Charging Order? The myth

eggbox

Googly eye

The Restriction you have posted is a standard form K. This is noted by the wording in the Restriction with the important section highlighted;

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 XXXXXXXXXXXXXXXX

This means that as long as the buyer (or their solicitor) has given the Land Registry a certificate (eg certified by providing a recorded delivery receipt) that they have notified the creditor the house is being sold; then the terms of the Restriction have been met and the new owners details can be registered.

Whether a Charging Order is Final or Interim doesn't really make any difference as both can only be notified by a restriction on your deeds as you are a joint owner.

Land_Registry

eggbox wrote: »

Whether a Charging Order is Final or Interim doesn't really make any difference as both can only be notified by a restriction on your deeds as you are a joint owner.

Just to add to eggbox's post a creditor will, in my experience, only register the interim charging order.
There are two reasons for that although the second one is speculation really and you'd have to ask a creditor to confirm
1 a charging order is a registerable interest whether it's been made final or not. Making it final makes no difference to the land register other than the word used (see point 2): and
2 Whilst the creditor could apply to register the final order they would have to apply and pay the £40 fee. The outcome re a form K restriction in this case would be the same but it would refer to the final and not interim order. Nothing to gain fir £40.

So the land register is correct. The court can confirm if the order has been made final if you need to check

Flavamum

Thank you eggbox.
I want to try clear it my nerves can't take it.

I would just like to say I've never seen such a amazing bunch of people.
By reading through it really has made me feel more relaxed and not so alone.
So refreshing to see people help each other xx

Googly_eye

Thank you for your help Egg Box and Land Registry.

So if the Buyer / Buyers Solicitor does agree to inform my creditors that the house is sold, and sends proof to Land Registry, will that then remove the restriction against the property in readiness for completion?

Really appreciate your help

Land_Registry

Googly_eye wrote: »

Thank you for your help Egg Box and Land Registry.

So if the Buyer / Buyers Solicitor does agree to inform my creditors that the house is sold, and sends proof to Land Registry, will that then remove the restriction against the property in readiness for completion?

Really appreciate your help

No - the point eggbox is making is that the restriction is overreached by the sale by joint owners for capital monies.

So that means the creditors have to be notified of the sale and the buyer's solicitor confirms that when submitting their application to register the purchase. We don't need proof of the notification but the solicitor has to certify that they have notified them.

The restriction won't be removed before that happens hence it is important that the solicitors involved understand the overreaching point in order to complete and then register.

eggbox

Land_Registry wrote: »

We don't need proof of the notification but the solicitor has to certify that they have notified them.

Hi LRR, can I ask what the LR would require if the seller decided to do their own conveyancing?

Land_Registry

eggbox wrote: »

Hi LRR, can I ask what the LR would require if the seller decided to do their own conveyancing?

The application to register the purchase is made by the purchaser so I don't think it matters whether the seller is represented or not, at least as far as the restriction is concerned.

Hope I'm not misunderstanding the point though

Remember compliance with the restriction relies on the applicant for registration or their conveyancer' certifying that they've notified the creditor(s). The applicant is the purchaser not the seller.

I suspect some sellers/solicitors may over think this on a few levels but remember the CO is against the joint owner's beneficial interest. Not both owners' joint legal ownership, which is being sold. So if the property is being sold in the way you have described many times the CO still exists but the sale overreaches it as far as the property is concerned. The creditors need to be notified of what's happening but it doesn't stop the sale/purchase being registered.

But you only get to the registration point if those involved, whether they use a solicitor or not, understand that. And the key is not the seller here but the purchaser/their solicitor

Googly_eye

Thanks LRR.

By overreaching do you mean that the property interest disappears and instead becomes an interest in the purchase monies for that property? If thats the case does that mean we would have to pay the creditors from the proceeds of the house, even though the restrictions are in single names but the house is being sold in jointly names and the proceeds from the sale would go into a jointly named account?

Thanks again for all your and Eggbox's help, I want to get the facts right in my head before I go and see my solicitor next week.

eggbox

Land_Registry wrote: »

Remember compliance with the restriction relies on the applicant for registration or their conveyancer' certifying that they've notified the creditor(s). The applicant is the purchaser not the seller.

