Charging Order? The myth

eggbox

If the CO hasn't been made Final then there may be grounds to object but it wouldn't be on the basis of no CCJ as its not possible to obtain a CO without getting Judgement of the debt first. The CO is an enforcement of the CCJ.

And as we are all aware, it's virtually impossible to stop the Order being made Final under any objection made.

Distracted

Can any one help me with the wording of my restriction, I understand the second part but the first sentence I've bolded is confusing me (not difficult admittedly)

Is this just a reference in case there is a previous charge/restriction registered on my property (there isn't) and they have effectively a right to disposition over this entry?
Or does it mean that they require something more onerous from me than merely evidence of notification of of disposition was given to my (partners) debtor

RESTRICTION: No disposition of the registered estate,
other than a disposition by the proprietor of any registered charge
registered before the entry of this restriction, is to be registered
without a certificate signed by the applicant for registration or their
conveyancer that written notice of the disposition was given to [NAME OF CREDITOR]

stuart30

eggbox wrote: »

I wouldn't worry too much, then, about locating the CCJ as it seems you would both have been responsible which is why an equitable charge has been registered.

I'd concentrate more on seeing how much they will settle for?

Yes it was more out of intrest as no CCJ has been added to either my wifes nor my credit report.

Obviously they must have had one...just not updated the CRA...bonus i guess.

Link have said they expect the full balance as were remortgaging,ive stated that if thats the case no point in going a head with it as wouldnt be cost effective.

Current mortgage only has 20 yrs and 1 month left...so can either pay a reduced amount now or full balance in 2036

DAKOTA45

eggbox wrote: »

If the CO hasn't been made Final then there may be grounds to object but it wouldn't be on the basis of no CCJ as its not possible to obtain a CO without getting Judgement of the debt first. The CO is an enforcement of the CCJ.

And as we are all aware, it's virtually impossible to stop the Order being made Final under any objection made.

Agreed… but if the CO is a restriction, rather than a charge it will make a difference when they come to sell… is it definitely in both names? Is there any way of finding out? D45

weimimamma

Hi we have around £100k of equity in our joint property my Husband has around £80k worth of debt as ICO's in his name only, could we still sell our property even if he doesn't have enough to settle the debts in his name? Obviously there is enough if I use some of my equity to settle his debts and we could potentially still come away with around £20k out of my £50k equity.

Also I need to ascertain the exact amount of two of the ICO's as I can't find any paperwork relating to these I have contacted the court concerned who advised they do not keep paperwork longer than 3 years and these are from 2010. I presume the Land Registry should be able to provide further information or would you suggest I contact the debtors directly, I don't want to stir them up as we have heard nothing for years and may decide against selling at this point.

eggbox

Weimimamma

If the debts are only against your husband then the CO's will only be notified by a Restriction on the deeds. In order to sell your property all that is required is for the wording on the Restrictions to be complied with.

Most Restrictions, notifying a CO, are a standard Form K and all that is required to remove them (and allow the Land Registry to register new owner details) is for the BUYER to notify the Restriction holder a sale is happening. But you should check what is stated on your deeds.

As this thread is highlighting, there is no obligation to hand over any proceeds under these circumstances at the point of sale. But whatever you decide, the creditor is only entitled to lay claim on your partners share of the equity and, if that doesn't cover the debt owed, then that is a problem for the creditor not yourselves.

weimimamma

Thanks Eggbox the wording is that they need to be notified the Estate Agent advised that if there is not enough equity in the property they we could not sell! If we do not clear the debts then I presume this opens up another can of worms as at some point these people will want their money. Also from what I have read previously most Solicitors are not aware of the a fact that they are working for you and do not have to pay on completion so finding a solicitor who will play ball may be a challenge too.

On another point we are currently awaiting a response from the court on an n245 form we have completed do you know if this creditor can apply for a charging order or indeed anything in the meantime whilst this is being considered?

eggbox

weimimamma

The last people you want to take advice from on this subject is an Estate Agent. Even many Solicitors misunderstand the selling process when there is a Form K Restriction. This following extract is from another site but is written by an irate Solicitor who does know the selling process involved and is a response to a Solicitor saying a sale can't be done.....


"It really does concern me how many numpties there seem to be amongst our noble profession these days. Are you sure he's actually a solicitor? There are an awful lot of people `doing' conveyancing these days who aren't qualified at all and simply follow a case management system. I come across them every day, and it drives me bonkers.

By way of illustration I'm selling a house in Welwyn Garden City at the moment. It's a bog standard house, but it's leasehold instead of freehold. That's not particularly unusual - many houses are on 999 year leases at a nominal ground rent and they aren't much more difficult to deal with than freehold houses.

But the buyer is using a firm of solicitors who are factory conveyancers - although their website is plastered with all the little badges and logos such as Lexcel, Conveyancing Quality Scheme etc they basically employ lots of unqualified people and like most such forms get most of their work through paying referral fees to estate agents.

The `conveyancer' that I have the misfortune to be dealing with is utterly clueless. When she saw it was a leasehold title she sent me a multi-page questionnaire asking about service charges, management company accounts, block insurance etc etc, all of which are only relevant to a leasehold flat.

