Charging Order? The myth

Land_Registry

Whether it's an ICO or FCO makes no difference from a registration perspective if they relate to the same debt. They are the same interest after all.

jez123cars

Hi all

Back in early January I asked about charging orders and if they have to be paid up upon moving, Eggbox suggested further information as to what was on the land registry file.
Fanfare
Well, we have at last got a copy of our Title deeds from the Land registry.

In section B the proprietorship register there are the usual mortgage information and our names as owners, but the two I'm interested in are as follows:

(06.04.2009) 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 Tesco personal finance ltd blah blah care of Incasso LLP, (their address) being the person with the benefit of an interim charging order on behalf of the beneficial interest of Mrs (Wife) made by the named county court on 23 march 2009.

My wife only ever went to court once and we have never had any further correspondence from either the court or from Incasso (or Tesco). We went bankrupt after the interim charging order and when the OR tried to contact both parties they either didn't respond or seemed to know nothing about the case!
What do we need to do now that we are selling up? do we have to pay this debt?

(24.12.2012) 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 our OR and trustee of in the separate case of myself at the Insolvency service Address being the person with the benefit of a charging order on the beneficial interest of the of in the separate estate of Myself made in the named Court on 10 Dec 2012.
We originally received letters stating both of us would have the above registered against us both but due to the previous restriction (and the fact the OR couldnt get any reply from either party) the OR removed their interest against my wife.
I assume this one is a must pay on selling but I would like to know if this is the case or do i need a solicitor/conveyancer who understands this sort of thing?

Sorry this is so long but needed to write down exactly what is on the title deed>

Any help on either of the above would be much appreciated as we are currently on the market and have a potential buyer (and a property to purchase) assuming all goes well.

Many thanks in advance

Jerry

eggbox

jez123cars

Land Registry Rep is always keen to explain that the LR can only deal with what is registered on the deeds. Therefore, as you only have a standard Form K Restriction registered for both CO's, there appears nothing to stop you selling the property, without settling either CO at the point of sale, if the buyer complies with the notification terms of the Restriction?

Whether the OR has any special powers to reclaim money from a sale I'm unsure? But, as with most areas of debt recovery; it's locating the funds to recover that provides most difficulty when they are not easily accessible?

What your info does explain, however, is that Tesco has priority (by date) for any proceeds available over the OR?

jez123cars

Thanks Eggbox

What does the buyer (I assume by this you mean their solicitor or can I do it for them?) need to do to comply with the notification terms of the Restriction?

If I understand you correctly I can sell up and I do not need to tell either Tesco or the OR that we are selling.

Is there anything I need to tell my solicitor handling the conveyancing?

Jerry

eggbox

"without a certificate signed by the applicant for registration or their conveyancer" means either the buyer or his conveyancer (Solicitor) has to provide the Land Registry with proof that they have notified the creditor (of a sale occurring) named on the Restriction to allow a transfer of ownership to proceed. As the seller isn't mentioned; then you doing so wouldn't comply with the Restrictions terms. So, no; you need not do anything.

The removal of the Restriction occurs (providing the new owner is buying the property and not just being transferred ownership) as it becomes overreached when the new owners details are registered.

Land Registry Practice Guide 76 Section 4 Para 3
Entry of a restriction does not protect the priority of the interest to which it relates for the purpose of section 29 of the Land Registration Act 2002. A charging order affecting only the beneficial interests under a trust is liable to be overreached along with those interests by the operation of sections 2 and 27 of the Law of Property Act 1925. Accordingly, a Form K restriction will be usually be cancelled automatically, without application, when a transfer which appears to overreach the beneficial interests is registered.

jez123cars

You've been a great help with this Eggbox thanks,

So, their solicitor/conveyancer will have to write to Tesco (or Incasso) and the OR to tell them the property has been sold and title transfer is taking place? Do they have to wait for a reply(or an set amount of time) or is just sending the letters enough?
Is it likely that their solicitor/conveyancer will need to contact us for more information or should he know what to do on their behalf?

Sorry if i am being a pain but we have now had an offer (2nd one in a few days as first one fell through as couldn't raise mortgage) and we have found a property to purchase and we obviously want to put as much deposit down and borrow as little as possible, do i assume that any profit i have after paying the mortgage off is available to use as deposit and to pay for solicitor estate agent etc or do i have to set monies aside to pay the CO's?

We don't want to loose out on a technicality.

Jerry

eggbox

jez123cars wrote: »

So, their solicitor/conveyancer will have to write to Tesco (or Incasso) and the OR to tell them the property has been sold and title transfer is taking place?

