Charging Order? The myth

harisumo

Thank you again Eggbox, I'd be lost without this thread and in particular your continuing valuable advice. It shows how misleading their correspondence is and how economic with the truth these people are. We don't really have anything of great value anyway, everything is 'past its sell by date' and due upgrading, including the car which is ten years old now, we just don't have the financial means anymore so keep going with what we've got for as long as possible. We pay interest only on the mortgage and goodness knows when we will ever catch up with that at the rate things are going. I am going to relax more about it all and let it run its course. Thank you again.

fatbelly

harisumo wrote: »

My poor husband is worrying also, the loan was nothing to do with him, he is convinced that in the end they might send balliffs and goodness knows what else!

It's a consumer credit act debt so can only be enforced in the county court, whose bailiffs are salaried employees of the court and are not the ones that cause problems. You would be pre-notified of this and would then have the opportunity to suspend the warrant on a court form (N245) - post here for further info if it happens. I don't think it will.

BlueBunny_2

Hi everyone
Very informative and supportive forum. Has anyone used a solicitor who has done this successfully,or even has a good attitude to the problem.
A lead to any firm,anywhere in the country would be appreciated.
Perhaps a reply by Private Message would be appropriate.
Thank you in advance
BlueBunny

DesertLighthouse

Hi all,great advice on the forum. I'm not sure if I should be posting here or somewhere else, but I've got a somewhat lengthy post and could use some advice.

My wife,her sister and brother inherited their fathers house(no mortgage) after his death a few years ago. Unfortunately, there has been a bitter upset between them (the brother is unreasonable and borderline psychopathic). It has been impossible to deal with him personally.

Within the last year, they have managed through a family mediator, to agree to sell the property-which the brother currently lives in. There have been a couple of occasions when offers have been accepted,but the sales have fallen through. So now the house is on the market again.

Now the real problem. A couple of days ago,my wife and sister-in-law received letters from a solicitor and the land registry for an interim charging order and a restriction on the property, for debt owed by the brother for unpaid legal aid.
It's for about £1400 & is probably from one or more court cases for violence(nice chap).

As I understand it from the info on the forum & other online sources, the order only applies to the brother's interest in the property and no money can be deducted from their share. I also believe after deciphering the jargon used by the land registry that the restriction only insists that the creditors be notified of the sale of the property but doesn't actually stop them from selling it.

My sister-in-law is getting very stressed by the situation-in fact she's been stressed dealing with it all for a long time. So she always feels the need to involve solicitors, I'm trying to see if that is needed at this time.

A court date for the creditors to apply for a final charging order has been set & they urge you to appear at this hearing. The court being used is a long distance from us and I'm wondering if we really need to attend, seeing as they want to sell the property anyway & are more than happy for the creditors to get their money from the brothers share of the sale.
As I see it, he is the only party with an objection to getting the debt secured against his interest in the property. However, what I'd like to know,is the ramifications of a final charging order being granted. Will that make any difference to them selling the house and would it even be granted(in their absence or otherwise) as the property is jointly owned and only one party is the debtor. Can the creditors prevent the sale before the debt is cleared,or can they ensure that when it does sell they can recover the debt from the brothers share. We just want it sold to be rid of the brother, so would our attendance at court and siding with the creditors help this along?

Thank you for your patience in reading this-hope someone can offer some advice.

eggbox

DesertLighthouse

There's no need to attend court as you won't prevent the Charging order being granted anyway (and the 'Final' bit is just rubber stamping it)

A Restriction has no powers to prevent a sale and all that will happen is the buyers solicitor will ask for the debt that relates to the Restriction (which he will see from his search of the Land Registry) be removed as part of the sale process. The payment of that debt that relates to this will then come out of the debtors share of the proceeds only when the money is transferred.

From what you say, there should be ample to pay the debt but, if there isn't enough to settle the debt, it can't be settled from the other owners share of the proceeds.

