Charging Order? The myth

DAKOTA45

eggbox wrote: »

An interesting read HERE from a Law Firm relating a Court ruling that transferring a property does not "overreach" a Restriction.

However, the last 2 paragraphs reinforce the fact that a standard Form K gives the creditor very poor security as a sale for "value" will overreach the Form K Restriction leaving the creditor (in their words)
"with the only real option of pursuing the debtor for the proceeds of the transaction"

The article (which is written for the benefit of creditors) highlights the fact that there is no legal obligation to hand over the proceeds to a creditor upon sale and which can be explained to naysay Solicitors/Conveyancers ready and willing to hand over their clients money when under no obligation to do so.

I'd say it would be unlawful to hand over someone's assets to a creditor, as it's not theirs to give… It's up to the creditor to try and get their hands on the money…probably by a freezing order...

D45

DAKOTA45

Very interesting… but the courts don't treat debtors fairly...

A Form K restriction is a blunt instrument in the eyes of a judgment creditor. It does not only require the person attempting to alter the register to notify the creditor of his application and as such the creditor has virtually no powers to object to any such application leaving him with the only real option of pursuing the debtor for the proceeds of the transaction. Benwaitt illustrates the need for the Land Registry to create a more potent standard restriction to protect the creditor’s position or alternatively, for the judgment creditor to seek a tightly worded nonstandard restriction from the Court when finalising the charging order.


In my case, the creditor was only awarded a standard form K restriction, but then he made an application to modify the CO to 'better secure the debt'… The court allowed the creditor to place a modification by way of a 14 day notice… a bit like the old caution type COs that they did away with a few years ago.

I argued with the court that once a judgement has been sealed, the creditor could not change it without an appeal to show that there had been a serious mistake in the first Judgement etc..

Guess what? The court dismissed my argument…and that has to be wrong in law, doesn't it? I mean… if you already have a judgement for the debt, how can you then make another application to alter the judgement decision?

By allowing the creditor to have two COs for the same debt!



D45

eggbox

weimimamma

Charging Orders don't show up on your credit file. What does show up is the CCJ obtained and which was enforced by way of obtaining the CO. But CCJ's will only stay on your credit file for a 6 year period from being granted and, whilst they don't expire, they don't impact on your ability to gain credit after this period (with the exception of secured loans against your property if a CO has been sought) as loan company's will be unable to identify you have them.

If the debts are in your husbands name and you own your property jointly; then the CO obtained will only be registered against your husbands "Beneficial Interest" (his share of the equity) and, as this thread is highlighting; these debts do not have to be, legally, settled when you sell your property. More importantly, the creditors have no legal claim, whatsoever, on your share of the property.

Whilst this thread is attempting to highlight that your husband is under no legal obligation to hand over his share to creditors upon sale of the property, if you do sell the property and want to hand over his share you are still able to retain your share of the sale proceeds.

Unfortunately, you may encounter half wit Solicitors telling you that the CO's need to be settled before you can sell the property. This is not correct as only the Restrictions wording needs to be satisfied to allow a transfer to proceed (which usually only takes the form of notification to the creditor that a sale is happening.)

The fact that your husbands share of the sale price (after the mortgage is paid) doesn't cover the debts registered cannot, in itself, prevent a sale proceeding. What will prevent it is if the buyer is using a mortgage as the lender will usually insist the Restrictions are removed prior to sale?

So, you then have the following option; you write to the creditors and explain you want to sell the property and, for this to happen, you require the removal of the Restrictions using whatever repayment method you can agree on.

If they refuse, then you explain that you will be doing a voluntary repossession of the property and that their Restrictions will be removed under the power of sale the mortgage company will have (as the first charge holder) and they will be removed anyway regardless of any agreement to repay.

If a house is repossessed; then the first charge holder (which is usually the mortgage lender) has the right to invoke a "power of sale". This gives them the right to remove all other charges from the property deeds to allow them to sell the property.

If this happens, then the mortgage company has a duty to gain the best price for a property (but that may mean using an auction) and can take any costs of the sale incurred out of the proceeds. However, any remaining proceeds are returned to the previous owners and not to the creditors. Whilst this will, most likely, create a problem obtaining a mortgage in the near future; the fact it can happen puts you in an extremely strong bargaining position with the creditors.

weimimamma

Thanks Eggbox for that info. Not sure if we should obtain the figures on the Interim Charging Orders and put our house up settle our debts and rent and then only have this court issue to deal with for some peace of mind and at least they cannot have a hold over us as will technically have no assets for them to come after as there is a long line before them. Just worried that we will be filed for bankruptcy or some such thing as knowing the person involved they will not want monthly payments and still want a lump sum.

Do you know if we are able to sell our property if there will not be enough equity to pay off the debts from my husbands half as I am aware that my half of equity safe so we will have at least something.

eggbox

If you have no assets then any court action is relatively futile (as is bankruptcy proceedings) and the creditor will know this.

Creditors will always exaggerate what they are going to do (and the powers they have) to you to scare you into paying up more money. But with the facts that you have related you have the upper hand as your husband share is not enough to pay off the creditors. Therefore, explaining to them that you will do a voluntary repossession if they don't agree to your terms should see them having a whole new attitude?

A creditor will only be able to stop you selling your house (if there is not enough equity to pay off the charging order) by way of a freezing order. But this is immensely expensive for the creditor and carries a huge amount to risk as they are responsible for damages if they don't succeed. A quick search on google will show you that it is extremely difficult to find any creditor taking this action.

weimimamma

Thanks very much most helpful

DAKOTA45

eggbox wrote: »

Yes that's all you can do and I think its unlikely she won't have passed on the mail being a signed for delivery. Good luck!

Just wondering… this bloke has property all over the place… Can he say he didn't receive it and ask for a set-aside if he happens to be on holiday at one of his other houses? Presumably, though he will have made an arrangement for mail to be forwarded?
I know there is SOMEone in there as I can see the house from my property… I think his relatives check on the house whilst he is away… I'm just worrying because this other neighbour has signed for it, so he can say he wasn't served it, can't he? :(D45

eggbox

He can say what he likes but its risky if he has, genuinely, received the Court papers as he could be risking a Judge not accepting his story and losing the ability to defend the case.

Even if he says he never received and applies for set aside, you will be able to object to the set aside and give the reasons you feel he would have received.

So I would expect a response right on the limit of the time they are allowed to acknowledge.

DAKOTA45

eggbox wrote: »

He can say what he likes but its risky if he has, genuinely, received the Court papers as he could be risking a Judge not accepting his story and losing the ability to defend the case.

Even if he says he never received and applies for set aside, you will be able to object to the set aside and give the reasons you feel he would have received.

So I would expect a response right on the limit of the time they are allowed to acknowledge.

Yes… that sounds about right… they are always late. Not sure what the defence will be… there isn't one. He has already denied any wrong doing in a letter. Just a bare denial…. but I note he hasn't pursued the buyers or the estate agent for slander or libel respectively… You'd think that he would, given the seriousness of the allegation.

Hmmm…

D45

DAKOTA45

I am pretty certain he will have received it as the neighbour who signed for it will have seen my address on the back of the envelope and will have phoned him straight away... the pair of them have colluded against me in the past.. This neighbour perjured herself at court and lied about me when the creditor bribed her. I know this for a fact! D45