Charging Order? The myth

Bella4321

Hi Land Registry Rep,  I have just obtained a digital copy of my official register of title.  My ex-husband and I separated in 2003 and he was removed from the register of title in May, 2006, I own the house with mortgage.  I had two creditors who I owed debt, one in joint name with my ex, and one in my own name.  There are three restrictions on Part B of the register title two from the joint debt, one restriction naming myself (entry Oct 05) and the other naming my ex (entry Nov 04). I am not sure why these are different dates?  The other restriction is the second debt in my name only  (entry Aug 06). Both of these say with the benefit of an interim order. On Part C of the charges register only one of the two  debts is showing  (the joint debt) with a final charging order (entry July 2006).  
I am thinking of selling my property, am I right in saying that both creditors will have to be informed of the sale, but only the one listed on the charges register will be able to take money directly from the proceeds?  

Also, these charging orders are over 12 years old:
- Can a final charging order be removed from the register after 12 years, even if you still owe the creditor money?
-Can restrictions be removed from the register after 12 years, even if you still owe the creditor money?
-Can either creditor turn these charging orders in to a order of sale after 12 years?
-With the restriction (interim charging order on part B, but no entry on part C).  Do I just have to let them know but they can not block the sale of house?
I hope you can help me resolve all or some of these questions.  
Kind regards

eggbox

Hi Bella4321
1. CCJ's do not expire, therefore, as long as enforcement is taken with 6 years (such as a CO) then the enforcement doesn't expire, either (see Yorkshire Bank Finance Limited v Mulhall). So a CO or restriction will stay on the register until dealt with.
2. Any creditor with the benefit of a CO can apply for an Order For Sale at any time. The reason,however, that over 99.5% of creditors don't do so is because they know they are extremely difficult to obtain.  
3. If a CO can be registered as an equitable charge (either, when the debt is against a sole owner or both owners owe the debt) then,yes, that debt would need be settled prior to a transfer taking place (this is providing there is enough equity in the property to do so).
3. Even if an equitable charge can be registered, some solicitor's (for reasons best known to themselves) will only register a restriction on the property deeds. When this happens then only the restriction terms are required to be complied with for a transfer of ownership to proceed.
4. As LRR always says, the devil is in the detail so you need to read the restrictions terms as they aren't always in the standard Form K format? Form K does only required notification, by the buyers side, that a sale is proceeding (along with certification the notification has been carried out to the Land \registry) for compliance.So you need to be sure no other terms are in the restriction.
5. Compliance of a restriction,in itself, does not remove restriction from the deeds. This forum is explaining that a restriction will be removed (after compliance) if two owners sell their property for value to a third party.This is because the restriction,at the point if sale,would become overreached and removed from the register.
6. Therefore, please understand that if you have become a "sole"owner you will need to add a joint owner before you sell in order for overreaching to occur.



  

magicjonny

Great thread. 

I have an interim charging order on my property ( not currently showing on title register but no doubt will). 

There is a mortgage on property so first charge is to bank. 

My question is that if I manage to transfer the title to a trust before the creditor registers the charge, where I am no longer a beneficiary, will they creditor in effect be unable to enforce their charge? 

Wookiee501

eggbox said:

5. Compliance of a restriction,in itself, does not remove restriction from the deeds. This forum is explaining that a restriction will be removed (after compliance) if two owners sell their property for value to a third party.This is because the restriction,at the point if sale,would become overreached and removed from the register.
6. Therefore, please understand that if you have become a "sole"owner you will need to add a joint owner before you sell in order for overreaching to occur.

These points aren't strictly true specifically in relation to Form K restrictions.

When a Form K restriction is added to a jointly owned title, it has the effect of severing the joint tenancy, so a Form A restriction is also added (if one does not already exist). In the event of a transfer from 'joint owner A and joint owner B' to 'joint owner A' the Form A restriction (and any Form Ks if no application to cancel or withdraw them with suitable evidence was provided at the same time) would remain on the register in the absence of any evidence that the trust created by the severance of the joint tenancy had come to an end. It is the Form A restriction that is overreached by appointing a new trustee ("adding a joint owner") to act in any future sale for value to a third party, not the Form K.

