Charging Order? The myth

DAKOTA45

I think it would be best if we tried to transfer the higher BI to my husband… After all, he has made 100% of the mortgage payments to date including a large deposit of more than £100k… I wonder if this transfer of assets would be allowed and how difficult it would be? Perhaps LRR could help here, please?

DAKOTA45

Oh… and what would happen if you were to die? I'm not planning on going any time soon, but would there still be a debt charged to the property?

eggbox

DAKOTA45 wrote: »

Oh… and what would happen if you were to die? I'm not planning on going any time soon, but would there still be a debt charged to the property?

I think LRR may have answered this one before so if he is around he may want to chip in to refresh?

As I seem to remember, because you are no longer joint tenants (but tenants in common) your share of the estate doesn't automatically go to your partner. However, because it's not clear on the Land Registry if owners are Joint or TIC, this can get over looked and the transfer often proceeds anyway.

What happens to the Restriction under these circumstances is probably best left to LRR to explain?

eggbox

DAKOTA45 wrote: »

I think it would be best if we tried to transfer the higher BI to my husband… After all, he has made 100% of the mortgage payments to date including a large deposit of more than £100k… I wonder if this transfer of assets would be allowed and how difficult it would be? Perhaps LRR could help here, please?

If you have evidence of this then there is no reason to draw up a Trust Deed to reflect his share is much large than yours. Especially as the mortgage and deposit arrangement preceded the CO made.

DAKOTA45

eggbox wrote: »

I think LRR may have answered this one before so if he is around he may want to chip in to refresh?

As I seem to remember, because you are no longer joint tenants (but tenants in common) your share of the estate doesn't automatically go to your partner. However, because it's not clear on the Land Registry if owners are Joint or TIC, this can get over looked and the transfer often proceeds anyway.

What happens to the Restriction under these circumstances is probably best left to LRR to explain?

Sorry Eggbox…. I don't get this bit… I am sure when I mentioned this before we decided that there was nothing which stated that we were tenants in common… unless that automatically happens once a CO is in place… certainly, I have had nothing from either the Court or Land Registry to say that we have become tenants in common having previously been joint tenants… I can't find anything about this online either… but we are entitled to know these things and someone, somewhere must be able to tell us what our status is...*Confused again*

Land_Registry

There are some circumstances, the most obvious one being when a joint owner is declared bankrupt, which can trigger the joint tenancy to be severed and a form A restriction to be registered.

That is not the case with a CO although when a modified form K restriction is ordered by the court they may order a form A to also be registered.

Based on your post that has not happened here so the issue seems to be what happens to the form K when you die. The answer to that is that the death doe snot overreach it so we would require and application to cancel or withdraw it.
Cancellation would have to show that the fate of the equitable charge (the CO) depends on the fate of the beneficial interest it affects. We must be satisfied that the registered estate is no longer subject to that trust of land/interest.

Not too sure that will make things crystal clear but it harps back to what we have discussed at some length already regarding how a CO against one of joint owners is registered as a form K restriction.

The fundamental premise here is a charging order which charges the legal estate can be protected by entry of an agreed or a unilateral notice.
If a charging order charges a beneficial interest under a trust of land only a restriction can be entered.
As you already appreciate as there are two joint owners and just a CO against one of them then the CO does not charge the legal estate.

Taffybiker

eggbox wrote: »

That is an ouch!

A few of things to consider;

1. Was the prior interest in the property equal before the CO was registered. The law assumes all owners have equal ownership unless there is a registration to show this is not the case ie you put a large deposit in when the property was purchased and you, therefore, own a higher percentage? If this is the case you may be able to register your share as a higher percentage therefore reducing the Beneficial Interest your ex had in the property. This would t least reduce the amount the CO can collect from

2. If you transfer to sole ownership now, thereby, getting your ex's details off the mortgage; there is nothing to prevent you becoming a joint owner with somebody else (however that may occur) in the future This would put you back in a position that when you did sell the Restriction would become overreached again upon a sale.

3. If you have absolutely no intention of moving from the property in the coming years the creditors might listen to a reduced settlement offer substantially less than is owed rather than waiting years for something in the future. I know this is something you don't want to do but it may lessen the, financial, damage if you are desperate to get your ex's details off the property deeds?

4. Sell now to a cash buyer at a reduced rate. This again, isn't what you want to do but if you offer, say, a 5-10k discount to a cash buyer (as an incentive to understand over reaching) then you walk away less, financially, damaged than paying off the full CO amount.

5. Don't do anything and let rising house prices diminish the problem. Providing you get a Trust Deed registering the fact your ex's Beneficial Interest is limited to a set value in the property, and you aren't planning to move anytime soon; then the percentage value of the CO (on the total house value) will become less and less as inflation increases house prices.

What is going to suit you best depends on how you able you are to do any of the above suggestions?

1. The original mortgage was in my name only, for the the first 5 years or so. It was the bank that insisted on joint when I remortgaged.

2. I like this option VERY much. I was beginning to think I had been legally cornered.

3. This is an option I would consider but I much prefer #2.

4. As mentioned previously I have no plans to sell in the foreseeable future, so this one is not an option for me.

5. Again, I would prefer her name off the deeds, which bring me back to #2 again. I shouldn't need Trust Deed then either, correct?

eggbox

DAKOTA45 wrote: »

I am sure when I mentioned this before we decided that there was nothing which stated that we were tenants in common… unless that automatically happens once a CO is in place…

Land_Registry_representative wrote: »

There are some circumstances, the most obvious one being when a joint owner is declared bankrupt, which can trigger the joint tenancy to be severed and a form A restriction to be registered.

That is not the case with a CO although when a modified form K restriction is ordered by the court they may order a form A to also be registered..

LRR

Every legal opinion I have sought (bar none) has told me a CO automatically severs a Joint Tenancy as you can't place a charge against the BI of just one owner under that type of ownership? Hence, you have to become Tenants in Common to separate the interests? Are you saying this is not the case as far as the LR is concerned?

I have also now dealt with, approaching, what must be three hundred clients with a Restriction/ Modified Restriction and non have ever had a Form A Restriction registered on their deeds? Does this absence affect anything regarding the above?

eggbox

Hi Taffy Biker

The only thing I would get nailed down before you do "2" is that the BI that stays on the deeds is at a fixed amount (ie the value of the CO's granted).

This will definitely be the case if no interest is being applied to the CO's but I would get that verified first before deciding what to do.

Taffybiker

eggbox wrote: »

Hi Taffy Biker

The only thing I would get nailed down before you do "2" is that the BI that stays on the deeds is at a fixed amount (ie the value of the CO's granted).

This will definitely be the case if no interest is being applied to the CO's but I would get that verified first before deciding what to do.

How can I ensure the BI remains fixed? Didn't you previously mention that the amount must remain fixed once the transfer has been completed? If it has increased, can I get it at least reduced to the value it was at the date of the Court Order (2012)?