Charging Order? The myth

Land_Registry

Restriction 3 is a form A restriction which can be applied for or registered where a joint tenancy has been severed for example. It’s the one people most associate the term tenants in common with although it’s not definitive on that point. 

Restriction 4 is one which relies on the consent of a third named party before the disposition (Transfer, charge or lease for example) can be registered. 

As you now appreciate we don’t register the shares or specific interest behind either restriction. Whilst that detail may form part of an application to register it is not added to the register. 

eggbox

Thanks for clarifying, LRR, however, is it possible you could clarify the Land Registry's comment that the "the joint proprietorship restriction indicates that the land is held as joint tenants"? as if that is correct then the Jewson CO should only have been able to have been registered a restriction (as it followed the above restriction by date?)

Land_Registry

eggbox said:

Thanks for clarifying, LRR, however, is it possible you could clarify the Land Registry's comment that the "the joint proprietorship restriction indicates that the land is held as joint tenants"? as if that is correct then the Jewson CO should only have been able to have been registered a restriction (as it followed the above restriction by date?)

Not really as it looks like a letter issued many years ago and the extracts don’t confirm what was happening at that time. 

Reference to Form 75 indicates this pre dates the 2002 Act so we are going back a long time here. 

You’ll recall my favourite phrase that the devil is in the detail and the timing, sequence of events and also what’s happened since, including events away from the register that may change how the joint ownership is held. 

Tiatodd

Hi. So am I classed as a tenant in common or a joint tenant then please?

eggbox

Given what LRR has said, you really need a solicitor to confirm exactly what has been registered in respect of what you intended and how it stands regarding the information you have provided. As LRR has stated, its from a long period ago so your position needs clarifying properly.

Land_Registry

Tiatodd said:

Hi. So am I classed as a tenant in common or a joint tenant then please?

The registered details are not definitive as to whether you are TIC or JTs. It forms part of the information you need to ascertain which you are now. 

So check the current registered details and any other information you may have re your beneficial ownership, charging orders, third party interests etc etc. If there are current circumstances that confirm your joint tenancy has been severed or your beneficial ownership has been charged for example then you might be referred to as TIC. 

The devil will be in the detail, not just the registered information 

Tiatodd

Thank you all for your help.

Kay_Bee_2

This post is related to information blue

I was extremely interested to find and read your comments on 'charging orders' in relation to jointly owned property,

‘If a property is jointly owned a charging order can only be registered as a restriction and not a 'charge’

For years I have been unable to make a clean break from my ex-partner or finalise our financial settlement because of several 'charging orders' (business debts in my husband's sole name) and registered on the property.  Now the end of term on the current mortgage has passed I have found it impossible to re-mortgage because of all the restrictions.

This year I thought I was making some progress when my ex-partner agreed to a consent order signing over his equity to me (he abandoned the property over 10 years ago)  I sought legal advice and I repeated your comments regarding the restrictions my Solicitor had no idea and said he would need to seek further advice he still has no clear answers for me.  I had a FDA court hearing and the Judge stated the ‘charging orders’ will need to be settled before any of my ex-partners beneficial interest can be transferred to me in a financial settlement, these charging orders seem to supersede my matrimonial interests how can that be right.   So, I am totally confused, obviously I favour your line of thinking because it is to my advantage, but legal professionals are dubious  about your comments even the land registry confirmed they would not remove a restriction on notice of an equity transfer and would only remove a restriction on notice of a sale at full market value. (saying this I am not sure whether they are legally permitted to make such judgements or decisions)

Sorry this is such a long post, these charging orders have plagued my life. 

Do you know of any legal development in this area since your early posts and comments?  If anyone has any similar experiences to mine, could you please share the outcome. 

eggbox

Hi Kay_Bee_2
I understand your frustration so I'll try to clarify, as best I can, what this thread is dealing with.

So, If a person receives a County Court Judgement regarding a debt they owe, then the creditor can apply for a Charging Order which attaches the debt to an asset the debtor owns. This provides security for the debt, in the event the debtor can't or won't pay, which is repaid when the asset is sold (which can in certain instances be forced to be sold by a Court Order.)

