Charging Order? The myth

eggbox

quaqua01

Thank you for sharing your experience in selling your property. It should help other posters understand that their are solicitors out there who will help you just have to put some effort into finding them.

Land_Registry

quaqua01 wrote: »

Obviously its up to the buyers solicitors to decide whether to accept that a sale can complete without the restrictions being settled.

Two things to add to this
1. Whilst form K restrictions are commonplace they are not nearly as common as consent restrictions. As such I suspect some conveyancers are far more familiar with that scenario and the need to get a consent and to cancel/withdraw a restriction
I’m not excusing anyone, just flagging the possibility, and

2. Terminology is key so the wording of the form K and how the CO/debt are referred to, and indeed how overreaching occurs, are crucial to aid understanding in this very specific scenario
So you don’t ‘settle a restriction’ in this context. You comply with it and then overreach the interest (the CO/debt).
‘Settle’ is linked to the actual debt in terminology and in this scenario that does not occur
I’m not criticising your choice of words here but just flagging the importance of terminology used in this very specific scenario for others should they read this part of the thread.
I hope my comments are fair ones

Bizzie_Lizzie

Sorry eggbox for the delay in acknowledging your post as I have been abroad and only just seen your response to me.


Thank you for this - I am aware of the subject of this thread and have advised him to alert his conveyancer. I specifically wanted to clear up the Form K resrtiction against a sole owner point and Land Reg rep did so.

Davidallen

Dear Eggbox,

If the creditor has a charging order against one owner of a jointly owned pty - can the creditor obtain an order of sale and force the JOINT OWNERS to sell the pty. If so, does the creditor have to be paid first out of the sale proceeds ?

eggbox

Davidallen wrote: »

If the creditor has a charging order against one owner of a jointly owned pty - can the creditor obtain an order of sale and force the JOINT OWNERS to sell the pty. If so, does the creditor have to be paid first out of the sale proceeds ?

Any creditor with a Charging Order is entitled to apply for an order for sale if it so wishes. However, as is explained in more detail in this thread, they don't do so as the chances of obtaining an order for sale is virtually nil. Court stats usually normally show that only 5 in every 1000 Charging Orders granted ever progress to the OFS stage (and that is 5 that progress not 5 that are granted)

The reason for this is mainly because Judges hearing the OFS application have total discretion on whether to grant the OFS, or not, and history shows they are reluctant to grant them (especially for consumer debt creditors which are often debt collection agencies.)

Family homes also have protection under ToLATA. (Trusts of Land and Appointment of Trustees Act) which requires the Court to consider the welfare of any children in the property concerned.

The Ministry of Justice also confirmed there are case law protections for primary and family homes which they took into consideration when deciding a £1000 debt limit (rather than the expected £25000 limit) for a creditor being able to pursue an OFS.

Whilst the above applies to jointly owned property, you will also find a "sole" owner's post in this thread regarding an aggressive DCA applying for an OFS on his property, which he managed to strike a deal with before going in to see the Judge; but he recounts the Judge still commenting she wouldn't have granted the OFS if the case had proceeded.

In the rare cases an OFS is granted, the creditor takes responsibility for the sale of the property and must pay any priority charges (such as the mortgage) before there own. Any surplus proceeds are returned to the debtor.

Davidallen

In our case the amounts involved are huge. My wife is being pursued for an amount in excess of £1million in respect of stock Broking account which went out of control it appears. The validity of the debt is in dispute currently and obviously is causing both of us a lot of stress (especially my wife).

Your comments seem to imply that courts are very reluctant for an OFS in cases where the amounts are relatively small in relation to the value of the house. Any thoughts if say somehow the brokers manage to get a ccj for a sum of £1m and then apply for a charging order (note house jointly owned by both of us) against my wife. If I understood you correctly, they can only put a restriction on our jointly owned pty but in theory that does not prevent an OFS - which as this sum is very large may have a much large chance of success ?

eggbox

If no action has yet been taken by a potential creditor, then your best option is to sell your property ASAP to "protect" your assets. My personal feeling is that any creditor pursuing that size of debt would more likely seek bankruptcy rather than a Charging Order?

If selling up isn't possible or a CO is pursued; then the size of the debt doesn't alter the Courts responsibility to abide by ToLATA or understand that your home is your primary residence which is protected by case law. Also, any Charging Order placed can only be made against the debtors share of the property, it can't be collected from the non debtors share.

Davidallen

But if the creditor can only put a restriction on the pty and cannot direct the sale proceeds as the pty is jointly owned and therefore we can payoff other debts before this disputed debt why should we sell the pty ASAP ?

Although our 2 children live with us - they are both above the age of 18. I assume the protection under 'Family Homes' would not apply ? Is the protection for primary residence very strong ?

Thank you.

eggbox

That only applies if you can be certain the creditor is definitely only going to pursue a Charging Order? If you know that is the case then there would be no need to sell up. However, I was advising on the basis that the creditor wouldn't be doing that (because of the amount involved) and would more likely pursue bankruptcy instead?

If your children are still living at home then ToLATA applies as its still their home. One of the case laws that applies to Primary homes is that if an OFS is granted, then the debtor must have enough proceeds left over to purchase a new home. Would that be the case?

Davidallen

Things are changing rapidly , now out of the blue they are chasing all 4 of us by serving a s268 notice on the basis of my wife's account being some form of joint account of the family. Accordingly, they are pursuing each one of us for a sum of £1m each. This was served over the weekend. Please advise. Any guidance would be appreciated as we are totally stressed as to our legal options.