Charging Order? The myth

eggbox

Hootin_Heck wrote: »

Just been on to the Land Registry about the restrictions on our property (we are trying to sell, and wife doesnt believe what I am telling her about the restrictions)...and lo and behold the lady spoken to at the Land Registry told us that the restrictions have to be settled before a purchase can proceed.

She said that only the creditor can have the restrictions removed...

This has not helped at all as now my wife is convinced we are all wrong.... any advice anyone??

If you had read a bit more of this thread you will have seen that the answer you have been given is the one the you would have received if you asked the Land Registry the question you have?

This is because you have asked the Land Registry how the Restrictions can be removed prior to a sale proceeding, therefore, what the LR has explained is correct (unless you have paid the debt off?)

What you are required to ask the LR is what happens to the Restrictions after a sale has been made for value but no application, prior to the sale, has been made to remove the Restrictions?

The LR will then explain that, as long as the sale has been for value then, provided the (Form K) Restrictions terms have been complied with: the restrictions will have become overreached and will be cancelled automatically.

Hootin_Heck

Thanks Eggbox..
We just got off the phone to our solicitor who confirmed exactly what you said before I read it..however she was deffo asked what happens after the sale..perhaps she just misunderstood.

Our solicitors have explained that the removal of the restrictions is easy...BUT .. once the sale proceeds, then they (the solicitors) then become trustees, and the creditors will make them liable for the funds owed. On that basis they say they will have to pay them.

They can fight it for us (in our interests), but there is no guarantee of a positive outcome. We are waiting to hear from their litigation man for further info.

He did say that there will be a conveyancing team somewhere who understands the restrictions but wont be aware of the potential risks as an unknowing trustee.

not sure if this has cropped up before?

eggbox

Hootin_Heck wrote: »

Thanks Eggbox..
We just got off the phone to our solicitor who confirmed exactly what you said before I read it..however she was deffo asked what happens after the sale..perhaps she just misunderstood.

I can't, obviously, comment on this as I haven't heard the conversation? The LR, however, cannot be seen to be giving legal advice so, unless you ask a question they can answer without giving advice, they are duty bound to repeat the standard method for removing restrictions.

Hootin_Heck wrote: »

Our solicitors have explained that the removal of the restrictions is easy...BUT .. once the sale proceeds, then they (the solicitors) then become trustees, and the creditors will make them liable for the funds owed. On that basis they say they will have to pay them..........................not sure if this has cropped up before?

Yet it has, but when asked how the Solicitors become trustees and, also, become liable for the funds no Solicitor has provided an explanation for?

So your next step is to request an answer as to why they believe they become trustees and would be liable for the debt?

Hootin_Heck

thanks Eggbox... will do

eggbox

I stand to be corrected, but my understanding is that the Law places no obligation on, either, a seller or his conveyancer to repay the CO debt at the point of sale. It's also my understanding that the conveyancer only has legal responsibility towards the his own client and the buyer.

I can find no evidence for any responsibility, for the conveyancer, towards payment of a third party debt only notified by restriction?

Land_Registry

Hootin_Heck wrote: »

Just been on to the Land Registry about the restrictions on our property (we are trying to sell, and wife doesnt believe what I am telling her about the restrictions)...and lo and behold the lady spoken to at the Land Registry told us that the restrictions have to be settled before a purchase can proceed.

She said that only the creditor can have the restrictions removed...

This has not helped at all as now my wife is convinced we are all wrong.... any advice anyone??

Just to add to what eggbox has already posted.

In my experience you have to be very clear as to what it is you are asking. Unfortunately terms such as settled, paying off a debt, creditor and so on muddy the waters where a form K restriciton is concerned. And such terms really relate to the debt/charging order and not the restriction which has been registered to protect the CO.

If you are making an enquiry you must make it clear as to what it is that is happening, for example if it is a sale by the two of you to a third party for capital monies - what happens to the form K restriction?

The answer should then be that as long as you comply with the terms of the form K restriction, namely notify the named creditor of the sale, then it should be overreached and automatically removed as and when the application is made to register the transfer to the new owner.

It is the overreaching aspect which is crucial and of course than only happens after completion of the sale/purchase and it's application to register.

If you alter the context of the enquiry to clearing/settling the debt and/or applying to cancel/withdraw the restriction then you move into a different scenario and context of enquiry.

In no way am I attaching any blame to you, your wife or my Land Registry colleague here. But as mentioned many times the devil is always in the detail and the more times you ask the dame question in a variety of ways the more uncertainty exists.

Hootin_Heck

understood... and very appreciative of the advice.

Our litigation member of the solicitors called us and clearly has no idea what he is talking about so having to look elsewhere now... the buyers are getting a bit restless as their solicitor is ready to go

Hootin_Heck

ok..so we had to explain all this to the litigation solicitor who basically took the moral stance on paying back the debts with the equity.
We informed him that the intention is not to avoid the debt but to sell the house and then take it up with the creditors afterwards.
If we have to explain this to someone who is paid £130 per hour then he is not the right person. They clearly have never done this before otherwise we wouldnt have to explain to a solicitor what needs to be done.

If anyone who has been successful could PM me the name of a solicitor who can actually help, it would be massively appreciated.

eggbox

Hootin_Heck wrote: »

ok..so we had to explain all this to the litigation solicitor who basically took the moral stance on paying back the debts with the equity.

Interesting as my understanding is that as long as they aren't breaking the Law; then a Solicitor's first duty is to his client?

Hootin_Heck wrote: »

We informed him that the intention is not to avoid the debt but to sell the house and then take it up with the creditors afterwards.
If we have to explain this to someone who is paid £130 per hour then he is not the right person.

I'm betting his moral duty didn't extend to refunding your fees when it became clear he didn't understand this area of the Law?

The search goes on for a Solicitor brave enough to act as his client wishes, but it's breaking down their barriers of what they feel may happen to them, if they act as requested, that might now be the key to this problem?

Hootin_Heck

That's what we said to him... we just need you to act FOR us..Put aside your personal opinions.

The truth is they will act in their own interests first, then, if the case fits into their own pigeon hole, they may act in your interests.