Charging Order? The myth

Peterkn

I jointly own a property with my mother on which I’m trying to do equity release just in my mother’s name which will mean I have to come off the deeds. Unfortunately I have 2 restrictions on the property which Equilaw have said I will have to settle before they can proceed. These were unsecured loan and a credit card, just in my name in 2007/8. Can they put a restriction on a jointly owned property? Can I get them removed without settling them? There’s not enough equity to settle them

Katie494

This relates to OP.

We live in Australia. Had 2 CO on property with NRAM. The told us we had to sell within 12 months as we had no longer got consent to let. Put it on market and sold in Nov.

When the redemption statement came it only had one of the CO's on it, the other was in the form of a Tomlin order. We asked if figure was correct, that was all we we obligated to pay, they confirmed with a second statement.

They are now saying that that Tomlin order CO will remain in place, even tho house is sold and we live in Australia. During the lead up to completion they never mentioned that the CO would stay in place and said we could continue repaying loan monthly!

The mortgage and debt wherein joint names.

We are not trying to avoid this debt and have been in constant contact with them, they have mobile numbers and address.

After another 1hour on phone today I told the case manager to 'sod it, if i stop paying you will take me to court for a CCJ, a CCJ will not be issued as i live outside England and wales, then what are you going to do?, I have agreed repayment with them but they state they will not lift the charge?

Any advice please????

eggbox

peakbg35

Signing over your equity will protect any equity from YOUR creditors but it won't then protect the equity (which your wife will own 100%) against her creditors?

Also, if creditors do go after a charging order, against either of you, then its better to be "joint" owners than a "sole" owner (as this thread explains why?)

The ideal solution (but one which could be very risky so you have to be ultra careful) is to have a legal charge placed on your property for money "owed" to a third party for a sum larger than the equity amount in your property. But that person would then, legally, be owed that money if you ever sold the property so it has to be someone you can trust implicitly?

Letting out a property with a CO has no "rules" attached to it but, given your circumstances it may well prove a better bet to sell the property (therefore removing the availability of any equity to a creditor) and just move on to the rented property you say you want to do?

eggbox

Peterkn wrote: »

I jointly own a property with my mother on which I’m trying to do equity release just in my mother’s name which will mean I have to come off the deeds. Unfortunately I have 2 restrictions on the property which Equilaw have said I will have to settle before they can proceed. These were unsecured loan and a credit card, just in my name in 2007/8. Can they put a restriction on a jointly owned property? Can I get them removed without settling them? There’s not enough equity to settle them

You have 2 charging orders against your share of equity in the property you jointly own with your mother. BECAUSE its jointly owned property; then the CO's can't be registered as an "equitable" charge as, say, a mortgage would be. Instead, creditors can only register "Restrictions" which are a notification one of the owners has the CO's against their equity.

You won't be able to remove the Restrictions without settling the debts they notify. You may, however, be able to negotiate a smaller settlement amount with the creditor if you pay the debt off earlier.

This thread does explain, however, that its possible to sell a property with Form K restrictions and not have to pay the creditor at the point of sale,

eggbox

Katie494 wrote: »

This relates to OP.

We live in Australia. Had 2 CO on property with NRAM. The told us we had to sell within 12 months as we had no longer got consent to let. Put it on market and sold in Nov.

When the redemption statement came it only had one of the CO's on it, the other was in the form of a Tomlin order. We asked if figure was correct, that was all we we obligated to pay, they confirmed with a second statement.

They are now saying that that Tomlin order CO will remain in place, even tho house is sold and we live in Australia. During the lead up to completion they never mentioned that the CO would stay in place and said we could continue repaying loan monthly!

The mortgage and debt wherein joint names.

A Tomlin Order is an agreement creditors and debtors agree to put in place to avoid further action? But it can't be put in place unilaterally by the creditor so you would have to have agreed to the order for it to be in place?

Having sold your house, however, I would now just ignore them as it's only you contacting them that gives them the expectation they will receive further money?

A CCJ would still be granted in England if they took you to Court but it has no power if you are living in Australia as it wouldn't show up on any Australian credit searches if you applied for credit there?

peakbg35

Thanks for your reply.

With regards to a “third party” legal charge, would a family member be possible? Also am I correct in assuming that the third party would have to enforce legal proceedings in order to obtain the equitable legal charge, and no other scenario could force them to do his for example their own creditors or a divorce?

It is our intention to pay off our debts and don’t really want to sell the property, however it is just the speed at which I expect the guarantor loan creditor to act should the Loan default, and would not want to let out the property with any threat to the tenant looming over the property.

eggbox

You can agree to a legal charge with anyone but there is no need to instigate any legal proceedings it just has to be registered with the Land Registry using form CH1 (Land Registry Rep will correct me if that is wrong?)

Your stated intention to pay off the debts may be laudable but, from the information you have given, you would have to consider if that intention is, realistically, achievable? From where I sit that goal looks hugely unrealistic as the debts are already totalling £40k and that figure will continue to rise very sharply with, either, only minimum payments being made or when defaults kicks in?

If you don't want to sell the house then you might want to consider an IVA (Individual Voluntary Arrangement) to get control over the debts. You've been honest enough to explain the problems you have but you've also been exploited by loan company's who shouldn't be lending money to a person with the difficulties you have?

Whatever you decide to do, however, do it NOW before it's too late!

peakbg35

Thanks Eggbox.

I suppose I am being very optimistic in the hope that our debts can be repayed, and you are absolutely right to point out the exploitation of the creditors. One thing certain is I have no intention of ever obtaining credit again in the future - for some people it really is not worth the hassle. I therefore have no interest in protecting my credit rating so your advice of an IVA makes sense. My concern with an IVA would be the guarantor loan company not agreeing to it.

With regards to the legal charge can this process be done without the help of a solicitor? If I went down this route and defaulted on accounts would they then all be paid back at affordable rate decided by a CCJ , and due to the legal charge to a third party any attempts by the creditors of a charging order would be pointless?

I really appreciate your help. It feels like a weight lifted simply to be able to speak about this let alone be given prompt advice, thanks again.

eggbox

As long as 75% of the loan value of creditors agree to an IVA it will be started and apply to any that don't agree. But read up on an IVA HERE

Charges on deeds go by date order so if you decide to go down the legal charge route then, yes, as long as the charge you agree is registered first it will take priority over any other, subsequent, registrations on the deeds (but its important the house stays in joint ownership to prevent any equitable charge being registered.) You don't need a Solicitor for a CH1 form but make sure you understand what you are filling in?

If you aren't worried about your credit score then there is no point trying to pay the CCJ amounts, either, as there is very little the creditor can do if you fail to pay if your legal charge is in place?

peakbg35

The legal charge route is sounding plausible. If subsequent restrictions by the creditors were applied, would they remain registered indefinitely and what would happen if these restrictions outlived the third party - would the charge then pass to their next of kin?

Also, could all our creditors try to force us to go bankrupt and if so would the third party charge still take priority?