Charging Order? The myth

harisumo

Thanks Eggbox you're right about the shock and disbelief. After all those years the debt is 10 years old and the court order 5 years and they did nothing for the last 5 years. It's bizarre really. Not a good day today worrying about life threatening viruses and now this

eggbox

Hi Land Registry Rep,
When you have a minute could you comment on the following question I was asked yesteday, please. The situation is that the property owners owe a debt to a close friend for a business loan of £250,000. The business has now gone bust but the owners still want to repay their friend. They debtors have now had the property valued at £240,000 and were planning to sell the house and rent elsewhere to repay their friend. 

But a few issues have arisen; the first is that the owners have been offered a job opportunity that includes accomodation in Scotland (they currently live in the Midlands) and they are anxious to secure the employment and move asap. They are worried, however, that the coronavirus threat will, currently, make it difficult to sell the property and at the valued price. Therefore, they wish to "sell" the house to their friend in exchange for cancelling the debt (which their friend is happy to do.)  The fly in the ointment, however, is that the wife has a restriction on the deeds for a CO that covers a credit debt of around £7k. So the issue I'd like you to comment on is whether exchanging a property to relieve a debt is still classed as selling for value and would over reaching still occur as its not, technically, a transfer? Any information greatly appreciated!

Land_Registry

eggbox said:

Hi Land Registry Rep,
When you have a minute could you comment on the following question I was asked yesteday, please. The situation is that the property owners owe a debt to a close friend for a business loan of £250,000. The business has now gone bust but the owners still want to repay their friend. They debtors have now had the property valued at £240,000 and were planning to sell the house and rent elsewhere to repay their friend. 

But a few issues have arisen; the first is that the owners have been offered a job opportunity that includes accomodation in Scotland (they currently live in the Midlands) and they are anxious to secure the employment and move asap. They are worried, however, that the coronavirus threat will, currently, make it difficult to sell the property and at the valued price. Therefore, they wish to "sell" the house to their friend in exchange for cancelling the debt (which their friend is happy to do.)  The fly in the ointment, however, is that the wife has a restriction on the deeds for a CO that covers a credit debt of around £7k. So the issue I'd like you to comment on is whether exchanging a property to relieve a debt is still classed as selling for value and would over reaching still occur as its not, technically, a transfer? Any information greatly appreciated!

From a registration perspective a Transfer for valuable consideration is just that. We are not privy to the reason(s) why a property might be sold or to whom so if we received a Transfer for £240K from A & B to C and there was a form K on the register re a CO by B then the Transfer should overreach it as we have discussed at some length in this thread.
An 'exchange' from a registration perspective is something quite different as you exchange one property for another. That is not the case here and the Transfer is in effect no different to any of the other 1,000s of transfers we receive on a daily basis, namely none explain why it has happened

eggbox

Hi Land Regstry Rep
Thank you for the update and whilst I meant the house was being "exchanged "for the debt I understand what you mean by an exchange from a registration perspective. However,  can I just ask how the "transfer for valuable consideration" is confirmed by the Land Registry? As you've explained; a transfer for value overreaches,  whereas,a transfer for no value doesn't overreach? So I'm presuming that certain documents are required, by the Land Registry, to prove the transfer is for value to allow overreaching to occur?     

Land_Registry

eggbox said:

Hi Land Regstry Rep
Thank you for the update and whilst I meant the house was being "exchanged "for the debt I understand what you mean by an exchange from a registration perspective. However,  can I just ask how the "transfer for valuable consideration" is confirmed by the Land Registry? As you've explained; a transfer for value overreaches,  whereas,a transfer for no value doesn't overreach? So I'm presuming that certain documents are required, by the Land Registry, to prove the transfer is for value to allow overreaching to occur?     

A Transfer for value would have two things. One the Transfer would refer to a financial consideration. And you would have an appropriate SDLT certificate

Wookiee501

eggbox said:

Hi Land Regstry Rep
Thank you for the update and whilst I meant the house was being "exchanged "for the debt I understand what you mean by an exchange from a registration perspective. However,  can I just ask how the "transfer for valuable consideration" is confirmed by the Land Registry? As you've explained; a transfer for value overreaches,  whereas,a transfer for no value doesn't overreach? So I'm presuming that certain documents are required, by the Land Registry, to prove the transfer is for value to allow overreaching to occur?     

I'd argue that an exchange qualifies as a "valuable consideration", which is typically defined as being "for money or money's worth".

Land_Registry

Wookiee501 said:

eggbox said:

Hi Land Regstry Rep
Thank you for the update and whilst I meant the house was being "exchanged "for the debt I understand what you mean by an exchange from a registration perspective. However,  can I just ask how the "transfer for valuable consideration" is confirmed by the Land Registry? As you've explained; a transfer for value overreaches,  whereas,a transfer for no value doesn't overreach? So I'm presuming that certain documents are required, by the Land Registry, to prove the transfer is for value to allow overreaching to occur?     

I'd argue that an exchange qualifies as a "valuable consideration", which is typically defined as being "for money or money's worth".

Nothing to argue over here - the Transfer is for £240K so is for valuable consideration
The point I am trying to make is that the reason for paying £240K is not part of the registration process.
The fact that it is to settle a debt or 'in exchange' for that debt is irrelevant as you could just as easily define a Transfer for £240K where those monies are used to pay off the seller's mortgage as the same thing, namely a Transfer for £240K or a Transfer in exchange for paying off a debt (the mortgage)

eggbox

Thank you LRR.
I think the seller was just a bit worried about what details (paperwork wise) had to be given to the Land Registry to prove it was for a debt repayment? This is because there is no paperwork for the debt as it was all done on a handshake?  

Land_Registry

eggbox said:

Thank you LRR.
I think the seller was just a bit worried about what details (paperwork wise) had to be given to the Land Registry to prove it was for a debt repayment? This is because there is no paperwork for the debt as it was all done on a handshake?  

As I posted we only see the Transfer, which then refers to the consideration/purchase price, and the SDLT certificate (if any). 
You don't have to prove the reason why the purchase is taking place. To understand why you have to recognise that a debt is a sum of money and that debt is only ever linked to the property if the debtor owns that property. So even if the sale monies are used to pay off that debt the Transfer and application to register do not have to acknowledge or explain that as the debt is the £s and pence whilst the registered title is the land and bricks & mortar

Piper008

Hi I could do with some advice, we are in the process of remortgaging and have now discovered that there is a restriction on the property, not long after we purchased our house we went through a little financial difficulty, lost my job and we ended up with a CCJ with a company called CL Finance Ltd. This is the company that holds the restriction on our property. Now we discovered that this company got dissolved in October 2019 so we had to contact Bona Vacania to try and get the restriction waived but the company was resolved again and we were advised to re-contact them to resolve this but they claim to have no details of us or the restriction and refuse to provide any documents to that effect so we are stuck with a restriction that we cannot get removed, do we have any other options that we can try to get this resolved?