Charging Order? The myth

Duckstrel69

I've not heard yet if they want the restriction moved. The conveyancer has just assumed that they will.

eggbox

Duckstrel69 wrote: »

I've not heard yet if they want the restriction moved. The conveyancer has just assumed that they will.

How is your conveyancer planning to get round that one if you want to pay after the sale? (as the Restriction won't be removed prior to the sale in that scenario)

Duckstrel69

Thanks Eggbox. To be honest, she doesn't seem to have looked at it as an option (she's not dealt with CO's before apparently and is taking instruction from a colleague, wish I'd known this at the start). She's just told me that it needs to be lifted, contacted the creditor for a figure and sent it to me with a note telling me that it was self-explanatory, I got this yesterday and she's not in the office today

I just wanted to know what my options are before I have to try and scrape the money together somehow

eggbox

Duckstrel69 wrote: »

she's not dealt with CO's before apparently and is taking instruction from a colleague, wish I'd known this at the start

Well, trust me, they won't be telling you the facts of the matter, so you need to explain to your Coveyancer that there is no legal requirement to pay off the CO notified by the Restriction and you do not wish to do so.


You explain that the Restrictions wording does not require payment of the Charging Order to be made, to allow the sale to proceed, only that notification is made to the creditor. This is explained in the Land Registry Practice Guide 19, Section 5 Para 3 which states,


"Entry of a restriction does not protect the priority of the interest to which it relates for the purpose of s.29, LRA 2002. A charging order affecting only the beneficial interests under a trust is liable to be overreached along with those interests by the operation of ss.2 and 27, Law of Property Act 1925. Accordingly, a Form K restriction will be usually be cancelled automatically, without application, when a transfer which appears to overreach the beneficial interests is registered."


You also explain to your Conveyancer that you are paying them to act in YOUR best interests and not those of a third party. What happens to the proceeds of the sale should be decided by YOU as there is no legal obligation to hand them over to anyone. If the creditor wishes to lay claim that is up to them; it of no matter for your conveyancer, the Buyer or the Land Registry if that happens or not.

Duckstrel69

That's great to know. Thanks for that, you're a star. I'll check the restriction wording when I get in too as I'm not sure if it's the standard blurb you mentioned or not.

This has helped me considerably

eggbox

That's fine but be prepared to get resistance from your Conveyancer as a) the majority of Conveyancers/Solicitors don't know what they are talking about on this subject and b) the minority that do won't want to help!

Duckstrel69

Well, as I’m enabling the creditor to get their money from the proceeds without the expense and fuss of them having to obtain a final charging order I was kind of hoping they’d have a bit of sense about it tbh but like you say, I’m getting ready for a minor scuffle….

eggbox

The creditor, at this stage, isn't your problem as they can't influence anything. But your Buyers conveyancer can throw a spanner in the works by insisting the Restriction is removed prior to the sale going ahead. This is what you will (probably) need to overcome.

Duckstrel69

You explain that the Restrictions wording does not require payment of the Charging Order to be made, to allow the sale to proceed, only that notification is made to the creditor. This is explained in the Land Registry Practice Guide 19, Section 5 Para 3 which states,


"Entry of a restriction does not protect the priority of the interest to which it relates for the purpose of s.29, LRA 2002. A charging order affecting only the beneficial interests under a trust is liable to be overreached along with those interests by the operation of ss.2 and 27, Law of Property Act 1925. Accordingly, a Form K restriction will be usually be cancelled automatically, without application, when a transfer which appears to overreach the beneficial interests is registered."

Given what this paragraph above says, if the restriction becomes 'overreached' upon sale, why would they feel compelled to do that ?

eggbox

Why indeed? But if you ask your Conveyancer to explain the difference between a Charging Order made on solely owned property and one made on a joint owners "Beneficial Interest"; then you may begin to understand what you are up against.