Charging Order? The myth

Bizzie_Lizzie

Thanks for your prompt response, Land Registry rep.

Brandy62

Hi,

I thought I would post on this thread because I am looking for some help and advice regarding a restriction placed at land registry on my property. I have a restriction that was was placed by Egg Banking Plc in 2007. After extensive research and a lot of help from other members of this forum, I have now found out that the debt has been transferred to Barclaycard. This came about as a result of Barclaycard acquiring the Egg credit card business in 2011.

The restriction at land registry is still in the name of Egg Banking plc. My question is? As Barclaycard are now the confirmed debt holders, do they automatically get the benefit of the CCJ and the subsequent interim charging order registered at land registry?

There are several restrictions on the title at land registry, and all of them have been dealt with. They have all replied to requests from my solicitor regarding redemption statements with the exception off Egg.

The property is jointly owned and the restriction is solely in my name. I have contacted Barclaycard directly and I am struggling to get a redemption statement, with the necessary undertaking that the restriction will be removed upon receipt of funds. Any advice would be much appreciated.

eggbox

Bizzie_Lizzie wrote: »

I'd be grateful for some advice on whether a Form K restriction is valid if secured against a solely-owned property.

A friend stood as guarantor for his girlfriend's Wonga loan. When she stopped payments Wonga in the end secured a charge on his property by means of a Form K restriction.

However, the property is now and has always been, in his sole name, and the relationship ended about 7 years ago. Does this mean that the Form K restriction is invalid?

Hi Bizzie Lizzie, Land Registry Rep has advised the Form K Restriction is valid, however, the good news is it can still be removed, without settling the debt at the point of sale, as this thread explains.

It highlights the ineptness of the solicitors concerned as a Notice should have been registered which has to be settled before the property can be transferred to a new owner.

A Form K Restriction is for use on jointly owned property where only one of the owners is responsible for the debt as a Notice can't be registered in that situation.

Whilst the Form K would, under most circumstances, still see the debt settled on sale of a property; this thread explains how that doesn't have to be the case and that your friend can benefit from the solicitors error should he wish to try and do so?

eggbox

Brandy62 wrote: »

Hi,
The restriction at land registry is still in the name of Egg Banking plc. My question is? As Barclaycard are now the confirmed debt holders, do they automatically get the benefit of the CCJ and the subsequent interim charging order registered at land registry?

The property is jointly owned and the restriction is solely in my name. I have contacted Barclaycard directly and I am struggling to get a redemption statement, with the necessary undertaking that the restriction will be removed upon receipt of funds. Any advice would be much appreciated.

To have entitlement to the Charging Order, Barclaycard will have needed the Court to reassign the CCJ to their company. You should have been notified, by the Court, at the time the reassignment was carried out. If you haven't received any confirmation you are entitled to request evidence from Barclaycard of the Courts reassignment? If it hasn't been reassigned Barclaycard have no legal right to enforce the debt.

All standard Form K Restrictions will, automatically, be removed upon sale for value (money) whether a settlement figure has been agreed or not, This is provided the Restrictions terms have been complied with, as they will become overreached. This is the point of this thread as it means the debts do not have to be paid at the point of sale to allow the property to be registered to a new owner.

Davidallen

I think this post is factually incorrect. As far as my research shows a charging order can be made against a debtors property even if it is jointly owned.

Davidallen

I think the original post in 2009 is referring to registration of that order on the land registry records. It gets more complicated if the pty is jointly owned. But nothing can stop a charging order following a ccj order against the debtor.

eggbox

Davidallen

The wording of the first post isn't quite correct and a bit more reading of the thread would have highlighted this for you.

However, the post was alerting people to the fact that, since the 2003 Land Registry rules came into operation; a Charging Order can't be registered on the property deeds of the debtor as an equitable charge (as it would be on solely owned property) if the property is jointly owned and only one of the owners is responsible for the debt.

Instead, the Charging Order holder can only register a Restriction on the property deeds notifying any potential purchaser that a Charging Order has been made against one of the owners beneficial interest.

The big difference, as this thread points out, is that compliance of the Restriction is all that is required to, legally, allow a transfer of the property to be made if for valuable consideration.

Davidallen

Dear eggbox,
Thank you for your reply. What does compliance of the restriction mean in practice. Can the owners of the jointly owned property sell the property and do what they want to with the proceeds of sale ?

Can the owner of the charging order (ie creditor) legally prevent the sale of the property ?

eggbox

Davidallen wrote: »

What does compliance of the restriction mean in practice.

It means complying with the terms written within the Restriction placed on the deeds. The most usual type of Restriction used for a Charging Order on jointly owned property is a standard Form K. The terms of a Form K only requires the buyer (or his agent) to provide proof to the Land Registry that they have notified the Restrictioner (creditor) that the property is being sold.

This doesn't remove the Restriction from the property deeds but it allows the, legal, transfer of a property to a new owner. The Restriction, however, will be automatically removed upon registration of the new owners details as, at that point, the Restriction will become overreached.

Davidallen wrote: »

Can the owners of the jointly owned property sell the property and do what they want to with the proceeds of sale ?

If the conveyancing Solicitors involved in the sale/purchase don't create any hurdles for the seller or buyer to proceed on the above basis; then the full proceeds of the house sale will pass to the seller to do with as they please. The CCJ and Charging order will still be in force but, as with any Court Judgement, if the debtor doesn't pay up as ordered the Court doesn't do anything else to collect the debt and the creditor has to try other means.

Which, in practice, is usually nothing as a Charging Order has usually been sought as the debtor hasn't already paid up and, if that fails to produce results, then the creditor won't usually waste further money or resources as a business decision.

Davidallen wrote: »

Can the owner of the charging order (ie creditor) legally prevent the sale of the property ?

To do so the creditor would have to apply for a freezing order which is. both, expensive to do and also carries financial risk for the creditor as they can be held liable for costs if the freeing order is found to have disadvantaged any third party involved in the sale. So in principle they can, but in practice they don't.

quaqua01

Hi
I have been reading this thread for around about a year now and feel as time has now past that I can give my brief story. I had 2 Form K 'Restrictions' on my property which was joint owned with the debt in my name only. I sold my property in May 2019 after finding a solicitor who knew about these restrictions which are very very common these days. Obviously its up to the buyers solicitors to decide whether to accept that a sale can complete without the restrictions being settled. I was very fortunate that my solicitor helped by ensuring that the buyers solicitor had all the letters and wording required to be sent to the claimants and LR once the sale completed. These were duly sent the day that the sale completed. I have heard nothing since from the creditors. Total saved approximately £25k