Charging Order? The myth

eggbox

KAWM wrote: »

Sale Price: £74,500
Nram: £22,000
Restrictions: £23,000
Charge: £19,000

Equity to be released on sale is only £10,500 less selling costs at this stage.

It's not for everybody, but if a house is repossessed (voluntarily) the first Charge Holder (which is normally the mortgage holder) will have Power of Sale. As such, other Charges on the Register are removed as they become overreached.

This allows the first Charge Holder to sell the property free of other Charges previously registered. However, once the other charges are removed they no longer have any valid claim on the property. So the scenario would be;

Sale Cost Obtained
Less Mortgage (First Charge)
Less Costs incurred by First Charge holder to obtain a sale
Balance is then returned to the previous owner of the property.

As I say, it's not for everyone but it may be worth a look if the Equitable Charge proves difficult to remove by "other" means?

KAWM

eggbox wrote: »

It's not for everybody, but if a house is repossessed (voluntarily) the first Charge Holder (which is normally the mortgage holder) will have Power of Sale. As such, other Charges on the Register are removed as they become overreached.

Thanks, I don't think thats going to work for them, but useful to know.

So am I correct in saying that if they sell the house, the buyer is cash buyer, the solicitor is under no legal obligation to send the money to the restrictors, just inform them of the sale, and the restrictions will drop off when the TR1 is put through Land Registry?

The charge hasn't been put on correctly so should be removed anyway.

Can you or anyone else send me the details of the Solicitor who has been mentioned who will help with this transaction please?

eggbox

Hi KAWM

I'm just in the process of confirming if the person concerned is still able to help. He's not been around for a couple of weeks so may be on holiday. As soon as I hear back I will let you know.

Regarding what you state about Restrictions, yes that is correct. The terms of the Restrictions you have notified only require the creditor to be notified a sale is proceeding from the buyers side. There is also no time period attached to the notification happening (some Solicitors mistakenly believe it still requires 14 days notice) so you can notify at the very last minute when everything else is wrapped up.

DAKOTA45

Eggbox… does that solicitor just do conveyancing?

eggbox

He's a property lawyer whatever that cover's?

DAKOTA45

Eggbox… he sounds quite useful!! I have lots of property issues… just need advice… wonder what he charges?

Land_Registry

DAKOTA45 wrote: »

Hi LRR… I hope all's well… not heard from you in ages!! I have a question, please;

For many years our son contributed towards our mortgage payments when he lived at home & I would like to gift a small piece of our land to him, which contains an outbuilding that he wishes to use as an artists studio.

We would still be able to redeem the mortgage with the smaller plot of land, but would we need our lender's permission to transfer part of the land? Or would they expect him to be added to the deeds, as part owner of the land, etc.?

DAKOTA45 - apologies for late posting but the thread was 'closed' at one point so we could not comment/post. That is no longer the case though but appreciate you may have already moved on re this query

If the property is mortgaged then you would very likely need your lender's permission as either there is a restriction on the title itself or the mortgage T&Cs refer.

I can't see that they would want him added as part owner but always worth having a chat with the lender or a solicitor to explore best options.

You may also find that the lender insists on your using a solicitor as well.

Land_Registry

eggbox wrote: »

Hi Kawm

Regarding the Restrictions registered; they are standard Form K and, as such, are very easy to comply with (as this thread outlines) upon selling a property.

Cautions were used prior to the 2003 LR changes and I will defer to Land Registry Representative to explain better how they are complied with on selling a property.

I would also like the LRR's comments regarding the Equitable Charge registered. It's my understanding these can only be registered if the property is solely owned or all owners are responsible for the debt? So we will wait until LLR comments on what you have said regarding only one owner being responsible for the debt?

Apologies for tardy postings - although we have a number of us able to post/comment availability can vary so there can be a 'lag' between posts.
The thread was also 'closed' at one stage but looks like that may have been a blip as now up and running again - or did I imagine that eggbox?

Picking up re the specific here though

A Caution is an entry on the register that shows the name and address of a person or organisation that claims an interest in the registered land. It does not state the nature of that interest. A caution stops any dealing with the land from being registered without the cautioners being given notice (by us) and the chance to object.

Since 13 October 2003, as eggbox mentions, it has not been possible to register a new caution against a registered title, although cautions already registered before that date continue to have effect.

As such any purchaser is going to need to be certain that the caution will be removed/withdrawn on registration of their purchase so when we do serve notice on the cautioner they do not object.

Your solicitor will be able to advise further on this as any undertaking/assurances you need to provide the purchaser and cautioner would not be something we would be privy to. All we would normally see is the application to register the purchase, which then triggers us to serve notice on the cautioner.

Equitable charge - this is what we refer to as an Agreed Notice, namely an entry to protect a charging order which charges the legal estate
As you already appreciate if a charging order charges a beneficial interest under a trust of land only a restriction can be entered so I assume that the charging order referred to was against a sole registered owner or the joint owners in 2005

With all these entries the registered owner(s) would/should receive notification from us as to the entries being made and the circumstances which have given rise to them

The devil is always in the detail and KAWM refers to some of the details although it reads as if nobody has obtained a copy of the CO itself from the court or queried the details with us to date?

DAKOTA45

Since 13 October 2003, as eggbox mentions, it has not been possible to register a new caution against a registered title, although cautions already registered before that date continue to have effect.

But it is possible to register a Caution… it is called a Modified Form K Restriction and (in my case) involves a 14 day notice before selling…which doesn't seem that different from the old type caution… or am I mistaken?

Land_Registry

DAKOTA45 wrote: »

Since 13 October 2003, as eggbox mentions, it has not been possible to register a new caution against a registered title, although cautions already registered before that date continue to have effect.

But it is possible to register a Caution… it is called a Modified Form K Restriction and (in my case) involves a 14 day notice before selling…which doesn't seem that different from the old type caution… or am I mistaken?

I can perhaps understand where you are coming from but it is not possible to register a new caution and it is a restriction which is now registered in the circumstances you refer to

And as you post it is 'different' albeit not that different from your perspective.

The key thing to consider is that the manner in which such interests are now capable of being protected on the register differs from how it once was pre LR Act 2002.