Charging Order? The myth

Wookiee501

Do the legal charge to a family member. If any restrictions subsequently get registered, get the family member to exercise their power of sale - this overrides any interests that rank lower in priority. Job done!

peakbg35

So in theory any restrictions subsequently registered could, if allowed to outlive the legal charge third party, be next in rank? I’m guessing if the creditors were made aware of the legal charge once it had been registered then it would be a waste of their time and money to pursue anyway?

mramason

Are we using the restriction and legal charge terms interchangeably here?

eggbox

peakbg35 wrote: »

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?

Restrictions can be removed by the Land registry if "superflous" but assume they will remain indefinitely. The charge would form part of the deceased's legal estate upon death. This could be a problem if the person you have granted the charge to had substantial debts to be repaid. So, again, be careful if you choose this path.

peakbg35 wrote: »

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

Yes, creditors can apply at any time for bankruptcy but, as with a charging order; it would only make sense to spend time and money if making you bankrupt if you had funds to pursue?

eggbox

peakbg35 wrote: »

So in theory any restrictions subsequently registered could, if allowed to outlive the legal charge third party, be next in rank?

Yes but it depends on what you mean by "outlive"?

peakbg35 wrote: »

I’m guessing if the creditors were made aware of the legal charge once it had been registered then it would be a waste of their time and money to pursue anyway?

It would be a waste of time but don't assume creditors are that smart still not to pursue just because of that reason? Also, there may be accounting reasons they want to show the debt in their accounts?

eggbox

mramason wrote: »

Are we using the restriction and legal charge terms interchangeably here?

No; the term "Restriction" is being used to notify that a Charging Order as been made against one of the owners of the property for an outstanding debt that has been pursued through Court.

A "Legal Charge" is the term used when a charge is placed on a person's deeds to protect a loan, such as a mortgage, but also for any loan the property owner has agreed to.

peakbg35

So as long as the third party did not have any debts to be repaid, the third party's wife or next of kin would be due the legal charge? Would this mean they could force a sale or can a legal charge be registered in a way that nobody can force a sale?

Also, on form CH1 do both owners of the property need to be included as 'borrowers' or does it not matter as long as the amount is more than the equity? Are there any guides available online or at land registry to assist with the successful completion of this form?

eggbox

peakbg35 wrote: »

So as long as the third party did not have any debts to be repaid, the third party's wife or next of kin would be due the legal charge? Would this mean they could force a sale or can a legal charge be registered in a way that nobody can force a sale?

Also, on form CH1 do both owners of the property need to be included as 'borrowers' or does it not matter as long as the amount is more than the equity? Are there any guides available online or at land registry to assist with the successful completion of this form?

There is plenty of advice online how to fill in a CH1 but, for something as improtant as this, it would benefit a trip to a Solicitors to ensure the terms for the loan are set as you want them to be.

peakbg35

Thanks for the advice. I will avoid any doubt and seek help from a solicitor. Would I have to provide the solicitor with any evidence of the “loan” from the third party?

eggbox

peakbg35 wrote: »

Thanks for the advice. I will avoid any doubt and seek help from a solicitor. Would I have to provide the solicitor with any evidence of the “loan” from the third party?

No (but if they do ask just explain its for money they've loaned you over the years you can't repay) but you will need the written agreement you have made regarding the loan and the terms for repayment etc.