Charging Order? The myth

eggbox

Hootin_Heck wrote: »

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.

And its what everyone who is considering employing a Solicitor should understand, and then ask questions, before proceeding with their services.

Hootin_Heck

Interesting:
RESTRICTION, NOT TO BE TAKEN AT FACE VALUE – HARRY PERADIGOU

Author Brightstone Law LLP
The Restriction I am referring to is a Form K Restriction normally worded as follows:
“Restriction: No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to XYZ Limited being the person with the benefit of an interim charging order on the beneficial interest of Joe Bloggs made by the Newport County Court on 13th January 2015 (Court ref 7XY1234)”.
The wording of the Restriction seems to suggest that by serving notice, a seller will satisfy the terms of the Restriction and a purchaser will be registered as the new owner.
However, there is more to it than that. XYZ Limited obtained an Interim Charging Order against Mr Bloggs.
Therefore, even though it does not have a legal interest in the land, it does have an equitable or beneficial interest, i.e. an interest in the proceeds of sale. The company must therefore be repaid when the property is sold by the owners. This is on the assumption that XYZ Limited obtained a Final Charging Order of course.
It is correct that the purchaser will be able to register the title in his or her name free of the Restriction simply by providing a copy of the notice served on XYZ Limited. However, the seller still needs to deal with the underlying debt.
The seller and his solicitors will hold the sale funds as Trustees and the seller will be responsible for repaying the Charging Order in full.
Simply serving notice and thinking that the solicitor’s job is done will likely lead to further action against the seller and, in turn, a potential negligence claim against the solicitor.

eggbox

It's an opinion several solicitor websites repeat as its written in favour of the creditor. But you will notice it uses the words "likely" and "potential"but carries no evidence of this action occurring (as I would suggest there isn't any) or on what legal basis the action would be carried out?

It also states a creditor "must" be repaid when a property is sold which is misleading. A Charging Order carries no guarantee of repayment as there can be no guarantee there will be enough equity to do so when a property is sold? This may cause a problem where the CO is registered as an equitable interest, but causes absolutely none where its only notified by a restriction that is liable to be overreached when the property is sold?

Crucially, the author states the "seller" will be responsible for repaying the CO and, unless the Law prevents a Solicitor passing all the proceeds of a sale directly to the seller (which, again, I suggest there isn't one); then the Solicitor should carry no liability towards a third party creditor should his client choose not to pay.

The creditor has the opportunity to take the debtor back to Court, should it so wish, but this is where the Law starts to work against them as its time consuming, costly and carries no guarantee of a, definite, victory?

Hootin_Heck

I just checked the FCA's register, and two of the creditors with a restriction on our property are shown as current status "cancelled"

Any firm which failed to apply to the FCA before 31 March 2014, and therefore does not hold an Interim Permission, will be acting illegally if it continues to engage in consumer credit activities. Any firm without an Interim Permission should apply to become directly authorised by the FCA before offering any consumer credit services.

The question is... can a company not authorised by the FCA to operate still maintain a charge/restriction on a property?

Clutching at straws now,, but worth an ask

Hootin_Heck

i appreciate the responses eggbox.. and only wish the solicitors out there supposed to be acting for their clients had your knowledge

eggbox

I recently received this from a Solicitor who indicated to a poster he could help with their sale but he, subsequently, had the block put on him by his superiors. I had to pull him up because he was using hearsay (which LRR has explained wouldn't be correct) as his boss's excuse.

But it highlights another Solicitors, contrary, opinion to the Brightstone extract but also highlights they don't have the courage of their convictions?

Dear Mr *****,

Thanks. I was simply reporting a query I had seen raised by a solicitor on Lexis who said he had trouble with the Land Registry (in 2015 I think). I completely agree - there should be no issue in my view!

Hootin_Heck

thanks Eggbox..

Just thought of some other straw to clutch. The original creditors have since sold the debt on but the Restriction on the Land Registry has not been updated? Does that matter in the validity of the restrictions?

Land_Registry

Hootin_Heck wrote: »

thanks Eggbox..

Just thought of some other straw to clutch. The original creditors have since sold the debt on but the Restriction on the Land Registry has not been updated? Does that matter in the validity of the restrictions?

From a registration perspective it makes no significant difference as the interest being protected is the charging order. If it has been sold on then the interest remains but the end beneficiary, the creditor, has changed.

eggbox

Hootin_Heck wrote: »

Just thought of some other straw to clutch. The original creditors have since sold the debt on but the Restriction on the Land Registry has not been updated? Does that matter in the validity of the restrictions?

Not the validity, but whoever has been sold the debt should've had the original CCJ reassigned to them by a court? If that hasn't been done they have no legal right to enforce the CCJ or subsequent CO

Hootin_Heck

thats what I was thinking... thanks for the response LRR.

Assuming they didnt..would our solicitor just inform the original creditor as stated on the restriction? That could assist with "buying time".

If they did, should that not be reflected in the LR?

I'll have to do some digging at the court perhaps, just to clarify