So, in the event the debtor owns a property, solely, own and the creditor wished to attach his debt to the debtors property (as an asset); then the Charging Order would be attached to the property (land) as an equitable charge (similar to how a mortgage is) and would then have to be repaid out of the sale proceeds when the property is sold.

However, where the situation is concerning a jointly owned property, but only one of the owners is responsible for the debt; then, ever since the Land Registry Rules that came into force in 2003, any creditor who obtains a Charging Order against a debtors, jointly owned, property is only able to register a restriction on the property deeds. They aren't allowed to register an equitable charge as would be the case if the debtor owned the property outright. The restriction registered notifies that a Charging Order has been made against one of the owners Beneficial Interest (equity)

The important part, however, is the wording of the standard form K restriction which is usually the type of restriction registered in these circumstances. The actual wording of a Form K restriction is repeated dozens of times in this thread, however, in simple terms it means that when a jointly owned property is being sold; then as long as the buyer of the property notifies the debtor the house is being sold and also confirms to the Land Registry they have done so, then the Land Registry is able to register new owners whether or not the debt has been settled.

Crucially, as long as the property is being sold by joint owners for "valuable consideration" which is money or another value (eg to relieve a financial loan owed) then the restriction becomes "overreached" and the restriction is removed from the property deeds. Its also worth noting this doesn't have to be for full market value as this is not stipulated in the restriction or in the Land Registry Practice Guides

This means that, whilst the Charging Order is still attached to the the debtors beneficial interest, the debtor now has the beneficial interest in the form of cash and has the advantage of disposing of it how he wishes (which is not usually in the direction of settling the debt.) So, whilst it may not be the perfect answer for you, as long as you are still a joint owner you can consider this option as an alternative to settling your husbands debts when remortgaging? (I would say here that you should still be able to remortgage with your existing lender as they will, already, be the first charge on the property deeds. The reason other lenders refuse is they insist on being the first charge on the property deeds which, if the restrictions aren't removed, they won't be.)

Unfortunately, outside of these circumstances then it is its virtually impossible to get a restriction removed unless the debt is settled or the creditor agrees to remove the restriction. I should also say it requires the compliance or exclusion of conveyancing solicitors to be successful. But many sellers have now succeeded selling this way so be persistent if you wish to go down this route.

I do also have to add here for any new readers that this thread is, primarily, aimed at homeowners who were exploited by greedy credit card and loan companies, during the last financial crash, who were allowed to charge high interest rates as the loans were "unsecured" but were then allowed to "secure" the debt on the debtors property. It wasn't designed to encourage people to avoid the debt type of, say, a builder who hasn't been paid for work completed on your property and is, therefore, forced down the Charging Order route.



 

Kay_Bee_2

Dear eggbox,

Thank you for your detailed reply which I appreciate although I don’t fully understand all of it, in particular the section where you talk about selling the house, I am probably blinkered in my thoughts right now

“This means that, whilst the Charging Order is still attached to the debtors beneficial interest, the debtor now has the beneficial interest in the form of cash and has the advantage of disposing of it how he wishes (which is not usually in the direction of settling the debt.) So, whilst it may not be the perfect answer for you, as long as you are still a joint owner you can consider this option as an alternative to settling your husbands debts when remortgaging?”

Can you explain this section again – so I might understand better.

I would like to continue to live and work from my home. My ex-partner is not bothered what happens to the property, financially he has had everything he could from it, he knows his debts are secured and they will not come looking for him whilst this is the case(which is very selfish of him)

I need to move on and prepare myself for the future and retirement. 

My ex-partner would like to stick his head in the sand and leave it there.  I appreciate the comment in your last sentence and understand what you are saying, both the debtor and the creditors took advantage of the family home.  I was lucky to keep a roof over my children’s head at the time and I will always praise the courts for helping me during that period. My husband was reckless, and I was unable to stop him or his creditors. I had legal advice at the time and was still unable to stop what was happening.