Charging Order? The myth

jamesd

DAKOTA45 wrote: »

yet those who caused the mess were bailed out by the taxpayer to carry on

Those who caused the mess weren't bailed out by the tax payer. They defaulted on their mortgages and in many parts of the US are allowed to walk away owing nothing but leaving the mortgage holder with a big loss. So many borrowers did this that they also caused a big drop in property prices as the repossessed homes were put on the market, increasing the losses for the mortgage owners.

The mortgage holders were a range of big banks and insurers who needed bailouts to survive. Their shareholders generally lost all of their money. Meanwhile the bailout money is normally being returned at a net profit for the governments that did the bailouts.

DAKOTA45 wrote: »

they are still paying themselves obscene salaries

They don't get to pick their salaries. Most of them are low earners with unstable employment or even on benefits only.

It's popular to blame banks but it is worth remembering that the actual cause was people not making their mortgage payments. Often people who should never have been granted a mortgage in the first place.

If you want to know who to blame for that, look to the US Congress, which passed laws requiring the US mortgage guarantee agencies to lower their lending standards. Those guarantee firms then sold on their packages of mortgage loans, as usual, leaving the buyers holding what became big bad debts.

The rest of us, from the insurers and banks to you and me, are all victims, not causes.

terryw

Thanks for that post James. I agree with everything you say with the proviso that UK banks were negligent in taking on these junk bonds so must bear some responsibility.

Sorry to go off-topic on this interesting thread.

eggbox

I would also add in that a major cause of default by credit card borrowers in this country was the decision by the banks to dramatically increase the APR rates of borrowers NOT in default. At a time when interest rates were shrinking to almost zero, they pushed up rates to, often, well over 30% forcing people already struggling into default, either with that debt, or with another.

This thread is mainly about the aftermath of this as people are pursued for an "unsecured" debt by leeches who see opportunity in making profit out of misfortune. Succesive UK Goverments have been complicit in allowing this problem to have happened as they have failed to address the issue of the high interests charged for the perceived high risk of no security.

DAKOTA45

jamesd wrote: »

Those who caused the mess weren't bailed out by the tax payer. They defaulted on their mortgages and in many parts of the US are allowed to walk away owing nothing but leaving the mortgage holder with a big loss. So many borrowers did this that they also caused a big drop in property prices as the repossessed homes were put on the market, increasing the losses for the mortgage owners.

The mortgage holders were a range of big banks and insurers who needed bailouts to survive. Their shareholders generally lost all of their money. Meanwhile the bailout money is normally being returned at a net profit for the governments that did the bailouts.

They don't get to pick their salaries. Most of them are low earners with unstable employment or even on benefits only.

It's popular to blame banks but it is worth remembering that the actual cause was people not making their mortgage payments. Often people who should never have been granted a mortgage in the first place.

If you want to know who to blame for that, look to the US Congress, which passed laws requiring the US mortgage guarantee agencies to lower their lending standards. Those guarantee firms then sold on their packages of mortgage loans, as usual, leaving the buyers holding what became big bad debts.

The rest of us, from the insurers and banks to you and me, are all victims, not causes.

Thanks… but we had been paying our mortgage for nearly 25 years and in what we thought to be a well paid job for life…the recession affected many people like me…putting us on benefits for the first time in our (middle aged) lives, but we are seeing the fat cats who run the banks getting huge bonuses, even whilst the bank still owes a debt to the taxpayer… and that can't be right!!:mad:

Land_Registry

DAKOTA45 wrote: »

I wonder if LRR could comment here, in that the creditor should apply in the first instance to Land Registry to request modification of the text of a standard form k restriction… otherwise, aren't they just bypassing LRR by going directly to the court? If the court can just waive the LRR, what on Earth is the point of having any rules?!

In the first instance it is important to recognise that we are a registration authority and as such it is not a case of 'bypassing' us as it is the court that holds sway here.

Applications to register a modified form K restriction will fit 3 scenarios from a registration perspective, namely

1. Application is accompanied by a court order directing Land Registry to register the restriction - no real argument here as you would expect providing the application is accompanied by a court order which both sets out the wording of the modified form of restriction and directs or orders Land Registry to register the restriction

2. Application is accompanied by a court order but the order does not direct Land Registry to register the restriction - we would go back to the applicant and explain that whilst the order sets out a modified form K restriction it does not order or require the registrar to enter this form of restriction. If this is what the court intended, the order should be amended accordingly.

Whilst Land Registry would be obliged to comply with an order made under section 46 of the Land Registration Act 2002 that required the registrar to enter a particular form of restriction, the charging order would appear to charge the defendant’s beneficial interest under a trust of land.

