVE to be distributed, legally, in that ratio. A creditor has no power to prevent or challenge this.

There is also no longer a 14 day time period for notifying a creditor of any sale. The wording of the Form K Restriction does not carry any time limit for notification. It is also the BUYERS responsibility to notify the creditor not the sellers.

So be careful on this if you sell as you will read on this board where some sellers solicitors have actually contacted the creditor (without the sellers knowledge) to try and arrange payment of the CO notified by the Restriction. So make sure your solicitor understands, not only, your instructions but what he also doesn't have to do.

The main problem when selling will be the buyers solicitor not being clued up and insisting the CO has to be paid off prior to a sale to give "clear title". This is where you need your Solicitor to earn his money by getting him to explain the facts of why the CO Isn't required to be paid off to allow a sale to proceed.

Distracted

Ok,

I spoke with my solicitor again - he's pretty much told me that as I seem to have a fair understanding of the process there's not a great deal he can add to be being present during the proceedings, he also confirmed the updated information that you told me above.

Its clearly a difficult point of law, and I did find that he was, as mentioned previously, favouring the debtors point of view.

I asked him a key point in my opinion, that is if the restriction gifts power of attorney to the solicitor, he confirmed that it didn't - I replied that then it is his responsibility to pay the monies as I instruct it when released from the sale.

This point seemed to throw him a bit (probably as I hadn't already sent it to him on an email) he then mentioned that the solictors could be pursued for the debt. I believe that he was wrong on this point, and even if they could be pursued, they would still have no obligation or ability to do with the monies other than as I instructed? (or am I misguided on this)

As its going through the court tomorrow, should I mention the Tenants in common item during the process, or should I remain quite about it.

In terms of obtaining the Tenants in Common, whilst I have printed of a document, is getting this signed enough? Would I have to then register this with the land registery?

Would having the restriction in place mean that it would be difficult to undertake?

If I 'found' an earlier agreement (obviously I haven't sent this through to the land registery) would this prove to be more suitable.

Once again sorry for all the questions, I'm just trying to cover all the angles

eggbox

Distracted

It's not a difficult point of Law; a Restriction gives power of notice not repayment. Your Solicitor's belief he could be pursued for the debt is complete nonsense and he should know that.

And if he favours the debtors point if view, you can point out he could get sued for paying the proceeds of one of their clients monies to a creditor who only has a Restriction because of the above. Simply because they have NOT acted in their own clients best interests.

I wouldn't mention the TIC tomorrow (as it's irrelevant) but get it registered with the LR and you are protected. The LR have verified to me that having a Restriction in place doesn't prevent a change in the % split being changed by owners of the property.

But good luck for tomorrow and please update the board!

sithemadmonkey

Hi all,

Bit of an update regarding my situation:

I still don't know for certain regarding whether or not the beneficial joint tenancy remains severed as a result of the paid-off Charging order. However, it's a bit of a moot point, as I've since found out there's another charging order in the name of the partner, which I believe is still outstanding (makes things a lot easier)

I've been round a few solicitors, and had the whole gamut of responses (ranging from "You've got no chance" to "You've got a solid case" via plenty of "It's not my area of law" and "I've never heard of that"). Once probate is sorted (which is taking forever), I've got an appointment with a property/conveyancing solicitor who will take a proper look through everything and advise on what the most appropriate course of action is - be that some form of restriction on the title or something else.

I will update once I know more, thanks again especially to eggbox and LRR for your help!

eggbox

I think your selection of solicitors responses neatly sums up the difficulties people on this board encounter as it reflects just how many solicitors/conveyances don't bother to update themselves with changes in the law.

Even worse is their continued intolerance and resistance to alter their opinion even when their own paying clients provide the necessary "evidence" to show what the facts are on this matter.

sithemadmonkey

Eggbox, I agree entirely. The solicitor I'm meeting with previously didn't have any knowledge of it either, but once I'd pointed him in the direction of the guidance at the Land Registry on the matter he changed his tune fairly quickly. Judging by his reaction (and similar reactions of others), the issue isn't explicitly stated anywhere in law, but the nature of charging orders makes it similar to other states (like bankruptcy) where it is. The typical reaction is a sort of "ah, it kind of makes sense now you mention it..."

The fact that the solicitor in question was willing to hear me out, and be willing to change his legal understanding based on my research was one of the reasons I'm using him - a wise move on his part since I'm only young, and probably have plenty of house-buying, will-writing and other such legal things to require a solicitor for in future

eggbox

It's good you've found one that has taken the time to listen. The biggest task, though, is to get him to give the assurance to the buyers solicitor that the restrictions will fall away upon completion as it states the the LR practice guides. But your experience should help this board in understanding a little work has to be done upfront given the general lack of understanding by most solicitors on this issue.