Yes. The Restriction only states that what is required is a "certificate" to prove that notification of a sale of the property occurring, to the Restriction holders, has been sent by the buyer or his conveyancer. So a recorded delivery receipt, for example, to "certify" that notification had been sent; is all that is required to be acceptable to the LR.

jez123cars wrote: »

Do they have to wait for a reply(or an set amount of time) or is just sending the letters enough?

It's only what is included in the terms of the Restriction that has to be complied with. So as there is no mention of "waiting for a reply" or any time of notification required; then the compliance can take place whenever it suits the buyer (which means it should be sent as late as possible to give the Restriction holder as little time to act as possible!)

jez123cars wrote: »

Is it likely that their solicitor/conveyancer will need to contact us for more information or should he know what to do on their behalf?

Unfortunately (judging by posters experiences on here), it's unlikely the buyers Solicitor will know the limitations of a Form K and they will, also, probably view it the same way as a CO registered by way of a Notice (which are used when the debt is against a sole or joint debtors) and aren't overreached upon a sale for value occurring?

This is where you need your Solicitor to earn his corn by making sure they understand overreaching and, also, the fact that there is no obligation to pay off the CO behind the Restriction registered before the sale can proceed and a transfer of ownership is allowed.

What happens to the debt being paid, after the new registration has occurred, is not a legal concern to, either, the Land Registry or the buyer.

jez123cars wrote: »

do i assume that any profit i have after paying the mortgage off is available to use as deposit and to pay for solicitor estate agent etc or do i have to set monies aside to pay the CO's?

Unfortunately, there is no way to answer that as it will depend on the two sets of Solicitors concerned. With posters who have managed to sell up and not pay off the debt at the point of sale; its been with the agreement of both Solicitors involved. Where they have failed, its been where the buyers Solicitors has failed to agree? Its as cut and dried as that, unfortunately?

jez123cars

Hi agian
this whole thin is all gobble-de-gook to me and its hurting my head.

So the buyers solicitor needs to write to each restriction holder, by recorded mail keeping he reciept of posting?, telling them that we are selling the property and they do not need to wait for a reply. I take it if they do we will need to pay up lol.

When I go to see my solicitor I will go through all this with him and hope both solicitors can work this out.

My wife has been doing some further research and it would appear that the OR should contact us every 3 yrs, or is this just at the end of the first 3yrs after bankruptcy, to review the state of things to see if the beneficial interest could be realised, but we have heard nothing from the OR since 2012.

What is overreaching? so I understand when my solicitor talks to me.

Jerry

eggbox

jez123cars wrote: »

So the buyers solicitor needs to write to each restriction holder, by recorded mail keeping he reciept of posting?, telling them that we are selling the property and they do not need to wait for a reply.

That's correct. But you need to make a copy of the receipt and send the original to the LR as proof of complying with the Restriction. This then allows a transfer to proceed.

jez123cars wrote: »

I take it if they do we will need to pay up lol.

If you are going to cave that easy you might as well pay up when you sell automatically? The point of not paying at the point of sale is you put the ball back into the court of the creditor. They couldn't get the money off you previously so they put a charge on your asset. That hasn't worked for them so are they prepared to throw good money after bad having suffered this?

jez123cars wrote: »

When I go to see my solicitor I will go through all this with him and hope both solicitors can work this out.

You just need to explain to your Solicitor you don't wish to pay any proceeds from the sale to the creditor upon sale of the property. Your Solicitor just needs to explain to the buyers Solicitor that the Restriction will be removed upon sale due to overreaching occurring (both of whom should already understand overreaching, as legal professionals, but many don't?)

jez123cars wrote: »

My wife has been doing some further research and it would appear that the OR should contact us every 3 yrs, or is this just at the end of the first 3yrs after bankruptcy, to review the state of things to see if the beneficial interest could be realised, but we have heard nothing from the OR since 2012.

If you have been discharged from Bankruptcy it may be more serious, for you, if you don't pay as I believe they can suspend you discharge. So I would read up on the legal aspect of not paying a CO on Beneficial Interest to the Official Receiver. But they would have to be notified so you will know, soon enough, how interested they are in collecting given the non contact?

As per Land Registry Rep:
Overreaching - in a trust of land or strict settlement, overreaching takes place on sale, when the proceeds of sale are received by the trustees (of whom there must be at least two, or a trust corporation). The effect of this is that the equitable interests in the land arising under the trust are overreached. After overreaching, the beneficiaries cannot claim against the land: their only claim is against the proceeds of sale. The buyer is therefore protected.

jez123cars

Thank you Eggbox you are a star. I believe a light bulb moment has occurred and I now understand it.