Charging Order? The myth

Land_Registry

eggbox said:

Land_Registry said:

The title change of ownership is I assume what we would refer to as the date on which the application to register the transfer was made. When they lodge it they certify that they have notified the creditor as per the restriction wording. 

We don’t need to see the letter referred to so I’m unsure what the issue is providing they certified that they notified them 
Once again this reinforces the key point that it’s the charging order and the law surrounding that, it’s enforcement and the debt that matters. It still exists after a sale/purchase and it’s just the restriction that has been overreached. 

I think the layman would view the "title change of ownership" as being when they can, physically, see that the deeds have been updated and the new owner/s name/s appear on the deeds. That change (as I know from recent experience) can be several months after an application to change the register has been sent to the Land Registry (and I'm not blaming the LR for that.)

The issue regarding the certification, therefore, is because it would seem clear that the conveyancer concerned notified the creditor after the date he certified to the Land Registry he had given notification. Otherwise, how else could the title change happen before the creditor received notification? 

If you say the LR doesn't request the letter then it is opening up the system for abuse which, similarly, leads me neatly to another bit of information which I was a bit unsure on how to impart? But as its linked to this instance I'll explain it.

As the LR doesn't request a copy of the notification sent by the buyer (or his conveyancer) to the creditor; I was quite surprised to learn during the transaction I helped with that the LR also doesn't require proof of the monies that a buyer had paid the seller for their property. So if  a seller states he received £xxx for the property no proof is required that they actually have? 

To me, this could lead to misuse of the LR system by helping a property owner avoid paying a debt> This could happen, whereby, a person who is actually only transferring their property to another person; could actually state on the application that they had received monies from a sale when no money had actually changed hands? This could mean that, say, a Debt Collection Agency who had a restriction registered on the property deeds; would then see their restriction cancelled, as being overreached, because it looks like the property has been sold for value when, in fact, it has only been transferred? 

How awful would that be 

A layman would most likely think that but the deal was done when the monies were paid and the keys handed over. They’ve then moved in and the conveyancer finalises the paperwork and submits the actual application. 

They’ll have put a priority search in place a week before completion to protect them and within 2-5 weeks they lodge the protected application. So the purchase is protected and the wait time, however long, has no impact. That does not mean we can just leave it for as long as we want but it does help understand why worrying about the length if wait time is for many owners wasted energy. 1 day, 1 week, 1 month or more they are all wait times. 

The issue regarding the certification being given before they had done it would be one for the conveyancer to explain. As you already appreciate the restriction has to be complied with and by giving the certification they have done so. If by doing it falsely has any impact on the debt/creditor then that’s for the creditor to pursue with the conveyancer. It’s another aspect of why I highlight the fact that the debt/charging order comes first.

I’m unsure where any ‘system abuse’ would arise re the registered title in these cases as the restriction has been overreached by their being notified. If they’d made an application to register the purchase without the certificate then we’d ask for one before completing. The restriction doesn’t set a timeline so any system abuse would be between conveyancer and creditor

On your other point we deal with the buyer, not the seller, when registering a purchase. The purchase price is confirmed by the Transfer/SDLT confirmation and in the application lodged. The conveyancers complete the sale/purchase and exchange monies/legal documents etc. The Transfer states that they have received the monies (consideration) and the seller executes the transfer. 

So the key point to consider is to look at why a form K restriction is the only option in the first place and why it can be overreached. That’s because it’s not charging the joint legal ownership but the shared beneficial ownership so the creditor/debt collector is chasing the monies, so that beneficial ownership, and not the legal ownership of the land, bricks and mortar. 

Remember, it’s a different scenario where a charging order is noted on the register as the seller needs to do more than comply with a restriction.

eggbox

Land Registry Rep
I’m unsure where any ‘system abuse’ would arise re the registered title in these cases as the restriction has been overreached by their being notified. If they’d made an application to register the purchase without the certificate then we’d ask for one before completing. The restriction doesn’t set a timeline so any system abuse would be between conveyancer and creditor
The abuse could arise though a creditor not, actually, being notified despite the Land Registry having been informed that they have been in the certification provided. If no check is made then the LR is relying on the honesty of whoever does the conveyancing? This means a sale could proceed and the restriction removed without the restrictioner having a clue of the proceedings until many years later? Whilst its doubtful any professional conveyancer would do this; conveyancing doesn't have to be carried out by a professional conveyancer. And as Stesar's case appears to highlight; it may not protect  a creditors right to notification, as required, when an incompetent professional is involved?

On your other point we deal with the buyer, not the seller, when registering a purchase. The purchase price is confirmed by the Transfer/SDLT confirmation and in the application lodged. The conveyancers complete the sale/purchase and exchange monies/legal documents etc. The Transfer states that they have received the monies (consideration) and the seller executes the transfer. 
As with the above explanation; you are relying on the veracity of the person supplying the information regarding monies changing hand as there is no check? So, what could actually be just a transfer of name ownership only (where overreaching doesn't occur) could be made to look like a sale for value (where overreaching does occur.) As with the above, its doubtful a professional conveyancer would do this. But, to repeat, there's no legal requirement to involve a professional conveyancer when transferring/selling a property. 

