Charging Order? The myth

sithemadmonkey

Just a quick update from me.

I've finally managed to sort out probate (well, grant of administration), and have an appointment with one of the more helpful solicitors on Monday. Watch this space!

I've got a little further when trying to work out the legal basis for the whole 'Charging Order severs Joint Beneficial Tenancy' thing, although I will hopefully get this confirmed on Monday. From what I can tell, according to the Charging Orders Act 1979, a Charging Order takes the same effect as the owner creating an 'Equitable Charge' themselves. An Equitable Charge would destroy either the 'Unity of Title' or 'Unity of Interest' required for a Joint Beneficial Tenancy (I can't work out which, but it seems to be one of them). Any idea eggbox? Or does Land Registry Representative still prowl these boards?

Land_Registry

We still 'prowl' but can't really help you with this Q sithemadmonkey I'm afraid as you are after what would be legal advice based on an understanding of the Charging Orders Act 1979. Section 2 of the Act is the one normally refererd to and all it's parts.

You may want to have a read of an article in our Landnet 19 (pages 16/17) from a while back which may shed some light on the basics involved from a registration perspective. Although it sounds very much as if you are researching the wider issues involved.

sithemadmonkey

Thanks for your help LRR. The only reason I ask is that I've seen it mentioned in several places that a CO severs a Joint Beneficial Tenancy, but nowhere is forthcoming in explaining why this is.

I think it's just my overly-logical mind trying to understand the reasoning behind it (plus it would make it an awful lot easier explaining it to solicitors and suchlike - currently all I've got is 'because the Land Registry says so')

There's a couple of articles on Practical Law that seem to cover it, but I sadly don't have access so can only see the titles...:mad:

eggbox

sithemadmonkey

The main reason a CO has to sever a Joint Tenancy is because under a "Joint" ownership both people own the whole of the property. You wouldn't, therefore, be able to register a CO against only one of the joint owners if that arrangement was still in place. So the law, after a CO is granted, then deems a 50:50 split of ownership under a Tenenants in Common arrangement thereafter.

What the "technical" name for the split is I'm unsure but I am struggling to understand why LRR can't shed light on the actual reason?

Land_Registry

eggbox - the difficulty in trying to explain such things is that the legislation involved is much wider than the Land Registration Act and Rules under which we operate. I believe we have touched on this a number of times previously. sitethemadmonkey is looking to apply a logical mind to understand the reasoning behind it when a legal mind also needs to be added to the mix and as you know we cannot provide legal advice. This is not meant to be a flippant comment but simply an effort to highlight the complexities involved in trying to understand charging orders and their impact/effect.

The following may help a little but it is important to remember that the land register deals with the legal ownership first and foremost.

When we register joint owners of land, i.e. the owners at law, they may not be the same persons as the equitable owners (that is, the persons entitled to the benefit of the land).

We only register legal estates. The proprietor is registered as the owner of the legal estate. The register does not guarantee that the proprietor is the beneficial owner (i.e. they own the land for their own benefit).

As such there is always an equitable estate and whilst All joint proprietors are "joint tenants at law" the "equitable" (or "beneficial") interest in the property, i.e. the money interest in it, may not be held in the same way as the legal estate.

Unlike the legal estate the beneficial ownership can be split into equal or unequal shares. For example, a couple may hold the beneficial interest in the same shares in which they contributed to the purchase price or one can be subject to a charging order as in the cases highlighted in these posts.

For that reason a charging order in favour of a creditor of a beneficial joint tenant, may change the kind of ownership without the legal owners realising it. In such cases the law splits the property automatically into the same number of shares as there were beneficial joint tenants but it is not the law relevant to land registration that makes such a split.

Section 3.4 of Public Guide 18 explains this and how the law views such things whilst Practice Guide 76 refers you to the COA 1979 legislation relevant to our guidance.

Our role is to register such legal estates and any registerable interests which affect. I am afraid it cannot extend to explaining the legal complexities involved.

sithemadmonkey

Thanks LRR. I appreciate the boundaries under which you can operate, and that what I'm looking for falls outside that - what you can provide is extremely informative, and has proved very helpful.

I met with the solicitor yesterday, they advised that the family member's beneficial interest in the house should pass to their beneficiaries and not the partner, and it will take a couple of forms to the Land Registry to get this noted on the title register. The solicitor will be doing this for us for a small fixed fee.

This is exactly the result we wanted, so many thanks to the MSE forums in general for alerting me to this little-known rule, and Eggbox/LRR for helping to clarify the point.

:beer:

kookykathryn

still no luck for me :-(

The solicitor wont give a firm undertaking that the restrictions will be overreached so looks like the sale is going to fall through.

Apparently this 'certificate' is causing issues, also the debt got sold and the new owners haven't made any contact?

Any advice or anyone that has sold a property with a restriction on that requires a certificate?

eggbox

Get your Solicitor to explain to whoever has the problem with the "Certificate" to look at the Land Registry guide Landnet 19 pages 16/17 (as notified by LRR on this site!). Here it explains the following,

"An applicant seeking to register a disposition can easily comply with this restriction by sending a notice to the address specified and supplying the necessary certificate. The purpose of the restriction is not to prevent a disposition from being registered."

The certificate is just "proof" (eg, recorded letter) that notification has been sent by either the buyer or his conveyancer.

You can further add that in the same reading they explain the following,

“ This (the Restriction) does not however entitle the judgment creditor to enter a restriction that would interfere with the ability of the trustees to overreach interests under the trust. We regularly have to reject on this basis applications for restrictions where judgment creditors have sought to prevent the registration of any disposition without their consent. The strongest form of protection that we are likely to approve follows the wording of Form K, which is set out in schedule 4 to the Land Registration Rules 2003"(which means the creditor cannot "block" a sale as some people believe)

kookykathryn

thanks, do you have a link to that document? I cant seem to find it?

eggbox

Click the link in Land Registry Reps post #1093 above