I politely pointed out that her client was buying a house, not a flat, and I received the reply "We are unable to progress the matter any further unless the enquiries are answered in full". I'm taking a few days to simmer down before responding!

But I digress. The reason I impliedly criticised your solicitor (if that's what he is) in this case is that he evidently has no comprehension of what he's looking at. It's increasingly the case these days that solicitors get pigeon-holed at a very early stage of their career so that they lack even quite basic knowledge of other areas of law. This is probably OK if you're dealing with the securitisation of syndicated loan notes for a City firm, but if you're in a High Street practice, where you come across a much wider variety of work it's not good at all.

In this case he's dealing with the result of County Court litigation, about which he's probably completely ignorant.

What's happened is that Mrs Beneficiary has sued Mrs Co-Vendor and obtained judgment against her. She has then registered a charging order. This is rather like a court-imposed mortgage on someone's land.

However, where you only have judgment against a joint owner of land you can't get a charging order over the legal title to the land, as that would clearly be unfair to the co-owner.

So what happens is that you get a charging order over the co-owner's "beneficial interest" - in other words in their share of the proceeds of sale.

That's clearly what's happened in this case. However, there's something strange happening.

You say that Mrs B relates it to an incident with her neighbour (who is presumably Mrs Co-Vendor) that was settled a couple of years ago. However, the charging order was only made this year. Furthermore, it's an interim charging order.

This means that despite what Mrs B says she (or her solicitors) must have applied to the court for the order. Mrs C-V wouldn't necessarily be aware of this, as the initial application is made without notice to the owner of the property.

The court has evidently been satisfied that Mrs B appears entitled to the charging order, and they will have set a date for a hearing as to whether the charging order should be made final. Obviously, Mrs C-V will have been notified of that hearing.

So why on earth would Mrs B be actively trying to enforce a judgment that she says was settled a couple of years ago?

However, intriguing as it may be it is (or should be) of no concern to you or your solicitor.

The reason for this is actually clear from the wording of the restriction, the important bit of which reads:

"No disposition of the registered estate... is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to Mrs Beneficiary [etc] "

It's well known amongst litigation lawyers that such charging orders are virtually useless if the solicitors dealing with the sale and purchase of the land know what they're doing. This is because all the buyer is obliged to do is to give notice of the "disposition" (i.e. the transfer) to the person named - in this case Mrs Beneficiary.

The key point is that it does not say that such notice must be given before the transfer takes place. So you can complete your purchase, Mr and Mrs C-V get their money and disappear, and then your solicitor writes to Mrs B / her solicitor and tells them that the property's been transferred to you.

He can then sign a certificate that notice has been given, and because the restriction only affects the beneficial interest and not the legal title the Land Registry will automatically cancel it when they receive the application to register you as the owner.

Our solicitor says "presumably" is not enough to satisfy the lender's requirements and requires an RX3 or RX4.

Unfortunately this confirms my impression of him. An RX3 is used to cancel a restriction, and an RX4 is used to withdraw a restriction (the difference being that withdrawal requires the consent of the person who registered it).

By definition a restriction imposed by the court against Mrs C-V cannot be cancelled by Mrs C-V, as this would rather defeat the object! Likewise, Mrs C-V can't supply an application to withdraw the restriction as it's been entered against her as a hostile act, and it's hardly likely that Mrs B is going to consent to its removal, having spent a no doubt considerable sum of money to register it in the first place (though in this case there's obviously something else going on).

But as I said earlier it simply doesn't matter. The restriction is not against the legal title, so your solicitor can just pay the money over to Mr and Mrs C-V's solicitor in the normal way and the restriction will then be removed by the Land Registry when your solicitor applies for you to be registered as the new owner.

Ironically, this is precisely why I and other litigation solicitors do still apply for charging orders against one of a joint owner's beneficial interest. Even though it should be ignored by the conveyancers there are so many that are as clueless as your chap that it very often works in our favour.

What happens (as here) is that the buyer's conveyancer through ignorance refuses to proceed unless the charging order is removed. The only way the creditor will agree to its removal is by being paid the debt. So the joint owner is often forced to cough up out of the sale proceeds simply because the buyer's conveyancer is a numpty!"

Land_Registry

eggbox - this recent blog article by one of our Assistant Land Registrars may be of interest (if not already seen).

It does not relate specifically to Charging Orders but does seek to explain the difference between the legal estate and beneficial interests, which as you will appreciate can be important when dealing with COs from a registration perspective.

weimimamma

Thanks Eggbox, so technically we could put the house on the market and if and when completion takes place either walk away with all the profit or choose to clear some of my husbands debts with just his share of the equity however much that may be and walk away with my equity and then the any debts will still be outstanding but it is up to them to pursue these in some other way as they will no longer have a hold over our property.


Gives me some hope of selling and making a fresh start of some description, long way to go but may be some light at the end of this tunnel


I do still however need to ascertain the exact balances on some of these debts and wonder if contacting the creditors directly will stir them up when they have not been in touch for many many years.