So the key point to consider is to look at why a form K restriction is the only option in the first place and why it can be overreached. That’s because it’s not charging the joint legal ownership but the shared beneficial ownership so the creditor/debt collector is chasing the monies, so that beneficial ownership, and not the legal ownership of the land, bricks and mortar. 
Understood and , with regard to the subject matter this thread deals with,  I couldn't give a monkeys about the lack of checks as it makes property owners more able to avoid unfair DCA debts. However, it may raise few eyebrows with businesses/tradesmen who are, legitimately, owed money for goods or services, but who've had to resort to legal action to be paid; when they discover their "security" for the debt can be so easily discarded? This is not by the overreaching process, but by a lack of checking in the system that can be easily manipulated to look like overreaching has occurred when, in fact, it hasn't.

MrsJT_2

eggbox said:

No problem and if you are intending to pay the debt it will be settled by your solicitor from the proceeds BUT if you don't wish to settle the debt upon sale you must make the soliciotr aware beforehand! They will tell you it can't be done but we'll give you info to show them it can, okay.

I'm currently obtaining quotes to sell the property and the one solicitors have advised the following -

I have discussed this with the conveyancer and can confirm that the buyers solicitors will want an undertaking from us that we pay the amount owing on completion from the sale monies. This has been accounted for in my original quote.

 They will also want a person with benefit of restriction to sign a cancellation form, and they will want us to give them an undertaking to provide this on completion.

I have all intention of the judgement being paid as long as it's the judgement amount and they don't start asking for anymore as there is only the statement provided at the time of the judgement which is for the same amount, there is nothing since and there has been no contact since 2008. So, if I refuse to pay if they come back with a different figure that I wish to argue these solicitors seem to think it would not be able to complete, or at least that is what I interpret from their reply.  Would you please provide the information as detailed above so that if I have to argue the amount I can do this separately and pay separately without it effecting a sale completion? 

Thank you

eggbox

Mrs JT
If you have all intention of settling the debt then what you have been advised will sort this for you. The creditor can't ask for anymore than the judgement amount and they will be relinquishing the debt, anyway, when they sign the restriction cancellation form.

Please be advised that you won't be able to advance with the sale, with the buyers solicitor, unless you agree to their terms as they won't entertain proceeding with the sale unless their terms are met.

dmcw

I have previously declared bankruptcy and have been discharged for 6 years
now. I spent years speaking with the insolvency service, debt advisors etc to ensure that I was making the correct choice for me. The main debt was a legal aid debt which I had signed to a Statutory Charge when my legal aid was completed. My legal aid was completed after my bankruptcy and I assumed had been included as the insolvency service helpline had stated this would be included. Until I received a letter from the land registry 18 months later stating a charge would be applied to my property (which was in negative equity but I had held onto following divorce.) When I challenged the Official Receiver, land registry online helpline, legal aid agency, I could never find an answer just that it was never included. Could you point me towards anyone who could answer why this wasn’t included, other than the three agencies above as they couldn’t tell me and it is like being passed from pillar to post. Thanks in advance.

MrsJT_2

eggbox said:

Mrs JT
If you have all intention of settling the debt then what you have been advised will sort this for you. The creditor can't ask for anymore than the judgement amount and they will be relinquishing the debt, anyway, when they sign the restriction cancellation form.

Please be advised that you won't be able to advance with the sale, with the buyers solicitor, unless you agree to their terms as they won't entertain proceeding with the sale unless their terms are met.

Hi again sorry!

The company claiming the judgement are saying they can claim interest as this is from the defendant being a guarantor for a commercial property. What are the rules around this do you know?
Do they have to send regular statements or anything in this situation or can they just claim
the judgement plus 8% on top for every year?
the defendant passed away in 2013 if interest is liable is it only liable to this date? 

Many thanks 

eggbox

Hi, unfortunately, if it was a commercial loan then, yes, interest can be applied as they're not CCA regulated. But it has to be applied for when the order is made so you need to press them for proof, especially, if they haven't been providing statements.

MrsJT_2

It was for a lease on business premises that wasn’t paid so ccj landed in my mom as she was guarantor. They sent a statement saying they were claiming at 8% until judgement date. The lease contract says their interest on late payments is law society rate which I believe is 4%. A statement from 2009 states they are claiming the judgement amount including interest and the ln trying to claim additional rent and insurance which solicitors said was unreasonable and never heard anything since. 

If they applied for it when the order was made should this be on the final judgement? And if they can claim it, would it end when paid or when my mom passed away? 

Even if they have applied to claim interest is there any fight means there are no statements and no communication?
thank you for your help in this matter I really appreciate your help. 

eggbox

"If they applied for it when the order was made should this be on the final judgement? And if they can claim it, would it end when paid or when my mom passed away? "
Anything claimed for has to be in the Judgement or its not owed as interest isn't added unless you apply for it. So if they didn't, and the Judge hasn't included it i the order they can't claim it. When a Judgement is made it supercedes the original loan agreement; so its what the order says that is owed that is important. It wouldn't end when your Mom died unfortunately as the asset its attached to is still available. 

"Even if they have applied to claim interest is there any fight means there are no statements and no communication?"
If they have a Judgement they have to prove the amount they are owed under the Judgement. But they are under no obligation to send you statements or communicte with you to retain the debt. Once the order is made then you "legally" owe the debt up until the point its repaid and which will inlude any interest claimed.

MrsJT_2

So if they can claim interest it will state the judgement amount plus that they can claim interest on top? 

The claim form says pursuant to the late payments of commercial debts (interest) act 1998 (as amended) the actual judgement says you must pay the claimant the total of 10,713 forwith. 

Notes for defendant if judgement is above £5000 or is in respect of a debt which attracts contractual or statutory interest for late payment, the claimant may be entitled to further interest. 

I’m waiting for a copy of the final charge order. 

Sorry I have no clue about it?