Charging Order? The myth

eggbox

DAKOTA45 wrote: »

EGGBOX
Tenants in Common can split the percentage any way they choose…so is there any legal reason, given that there is a CO in place, that we could not divide the estate as we wish?

Not that I can find but anyone reading who knows different please let us know?

philb82

Hello


I have a query about an order that is on my property. I have posted this query already but was advised to put it here as well, here is my original thread https://forums.moneysavingexpert.com/discussion/5128154=


Basically we are wanting to sell our house and as well as a mortgage, we have a secured loan, a charging order and a restriction.


I have just paid for the title register online and have had another look at the information. I need some help regarding what things mean.


First of all we have a charging order and this is what it says:


(30.08.2007) Equitable charge created by an interim charging order of the Cardiff County Court dated 7 August 2007 in favour of Asset Link Capital (no 1) Ltd.


Secondly a restriction on a debt in my name only:


(09.06.2004) The Transfer to the proprietor contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof.

4 (01.06.2005) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent signed by the proprietor for the time being of the Charge dated 25 May 2005 in favour of Progressive Financial Services Limited referred to in the Charges Register.

5 (27.05.2008) RESTRICTION: No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to Nationwide Building Society at care of Drydens - Reference number and address here- being the person with the benefit of an Interim charging order on the beneficial
interest of -my name here- made by the -court name here and a date...-


So is any of this bad news? Would any of these creditors stop a sale going through? We intend to sell our house to get out of debt so I would intend to pay all these debts off with the sale as there should be just enough equity. I just need clarification on what's what and if we're likely to experience problems. I hope something would go for me for once, I don't get much good luck


Thanks


Phil

eggbox

philb82

The purposes of Charging Orders and Restrictions aren't to stop you selling your house, they are designed to enable creditors to, hopefully, get paid when you sell your house. And if you are intending to pay off the creditors with equity in the property then they will only be too pleased you are selling.

Once you have a buyer then your conveyancer will sort the payments to these people and you will be shot of them. This thread is, largely, regarding sellers who don't wish to pay off the Charging Orders behind Restrictions registered as there is no obligation placed on them to do so. If that is not your intention you have no problem.

eggbox

Hi LRR

Can I ask what the above Restriction in Philb82 above that states;

(01.06.2005) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent signed by the proprietor for the time being of the Charge dated 25 May 2005 in favour of Progressive Financial Services Limited referred to in the Charges Register.

would usually be placed on the register for as it appears to require consent?

Land_Registry

eggbox wrote: »

Hi LRR

Can I ask what the above Restriction in Philb82 above that states;

(01.06.2005) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent signed by the proprietor for the time being of the Charge dated 25 May 2005 in favour of Progressive Financial Services Limited referred to in the Charges Register.

would usually be placed on the register for as it appears to require consent?

eggbox - apologies for slow posting here

This form of restriction is the standard form normally applied for at the same time as registering an actual legal charge as in a loan where the property has been used as security. I assume the secured loan Philb82 refers to is with Progressive in this case

eggbox

Hi LRR thanks for the update.

Another question if I may? Where a creditor has an equitable charge registered on the deeds (as for a sole owner but second to a mortgage); is it possible for that creditor to block the sale of the property, by notifying the Land Registry it objects to the sale, if the equity in the property, when being sold, is not sufficient to cover their charge amount?

This question appears to be popping up on some boards and there doesn't appear to be any info on what rights the creditor, with an equitable charge second to a mortgage, has? My understanding was they could only block by applying for a freezing order?

Land_Registry

eggbox wrote: »

Hi LRR thanks for the update.

Another question if I may? Where a creditor has an equitable charge registered on the deeds (as for a sole owner but second to a mortgage); is it possible for that creditor to block the sale of the property, by notifying the Land Registry it objects to the sale, if the equity in the property, when being sold, is not sufficient to cover their charge amount?

This question appears to be popping up on some boards and there doesn't appear to be any info on what rights the creditor, with an equitable charge second to a mortgage, has? My understanding was they could only block by applying for a freezing order?

I can only comment from a registration perspective so would not know what wider rights the creditor would have or whether they would or should apply for a freezing order.

As you mentioned in your earlier post a seller would normally undertake to 'clear' any existing charges, whether registered or simply noted as in the case of an equitable charge.

If we received an application to register the sale (Transfer) then we would cancel the noted equitable charge providing we received an application to do so (form CN1).

If no application to cancel it was submitted we would simply complete the Transfer and leave the noted charge on the register.

So in essence the creditor is not able to object to the sale/transfer being registered.

eggbox

Many thanks LRR

philb82

Thanks to you both Eggbox and LRR.


Although the Nationwide debt is in my name and the mortgage is in joint names I still intend to pay it off from the sale off the house. I have decided to do this although from what I have read that isn't necessary because this is classed as a Restriction.


We want to sell and move with no debt and start afresh :j

LRR - may I just ask a question about something you said, sorry if I seem a bit thick but this is the first time we've ever sold a house so bear with me

Land_Registry_representative wrote: »

If we received an application to register the sale (Transfer) then we would cancel the noted equitable charge providing we received an application to do so (form CN1).

If no application to cancel it was submitted we would simply complete the Transfer and leave the noted charge on the register.

Who sends the application for the form CN1? Also is this isn't submitted and the charge is left on the register, does that mean it will still be present on the register even with a new owner in the property?


Thanks


Phil

eggbox

Hi LRR

Just had this response in relation to what you stated regarding the "blocking a sale" situation. Any comments?

That's lovely in Land Registry theoretical procedure, but that doesn't reflect the real world.

The reality is absolutely zero mortgage lenders would allow an Equitable Charge (EC) to remain on the title register belonging to the former owner and it would be madness for the purchasor to allow the EC to remain on the title deeds of their new property when the debt has nothing to do with them and relates to the former owner.

So the Claimant can block the sale if they choose and the only way to get rid of it is to repay the debt or have the Claimant agree to the removal of the EC. I bet you can guess how often that happens in practice!

You cannot simply submit a Form CN1 and have the EC removed automatically, you must provide evidence that the interest has come to an end (E.g. that the debt is repaid) otherwise it will be refused by the Land Registry.