You will see from this thread that this doesn't have to be the case. But this thread is primarily dealing with creditors who have had the benefit of high interest rates on "unsecured" loans who have then sought "security" on people's homes when they can't pay. My, personal, view is that this is unfair and wrong especially as there was no "your home may be at risk" clause in the contracts (as there are for actual secured loans.) But if the debt is "legitimate", as this appears to be, then it would only be correct for the debt to be settled in the normal manner.

DesertLighthouse

Thank you for responding so quickly eggbox!

You've certainly confirmed my thoughts on the matter, I realised that this thread was dealing mostly with people with debts,who were under a lot of pressure. I guess our situation is a lot rarer, but it certainly isn't stress free. Now I can at least try to explain this all to my sister-in-law...
Just to confirm, you mentioned that this debt be settled in the 'normal manner', I assume you meant that the conveyancing solicitor dealing with the house sale,would make provision to pay the creditors when the money is transferred from the buyer-therefore lifting the restriction? Or is just that they need to notify the creditors in writing that the property is changing hands and it's up to the creditors to act from there?
Thanks once again

eggbox

DesertLighthouse wrote: »

I assume you meant that the conveyancing solicitor dealing with the house sale,would make provision to pay the creditors when the money is transferred from the buyer-therefore lifting the restriction? Or is just that they need to notify the creditors in writing that the property is changing hands and it's up to the creditors to act from there?
Thanks once again

Technically, all that has to happen is for the buyers conveyancer (or the buyer themselves) to notify the Restriction holder that a sale is being made. That's all that is required to meet the terms of the Restriction and for the Land Registry to proceed with the new registration. At this point the Restriction then HAS to be removed as it becomes "overreached" as the buyers rights outweigh those of the creditors Restriction.

As the Land Registry themselves will confirm; there is nothing then that prevents a new registration from being entered and what happens between the Creditor and Debtor is of no concern for the Land Registry.

As the creditor has been notified there is a sale happening, which is the purpose of the Restriction, it is then up to them to contact the conveyancer to request payment for their debt. But there is no legal obligation placed on either the conveyancer or the debtor to pay off the debt from the proceeds of the sale.

Unfortunately, (but fortunately in your case) conveyancing solicitors do not seem to understand this process and insist the debt is settled to give what they call "clear title" when a purchase is being made. And that is what will happen in your situation.

Whilst this may be an understandable request from the buyers solicitor, it should fall on the sellers solicitor (who is being paid to represent his clients best interests) to explain the above. Given it explains in the Land Registry's own Practice Guides that this is the case there is no reasonable objection for the buyers solicitor to object. Given sellers solicitors are, in my opinion, failing in their duty to protect their clients best interests (by handing over thousands of pounds of their clients money they have no legal obligation to do so) I would really like to see them being taken to task by an ex-client making a claim against them for the amount given away by their solicitor.

DesertLighthouse

This was what I expected. Convincing a conveyancing solicitor to do as you suggest was one of my fears. As you suggest these 'experts' often seem reluctant to do anything like this. If it came to this point in the house sale, I know the brother in question will do anything to avoid paying his debt. My sister-in-law will be convinced that they won't be able to sell without settling the debt and will probably want to settle it out of her and my wife's pocket. Their brother gets away with everything-serious assaults included and living in the house rent free for the last year, pays no house insurance etc-sorry to go on,world seems so unjust at times.
Could you quote the relevant land registry guidance notes containing this info. I can then wave it under the nose of the solicitor we're seeing for 'advice' along with other documentation I've sourced.
Thank you again, your posts are invaluable:)

eggbox

It's Practice Guide 76 Section 5 Para 3 relates to the overreaching and removal of restrictions.

But given what you say, the solicitors will do their "normal" job this time and settle the debt from your brother's proceeds. Everyone else will receive their share as normal. The creditor has no legal claim on anyone but the brother whose debt it is share so don't worry on that score.

DesertLighthouse

That's great news, thank you very much. You're an excellent poster:j