Charging Order? The myth

helpappreciated

Thank you so much for your response -
I was afraid this thread was dead.
We shall show all this info. to our solicitor in the morning, especially the article written by the experts.
Shall let you know the result
Thank you again .

Sparklyfairy

helpappreciated wrote: »

Thank you so much for your response -
I was afraid this thread was dead.
We shall show all this info. to our solicitor in the morning, especially the article written by the experts.
Shall let you know the result
Thank you again .

No worries there are loads like us in this situation & as they say, knowledge is power! My dh & I plan on putting our house on the market this time next year & I shall be ringing all the conveyancing solicitors in the land in the hopes of finding one with full knowledge of this info...failing that, I'm more than happy to send that letter off myself! Good luck x

thechippy

Nice one Sparkly...:beer:

This thread needs to be kept bumped.

Pretty much, the only obligation of the solicitor, is to send a letter of undertaking to the purchaser, that the restriction will fall away at the point of sale - which it does by it's nature anyway.

Sparklyfairy

Cheers for clearing that up, chippy! Yes - I agree this needs to be kept bumped!

helpappreciated

Well we have made no headway with the solicitor who will not admit that there is any possibility of the house sale without paying off the interim charging orders.
He is also worried that their firm might then become responsible for the debts and also says that we would never find a buyer's solicitor to accept such a sale.
If only we could get in touch with anyone who has completed such a sale or knows of a solicitor who would entertain the idea.:(

terryw

helpappreciated wrote: »

Well we have made no headway with the solicitor who will not admit that there is any possibility of the house sale without paying off the interim charging orders.
He is also worried that their firm might then become responsible for the debts and also says that we would never find a buyer's solicitor to accept such a sale.
If only we could get in touch with anyone who has completed such a sale or knows of a solicitor who would entertain the idea.:(

Maybe you need to take your own action. Send a formal complaint to the firm of solicitors (the "care letter" will give details of the person to whom this should be addressed)

If no joy here, then a complaint that your solicitor was refusing to carry out your specific instructions would be in order.

Obviously send copies of the LR letters given in this thread should be enclosed with both complaints.

eggbox

As someone who owns a joint property with an ex wife who has had a "Restriction" now placed on her share of the "beneficial" interest in the property, I have investigated this matter with a solicitor from the Land Registry (I'll refrain from naming her but I have the letters)

Basically, what she has confirmed is that all is required to transfer ownership of a property, when selling a property with a Section K "Restriction" is for the seller or his agent (ie solicitor) to notify the Land Registry that they have notified the Creditor who holds the Restriction. That's it!

What the interested parties do at this point, she concludes, is "not a matter for the Land Registry". I've asked her if a Creditor can block the sale but that area she wouldn't discuss (as it would, apparently, be deemed as legal advice) but, it would seem to me, the only course of action would be for the Creditor to try and attempt to gain a Freezing Order before the sale is completed. As these are extremely expensive (and they would have to act before the sale) it's highly unlikely they would ever do so (IMHO). So I would have to say its your choice or not on whether to pay up!

She also stated that on the HMRC page here

hmrc.gov.uk/manuals/dmdmanual/dmbm667320 (sorry new user can't link)

that there is an error in that the Land Registry DOES NOT notify the creditor of an impending sale. That requirement, as it states on the Restriction, is the duty of the "applicant". However, since the changes to the 2003 Land Registry rules, there is now no time period upon which the Creditor has to be informed. (so it can be left to the absolute last minute to notify them!)

This is why a lot of the legal profession forums are openly stating that a Restriction on a jointly owned property, where the debt is only in one of the joint owners name, is practically useless. It would appear the words "Charging Order" stated in court gives the impression to the uninitiated (which includes it would appear the bulk of Solicitors) that it is something it is not in this case.

Also, a telling bit of information on the HMRC site is;

"A notice or restriction does not impose an obligation to make payment when the property is sold"

This is because the "Restriction" is not an "Equitable Charge" (like a mortgage) and therefore carries no legal weight to ensure payment is made. I also believe the HMRC is wrong in stating that a Creditor can refuse to agree to have the Restriction removed. This is because there is no provision for them to do so in the Restriction wording put on the Registry. And whilst the Solicitor I corresponded with wouldn't be drawn on whether a Creditor can block a sale (legal advice again!), she basically intimated that a Freezing Order would be the only way of prevention and would need to be applied for before the sale was completed (so timed right it would be impossible to do)

As I see examples of people on forums who have sold there property without paying Creditors with Restrictions and also not having any combacks, and I cannot find any examples of Creditors applying for Freezing Orders I can only conclude (but stand to be corrected) they either give up or use other methods of chasing the debt?

Don't expect any help from the vast bulk of Solicitors out there, however, (and I'm talking as the Father of a daughter into her first year of a Solicitors Training Contract) as the old saying "ask six different Solicitors a question and you will get Six different answers" is undoubtedly true. My experience is they are not as informed in this area as they should be, they also won't want to rock the boat and toe the "perceived" legal line that payment should be made.

My, final, feelings on this matter is that when a Creditor has been allowed to raise interest rates to obscene levels (30%+) on supposedly "unsecured" debts; yet they are then able to secure that debt on a chunk of a persons home is both immoral and wrong. Many of these creditors have been repaid there initial loan from the high interest rates charged! What they are then trying to secure is mainly compound interest accrued by those high rates on "unsecured" debts! It's scandalous any Government allows this to happen so don't EVER feel guilty in refusing payment to any Creditor with a Restriction who has, undoubtedly, hounded and chased you over this type of debt. I won't be!

fatbelly

Useful post from eggbox. Link here:

http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm667320.htm

The text contains the following paragraph:

A notice or restriction does not impose an obligation to make payment when the property is sold. However if the judgment debtor (or any one of the co-proprietors) attempts to dispose of the property, the District Land Registry will advise the claimant of the interest in the property. Prospective purchasers will be wary of buying a property subject to a notice or restriction and, more often than not, will want the notice or restriction removed before completing the sale. This is normally sufficient incentive for the judgment debtor to pay the judgment debt. Even where they do not do so voluntarily, the fact that they have received money and have failed to pay the judgment debt is valuable evidence in support of a request for a judgment summons.

Thanks

eggbox

Its

http
/www.hmrc.gov.uk/manuals/dmbmanual/dmbm667320.htm

written as one (if I put the address on here one line it recognises it as a link and tells me I can't do it!)

Copying the above as a whole into you address bar does it or if anyone can link it that would be better?

Sparklyfairy

This thread just gets better & better! Many thanks for all that info - eggbox.

Just a question though....when you hire a conveyancing solicitor & they go through all the Land Reg checks - they're bound to see the restriction sitting there & if they're clueless to the difference between a co & restriction, they'll just go through the channels to 1. inform the creditor & 2. plan to pay that creditor out of the sale proceeds..right? At what point should/could we take over so to speak?