Thanks for the reply LRR but what I was requesting an answer to is what the LR would accept from the purchaser (by way of verifying they had notified the Restrictioner) if they chose to do the conveyancing themselves rather than employ a Solicitor?

You stated you don't need to see proof from a Solicitor but they have to "certify" they have notified the creditor of the sale which, I presume, means you can accept their word on the matter (presumably because they are a legal professional and would be in trouble had they, actually, not notified the creditor?)

As a purchaser doing their own conveyancing would not have that advantage; I'm asking what would they need to provide to satisfy the LR notification had been sent to the Restrictioner? Would a recorded delivery receipt to the Restrictioner be enough?

Land_Registry wrote: »

But you only get to the registration point if those involved, whether they use a solicitor or not, understand that. And the key is not the seller here but the purchaser/their solicitor

The problem when Solicitors are involved appears to be that the buyers Solicitor won't play ball unless the Restrictions are removed prior to the new registration commencing.

This is because they refuse to accept that the Restrictions will be removed from the deeds even if the Restriction terms have been met and are, also, overreached by a sale for value?

Even if the buyers Solicitor is willing to play ball; the sale falters as they request the seller's Solicitor to give an "undertaking" the Restrictions will be removed upon registration. It falters because the seller's Solicitor refuse to give that undertaking because the LR won't confirm the Restrictions will "definitely" be removed upon the new registration proceeding?

As a Solicitor can get into serious trouble giving an undertaking for something that doesn't happen; they don't feel it's worth taking the risk? So any "guidance" on that area would be most welcome?

eggbox

Googly_eye wrote: »

Thanks LRR.

By overreaching do you mean that the property interest disappears and instead becomes an interest in the purchase monies for that property? If thats the case does that mean we would have to pay the creditors from the proceeds of the house, even though the restrictions are in single names but the house is being sold in jointly names and the proceeds from the sale would go into a jointly named account?

Overreaching means the "beneficial interest" (equity), on which the creditor has their CO attached to, is removed from the property when it is sold and you receive that "beneficial interest" in the form of the buyers purchase money.

The creditor, however, only has claim on the debtors portion of the BI in the property. So, should you decide to pay the creditor on the sale of the property; they are only entitled to be paid from any monies the debtor receives from the property.

The point of this thread, however, is to explain that the property can be sold without settling the debt at the point of sale. This is because the Restriction the creditor has isn't strong enough to prevent the sale happening. Once the funds are released to the debtor it is then up to them if they choose to settle the debt at that time. If they don't then the creditor has to find a way to recover the debt again?

As many CO debts are from loan companies that sold the debt to a debt collection agency for a fraction of their value (for instance a £10k debt would be sold for a maximum of £1k to the DCA) The DCA won't want to spend more time, effort and expense chasing a debt that the debtor is trying to avoid repaying.

As a reminder to anyone new reading this thread; this thread isn't trying to help people avoid paying "legitimate" debts (such as a builder who installed your new extension but you decided not to pay up) and for which Charging Orders are rightly used.

It was to help redress how the financial institutions, disgracefully, acted during the financial crash around a decade ago, whereby, ordinary people who would never of dreamed they would ever default on loans and credit card payments suddenly found they were having to do so? The world economy crashed for the reasons we now all know was major greed and mismanagement from those same financial institutions?

Instead of helping people who found themselves in difficulty, the banks took the decision to try and bleed customers, in trying to recover there own losses, by raising interest rates to extortionate amounts. 10% pa became 26%pa and the amounts owed forced thousands of people to default. When they did the banks then made the decision to use the avenue which turns an "unsecured " debt into a "secured" debt by attaching the debt to property. Leaving thousands of ordinary families terrified they were going to lose their home?

Having secured the Charging Orders required but finding that CO's are a long term solution not a quick fix; the banks then decide to unload these debts to Debt Collection Agencies for a fraction of their value. Much, much, much less than they would have recovered if they had arranged long term repayment plans from their own customers in trouble?

This practice also absolved high street banks from the dirty work of having to be responsible for collecting the debt that still existed. So, please, never, ever feel guilty if your debt is for a loan or credit card as these institutions, despite being responsible for the financial crash; are still planning ways to suck every last dime they can from you by fair means or foul.