Charging Order? The myth

eggbox

DAKOTA45 wrote: »

A Charging Order is a debt secured against your property, so it has to be paid when you sell that property…I get that.

But with a Restriction, there is no obligation to pay the debt upon the sale of the property... so does that mean it's unsecured?

No as you are trying to compare a CO with a Restriction and that is not correct. A Charging Order charged against property is where there is a sole owner and attaches to the property because of that sole owner reason. A Charging Order registered against a joint owner (who is the sole debtor) can't attach to the property because of the joint ownership. The CO, therefore, attaches against the debtors financial interest in the property. So it is the asset that is charged that makes the difference and a Restriction is required on the latter instance in order to notify any potential purchasers that the charge exists.

DAKOTA45 wrote: »

How does "no obligation to pay" become "pay up, or lose your home"?

It's No Obligation to pay upon sale, not to not pay at all. You are still responsible for the debt.

DAKOTA45 wrote: »

They should at least raise the minimum amount (to bring a CO) from £1,000 to £30,000, the level needed to transfer proceedings to the High Court, where serious matters like this should be referred…Nobody should be in fear of losing their home due to unsecured debt.

The Office of Fair Trading recommended in 2011 that CO thresholds for OFS sale should be raised to £25000. The Governments white paper decided on a £1000 after much lobbying from the banks. So that won't happen anytime soon.

DAKOTA45

What is the process for obtaining a Charging Order?

The application is a two-stage process;
1 Obtaining an Interim Charging Order (formerly known as an ‘order nisi’) (CPR 73.4) – this is obtained without notice to the defendant and for property, the creditor can use land registry to check ownership of land. ‘Office copy entries’ should be attached to the application as evidence.
At the interim stage, a judge will deal with the application without a hearing. The judge could impose a charge over the defendant’s interest in the asset and for a hearing for a final order; or he could refuse to make the interim order, using his discretion, as the outstanding amount is too small to justify the defendant losing his home if the Final Charging Order becomes an Order for Sale. In their application, the creditor should include evidence, in paragraph 7, that the defendant has a “won’t pay” attitude rather than a “can’t wait”. Also, include an abortive enforcement methods tried and include the abortive report. It is for the creditor to put a case together to prove the defendant has assets to pay but is unwilling to do so.
An interim order should be registered to stop the asset being sold. It will depend on whether the land is registered or unregistered as to the steps that should be taken.
Interim charging orders must be served not less than 21 days before the final order hearing; it should be served with the application notice and any other documents which support it; served on the defendant, any creditors (directed by courts) and, if the interest relates to a trust then the trustees. The creditor must include any other known creditors in their application.
If an Interim Charging Order is made prior to agreeing a payment arrangement, the court usually confirms the Charging Order but it is unlikely to do so if the payment arrangement is made after the interim order has been made. The court will use their discretion to make or refuse a Charging Order.

At what courts are Charging Orders made?

It depends on the original value of the judgment debt; if under £5,000, it will be made in the County Court. For all judgments with a value that exceeds £5,000, the Charging Order will be made in the High Court.


I found the above on the Burlingtons Solicitor's website, and I am querying the bits highlighted in red and wondering if they are 'set in stone'…

My JC just put 'No known creditors' when making their application, despite there being almost £60k with of debt, excluding the £250k mortgage… also, the FCO was heard in the County Court, even though the CO debt is for nearly £30k… Hmmmm…

D45

DAKOTA45

Apparently, an Interim Charging Order is to prevent you from selling your home whilst the creditor makes the application for a Final Charging Order… but how does that work in practice? Say you already had a buyer in place and waiting to exchange contracts before the ICO was in place, where would you stand as to whether you could complete or not? My creditor interfered with the sale by making threats to the buyer, but surely he would need to act properly using a court order or something in order to prevent the sale from completing? I just wonder what my legal rights are… I was in negotiations with the buyer several months before the application for the ICO was made...

eggbox

Dakota


I'm pretty sure the CO limit for the High Court is £25000 so it may be a typo? Notifying other creditors when applying for a CO seems an irrelevance, however, as the Court takes no notice of the affect any order could have on them?


As far as I am aware (but I'm sure LRR will clarify if I am wrong?) Interim CO have no greater power than a full CO when registering against a joint owner. Therefore, as only a restriction can be entered on the deeds; that restriction can be overreached and removed in the same manner.

Land_Registry

eggbox wrote: »

Dakota
As far as I am aware (but I'm sure LRR will clarify if I am wrong?) Interim CO have no greater power than a full CO when registering against a joint owner. Therefore, as only a restriction can be entered on the deeds; that restriction can be overreached and removed in the same manner.

From a registered title perspective the interest remains the same whether it is subject to an Interim or Final CO as you suggest.
The interest is created by the Interim and that is why they are invariably used to secure the restriction as mentioned.

The creditor may if they wish look to register the Final CO but that rarely happens as protection has already been achieved.

DAKOTA45

Land_Registry_representative wrote: »

From a registered title perspective the interest remains the same whether it is subject to an Interim or Final CO as you suggest.
The interest is created by the Interim and that is why they are invariably used to secure the restriction as mentioned.

The creditor may if they wish look to register the Final CO but that rarely happens as protection has already been achieved.

Thank you, LRR… perhaps they made the FCO and then the further Modified CO in order to rack up the court costs against me… who knows?! I still don't think it should be lawful to have TWO COs for one debt, the modified one being made without notice so I couldn't even make an objection...:(

DAKOTA45

eggbox wrote: »

Dakota


I'm pretty sure the CO limit for the High Court is £25000 so it may be a typo? Notifying other creditors when applying for a CO seems an irrelevance, however, as the Court takes no notice of the affect any order could have on them?

Well, they say no existing creditor should be prejudiced by another getting a CO… or something..

About the £5k limit; Yes, I thought that as well… but I have seen it repeated on other sites… I don't understand it as I know COs can go to either court… they make it up as they go along, probably...


As far as I am aware (but I'm sure LRR will clarify if I am wrong?) Interim CO have no greater power than a full CO when registering against a joint owner. Therefore, as only a restriction can be entered on the deeds; that restriction can be overreached and removed in the same manner.

Don't forget they went and got a Modified CO as well, (14 day caution)… I doubt there will be any 'overreaching'… especially as solicitors are all useless about these things...

JAS2015

Ok...so the day before exchange and completion (both were happening on same day), I have found myself back here!!
As explained in my previous post, there were 2 restrictions on my property in my ex-partners name. These have now successfully been resolved to allow the sale to proceed.
HOWEVER, I have just had another phone call off my solicitor. Final land registry checks have thrown up another hurdle! Again it is something in my ex-partners name...however, it is not a charge/restriction!? My solicitor said he had to speak to my ex to discuss it and couldn't divulge any more to me!!! I asked why it didnt show up on the original search which highlighted the two restrictions and he said "Its not a restriction". Any ideas what it is??

eggbox

JAS2015


I don't think your solicitor is doing you any favours here as you are named on the deeds so have a legal right to know what's on them (whatever that may be?) so I would let him/her know that.


But if time is of the essence you can download a copy of your deeds from the Land Registry website (and I'm pretty sure LRR may be able to help clarify any problem tomorrow?)

Land_Registry

JAS2015 - Very strange for the solicitor to advise but not clarify? Let us all know what this other 'hurdle' is and hopefully we can explain a bit more and/or a way forward

Your earlier posts refer to an impending charge on top of the earlier two so is this related in some way or something else entirely?

Handy to know if property still in joint names and you also referred to 'soon to be ex' so any clarification may also help