The Form K is removed upon registration of a transfer on sale (which can only happen if the Form K has been complied with) because the restriction was entered in relation to a limitation on the powers of a previous proprietor, which triggers its automatic cancellation. A Form K restriction cannot be overreached in the way that a Form A restiction can and it makes no difference if a sole owner or a joint owner makes such a transfer.

eggbox

Hi Land Registry Rep if you are about could i request a little help please. The previous details I supplied regarding some people I was dealing with who were wishing to sell there house has had everything in place for over a month for the sale to complete. Unfortunately, they've experienced a very slow process from their lender (Lloyds Bank) confirming the mortgage was paid off and the return if the house deeds. Thankfully, everything is now all in place with the exception of their charge being removed off the title register at the Land Registry. They have been assured the Land Registry have been notified to remove the charge and have twice been given dates it should have  been removed by (the last being the 20th of July). Unfortunately, tyhey have just confirmed the charge is still showing on the LR search? Could I ask if there is any chance you could find out when the charge will be removed from the register or, if they sent in the transfer details, if the LR is in the process of removing the charge and won't cause any problems to the transfer details sent in? The title number is  SF69135

Land_Registry

eggbox said:

Hi Land Registry Rep if you are about could i request a little help please. The previous details I supplied regarding some people I was dealing with who were wishing to sell there house has had everything in place for over a month for the sale to complete. Unfortunately, they've experienced a very slow process from their lender (Lloyds Bank) confirming the mortgage was paid off and the return if the house deeds. Thankfully, everything is now all in place with the exception of their charge being removed off the title register at the Land Registry. They have been assured the Land Registry have been notified to remove the charge and have twice been given dates it should have  been removed by (the last being the 20th of July). Unfortunately, tyhey have just confirmed the charge is still showing on the LR search? Could I ask if there is any chance you could find out when the charge will be removed from the register or, if they sent in the transfer details, if the LR is in the process of removing the charge and won't cause any problems to the transfer details sent in? The title number is  SF69135

We’ve yet to receive an application to remove the first Lloyds charge and I can’t see a record of any communication between us and anyone else re that title, so I’m unsure who has twice given them dates as you suggest - could that have been Lloyds?
Most lender’s remove their charges electronically and Lloyds did that re their second charge back in June. However they have yet to do the same for their first and older charge. 

Either Lloyds haven’t realised that they had two charges to remove or, and this may be more likely, the first charge is not one they are able to remove electronically so they need to make a paper/postal application instead 

Either way it’s Lloyds you need to pursue this with 

eggbox

Hi Land Registry Rep

As always thank you for your invaluable help. I've been explained it was Lloyds who notified them of the dates the charge should have been removed so they are currently contacting them again. They've also asked me to ask you what would happen if they sent the transfer application to the Land Registry whilst these charges are still present with a note explaining the charges are pending removal by Lloyds with a copy of the letter Lloyds sent confirming the mortgage was settled They understand the LR wouldn't do anything until Lloyds confirmed the details with them; but they're asking if the application would have priority over someone else trying to register something on the title (there isn't anything pending I think they're just a bit anxious to get things sorted?)

Land_Registry

eggbox said:

Hi Land Registry Rep

As always thank you for your invaluable help. I've been explained it was Lloyds who notified them of the dates the charge should have been removed so they are currently contacting them again. They've also asked me to ask you what would happen if they sent the transfer application to the Land Registry whilst these charges are still present with a note explaining the charges are pending removal by Lloyds with a copy of the letter Lloyds sent confirming the mortgage was settled They understand the LR wouldn't do anything until Lloyds confirmed the details with them; but they're asking if the application would have priority over someone else trying to register something on the title (there isn't anything pending I think they're just a bit anxious to get things sorted?)

There’s only the one Lloyds charge on the title. The first one was removed in June. 

If we received an application to register a new owner and it was in order we would complete it but leave the Lloyds charge on the register. This is known as ‘early completion’ with the completion relating to the registration process. 

If the charge had a corresponding restriction we would not be able to complete the registration as we’d need the discharge or consent from Lloyds. But there is no such restriction so we could register the purchase and remove the charge later as and when Lloyds applied to remove it. 

eggbox

Thanks again LRR!

eggbox

Sorry, Land Registry Rep just another quick question! As long as the Form K restriction has been complied with would that automaticallly be removed, when the new owner details are registered, under these circumstances (the sale is for value)?