Charging Order? The myth

Routerman

So good luck and I will finally add that NR/Eversheds can sell the debt on, however, Link aren't legally entitled to the debt if a Court hasn't re-assigned the original CCJ, to them, and that was obtained for the original debt. You Husband should also have been informed of any re-assignent by the Court.  

Hi Egg,

Can you give a legal reference or weblink for the above please as I have more than one debt bought by Cabot where this could apply.

The usual notice given is along the lines of "All rights, assignments, etc are passed to xxxx" would this mean the original CCJs are no longer valid or that Cabot don't actually own the debt?

Seems like a good way of putting the cat among the pigeons :-:smile: 

Regards

Dave

eggbox

Hi, I'm not too sure what you mean by a legal reference or weblink but to explain; when a creditor sells the rights to a loan to another company its through something called a "Deed of Assignment". This is what includes the "all rights are transferred etc" bit and means new owner of the debt will be, legally, entitled to all the money the debtor still owes as agreed under the original loan agreement.

However, a Charging Order is a method of enforcing a County Court Judgement which is a legal ruling that a debt is owed and can't, therefore, be transferred without the Courts permission. The new owner of the debt, therefore, has to apply to the Court to get the CCJ re-assigned before it is, legally, entitled to any money owed under a Court Judgement or any enforcement method of that Judgement.

CCJ's also don't become invalid but it is the Court that has to grant who is entitled to the Judgement. Link will know this and they may had had the re-assignment done. The Court is supposed to notify the debtor but history says this doesn't always happen? 

Routerman

Thanks Egg, I'll have to check but if irc Cabot merely informed me that debts had been purchased with no mention of ccj re-assignment nor any communication from the court. (Northampton)

Regards

EyesOnThePrize

Land_Registry said:

EyesOnThePrize said:

Hi Land Registry rep
Apologies if this specific scenario has already been addressed, I have had a brief look around the forum but may have missed it. 
We are in the process of buying a freehold house and I have spotted the following two restrictions on the title:

2 (19.05.2008) RESTRICTION: No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to Northern Rock Plc (Ref: X) care of Eversheds LLP, Fairfax House, Merrion Street, Leeds, LS2 8HE (Ref: X) being the person with the benefit of an interim charging order on the beneficial interest of Mr X made by the X under claim number X. 

3 (31.12.2008) RESTRICTION: No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to Tesco Personal Finance Limited C/O Incasso LLP at Trafalgar House 29 Park Place Leeds LS1 2SP, being the person with the benefit of an Interim charging order on the beneficial interest of Mr X made by the X on X (Court reference X). 
The person who was the subject of both interim charging orders has since died, and the property is held as TIC by their widow and their grandchild, who inherited Mr X's share of the freehold. I am puzzled why the restrictions were not removed when the property was inherited by the grandchild and their name added to the title. Please can you confirm what Land Registry will require to lift these restrictions from the title?
Many thanks for any assistance. 

Such interests are not automatically removed from the register. Invariably an application has to be made to cancel them .
i suspect in the scenario as described that the widow transferred the legal ownership to herself and the grandchild. No sale took place so the restrictions, which protect the creditors’s charging orders which in turn are against the deceased’s beneficial share remain. 

If they are to be cancelled then we would need an RX3 plus supporting evidence that the charging orders/the creditors’s interests had come to an end. Or RX4s from each creditor withdrawing them. 

However if you are the buyer, and you’ve read this thread, you’ll appreciate that they can also be overreached on a sale providing they are complied with. If you are us8ng a conveyancer I’d suggest you seek their legal advice to clarify and confirm  

Hi Land Registry rep

Sorry for the delayed response. Thank you for your previous advice, unfortunately this still rumbles on. I think the seller may now have a contact at Tesco Personal Finance but given that Northern Rock Plc has since been dissolved and its debts sold on, it is proving challenging to know how to proceed with removal of this restriction and who to contact about it. 

We believe the debtor passed away in 2012, which I think is during the period Northern Rock was owned by HM Treasury so it is unclear who should be approached for evidence that the debt was satisfied. 

Is there any other way Land Reg can be satisfied to remove an historic entry if the seller cannot find written records of the debt's satisfaction and if it proves impossible to show that the debt was sold on or to otherwise determine who can give evidence that the debtor's charge has come to an end? 

Sorry for a convoluted question and thanks for any suggestions!

Emma 

taxigeoff

Hi. I have been following this thread for quite a while and would like to thank eggbox and the original poster bluback for all there effort. I will shortly be selling my late sons house which is owned by my son and his ex partner as tennants in common and has a Form K Restriction on the deeds. I have contacted a couple of soliciters in my area (Lancashire) but none of them fill me with confidance so i would be gratefull if anybody could PM me a soliciter/conveyancer who is fully clued up on the Form K Resriction
Regards

Land_Registry

EyesOnThePrize said:

Hi Land Registry rep

Sorry for the delayed response. Thank you for your previous advice, unfortunately this still rumbles on. I think the seller may now have a contact at Tesco Personal Finance but given that Northern Rock Plc has since been dissolved and its debts sold on, it is proving challenging to know how to proceed with removal of this restriction and who to contact about it. 

We believe the debtor passed away in 2012, which I think is during the period Northern Rock was owned by HM Treasury so it is unclear who should be approached for evidence that the debt was satisfied. 

Is there any other way Land Reg can be satisfied to remove an historic entry if the seller cannot find written records of the debt's satisfaction and if it proves impossible to show that the debt was sold on or to otherwise determine who can give evidence that the debtor's charge has come to an end? 