The appropriate way to protect such an interest is to apply for a restriction in form K. Form K preserves the principle that the trustees of the land can overreach the interest in accordance with sections 2 and 27 of the Law of Property Act 1925, and so meets the requirements of both section 42(1)(b) and section 42(1)(c) of the Land Registration Act 2002. The form of restriction that you are seeking would appear to interfere with the mechanism of overreaching, notwithstanding that potentially the charging order would appear capable of being overreached.

If they relodged an amended order then we would register the modified restriction. I have quoted directly from the text we would use to respond to an applicant and the reference to both the LRA and LPA are important here in understanding how the law views such matters

3. Application is not accompanied by a separate court order directing the registration of the restriction (the type of application you are referring to it seems) - these applications would be rejected, even as a non-standard restriction, on the grounds that a modified form K restriction is in our view not necessary or desirable for any of the purposes in s.42(1), LRA 2002.

I think this is the key point here re both your own post and eggbox's recital of the BL article

In our view Form K is the restriction that achieves the object of protecting the charging order for the purpose of s.42(1)(c) whilst also ensuring that the interest is overreached where appropriate, as required by s.42(1)(b)

BUT if a court orders that a modified restriction be registered, and I reiterate that we are not privy to the grounds on which a court makes such an order, then we are obliged to do so.

eggbox's posts seek to cover off the creditor's view and their approach to such matters and I think it is quite clear now as to why such applications are rare

Finally, as far as rules are concerned the Rules we operate under dictate how we register matters and how applications may be submitted. These are not rules in the context you refer to them.
The key issues in my view relate to active legislation be that the COA, the LRA or the LPA and of course the courts can take their own view on how such legislation is interpreted - we are in many ways no different to you, a debtor or a creditor in that if the court orders us to do something then we should be doing it.

So a creditor is not seeking to bypass us but simply following the legal requirements of demonstrating to the court as to why they believe additional protection is required - whether the original protection afforded by a form K restriction is deemed sufficient or alternatively seen as being 'useless' is clearly open to debate. The registration requirements though are quite clear.

bobbymotors

Regarding my son's debt, presumably Stepchange and the like cannot put this debt into a DMP?


I was just thinking if he could pay £200 a month or something for 5 years to get rid of it. I can give him this as they are struggling, the £40 a month token payments they are making are really all they can afford.


I believe also that at the end of any DMP he / they would have to attempt to remortgage to see if any further funds can be achieved?


The thing is, if they attempt to remortgage (which they wouldn't want to do, obviously..) am I correct in saying that unless they remortgage with their present lender then my second charge precedes any new lending? that is, making any remortgage effectively a third charge if you see what I mean?


I can't see any new lender remortgaging with a second charge held on the property!


Sorry if this is not totally clear, I am not legally minded!

eggbox

..........

bobbymotors wrote: »

Regarding my son's debt, presumably Stepchange and the like cannot put this debt into a DMP?
Presume nothing until you have spoken to them

The thing is, if they attempt to remortgage (which they wouldn't want to do, obviously..) am I correct in saying that unless they remortgage with their present lender then my second charge precedes any new lending? that is, making any remortgage effectively a third charge if you see what I mean? Yes, which is why a new mortgage lender wouldn't lend given your charge

Sorry if this is not totally clear, I am not legally minded! Most people aren't so don't worry!

eggbox

Land_Registry_representative wrote: »

BUT if a court orders that a modified restriction be registered, and I reiterate that we are not privy to the grounds on which a court makes such an order, then we are obliged to do so.

Hi LRR, thanks for the full explanation! Can I just ask how far Court orders are able to override the LR rules? For instance, if a Court ruled the CO against a Sole Debtor/Joint Owner has to be registered as equitable would the LR be obliged to do that?

Land_Registry

eggbox wrote: »

Can I just ask how far Court orders are able to override the LR rules? For instance, if a Court ruled the CO against a Sole Debtor/Joint Owner has to be registered as equitable would the LR be obliged to do that?

Whilst a court order in general terms is the trump card I doubt if your example would apply as if a charging order charges a beneficial interest under a trust of land only a restriction can be entered so we would not be noting an equitable charge for example, which I assume is what you mean here.

From our perspective an equitable interest is an interest in, or charge over, land which either needs to be protected by an entry in the register so as to bind a purchaser (e.g. a restrictive covenant or an equitable charge), or can be overreached (i.e. transferred from the property in question to the purchase money obtained by trustees on the sale of the property).

The difference between legal and equitable interests is set out in s.1, Law of Property Act 1925 and I suspect that this is what a court would consider and hence the order you refer to would not arise in a sole debtor/joint owner scenario - not the LR Rules in play here but the LPA legislation and the treatment of legal and equitable interests.

eggbox

Thanks LRR!