Sorry for a convoluted question and thanks for any suggestions!

Emma 

Not that I’m aware of - there will be a trail to follow re the debt so they need to follow that and record outcomes as appropriate. That plus evidence of payments/receipts may assist to state the facts also. 

But it reads as if the trail is still being followed with Tesco Personal Finance although unclear as to the connection unless they know the debt was sold on. 

The assets of Northern Rock were handled by Northern Rock (Asset Management) Plc so another trail to follow 

Pinkflora1974

So an update on our situation, our solicitor is not having at all that the restriction can be removed and is adamant that the buyers solicitors will not proceed until they have confirmation from her that it can be. She has ended up writing to the company that we think hold the debt now, and we cannot seem to think of a way to move forward unless we clear which yes as you said we were trying to avoid but it is holding the sale up and our buyers are getting desperate. I don’t really want to go to them as they are first time buyers and may be put off. I would love to change solicitors but again late in the day! So question now is, northern rock listed on the land registry. Sold to link financial. Do link financial have any legal right to the proceeds of the charging restriction? 

eggbox

Pinkflora1974
Link will only have a legal right to the charging order debt if they have had the original CCJ re-assigned to them by a Court. They may well have asked a Court to re-assign the debt but just not updated the Land Registry, or they may still need to do it? The problem you have, however, is that your solicitor (and I'm not blaming her for this) hasn't been able to resolve the problem to enable the restriction to be removed prior to sale using the "conventional" method of sale approach.

So, if your existing solicitor still refuses to act in the manner you wish then you are going to have to ditch her or the sale will just falter and your buyer will walk away. If you read through the thread you will see this has happened on many occasions through the recording records of, both, the creditor concerned and the Court system, not being fit for purpose. 

You probably don't want to approach your buyer as you may be embarrassed about the debt in question? So, my advice would be to try to have a word with their solicitor as, ultimately, its them you are going to have to convince to use the alternative approach. Especially, if they are first time buyers as they will, most likely, view what their solicitor says as the word of God.

But its important you realise you have nothing to lose by contacting the buyer as the sale is going to fail if you don't contact them, anyway. Also, if the buyers are desperate then a more open minded solicitor may just see that it will complete the sale (and they will be paid) and may be able to convince your solicitor. One of the methods used in the past is to let the other side know you are happy for them to retain the debt amount, from the sale proceeds, until the new owners details are registered on the property and the restriction is removed. 

Land_Registry

eggbox said:

Pinkflora1974
Link will only have a legal right to the charging order debt if they have had the original CCJ re-assigned to them by a Court. They may well have asked a Court to re-assign the debt but just not updated the Land Registry, or they may still need to do it?

It is very rare, in my experience, for the land register to be updated when the creditor changes re the charging order debt. For me at least it seems quite clear as to why that is, for the same reason as the restriction is overreached in the circumstances this thread explains. 

The restriction is essentially registered against the debtor’s beneficial ownership. Overreaching simply removes the restriction. It doesn’t clear the debt. So the charging order as a protected interest remains in play so why update the register? 

Only answer to that would presumably be that by knowing the debtor’s sold triggers something for the creditor re pursuing the debt - is that true eggbox? 

eggbox

Land Registry Rep
My tenpeneth on what you've commented on, from what I've learned since 2012 when I started researching this subject for personal reasons, is this,
99% of creditors (and especially debt collection agency creditors) will have zero understanding of overreaching. This is because they will not understand that only a restriction can be placed in relation to the CO. The reason for this is because creditors employ soliciitors to do the legal work for them so all they will know and remember is "Charging Order". They will have no idea that the property can be sold without the debt being settled and many will start to request modified restrictions once this fact becomes more widely known (depite this thread the people that understand overreaching, even in the legal community, is miniscule.)

Presently, however, creditors will also presume that as they have, legally, purchased the debt; then everything will be legally udated to reflect this fact (which is not, actually, an unreasonable thing to believe?) So they will have no idea that they should update the Land Registry details to reflect they are the new beneficiary of the debt. Again, once it become more widely known  that debtors can't pay their debt off because they didn't update the restriction with the Land Registry (so the debtor doesn't know who to pay); then they may start to do so. 

Given the majority of solicitors that posters on this thread have dealt with have no idea what overreaching is, or the difference between how a charging order has to be registered on jointly owned property (sole debtor) to solely owned property; then it shouldn't come as too much of a surprise that creditors have no idea, either? 

However, the reasons for the problem that Pinkflora1974 is suffering is a bit more complex. The main reason its happened is down to the Court system not having an adequate recording method of past Court cases, which, in the age of the internet and unlimited computer storage is as baffling as it is diabolical.  If you couple that failing with, most, creditors also having an equally bad recording system for their debts purchased; then its no wonder some people trying to sell their houses, with a restriction, are struggling to sell.

Throw into that mix the spineless and ill informed conveyancing solicitors; and you begin to get a nightmare scenario where nobody wins. The seller loses their sale, the buyer loses, what may be, their ideal house and the estate agent loses their commission? The solicitors won't lose, however, as they'll bill all sorts of hours for trying to "resolve" the problem.

Given that the Land Registry can understand that the sale doesn't extinguish the debt and the CO still stands, it has to be questioned why solicitors don't understand this fact and are being so intransigent in not helping their, paying, clients to sell up as this thread explains and which is perfectly legal? 







 it used to say in literature provided online by the Land Registry that the restriction acted as a "reminder" to the creditor that the debt was owed.