Charging Order? The myth

eggbox

KathrynConfused 

Firstly, look at the post before yours for some help.

But to clarify, a Restriction is a notification on the deeds that there is a Charging Order against one of the owners. This may be an Interim or Final Charging order but you mustn't get confused that there isn't a Charging Order involved.  A Restriction can only be registered on the deeds of a jointly ownerd property where only one owner is responsible for the debt.

KathrynConfused

Thank you. Yes, sorry  I should have said. The debts are both single debts on a jointly owned property. Does that mean they are restrictions? I really appreciate any help. I'm getting so confused 

KathrynConfused

The wording seems to be "standard" restriction wording about notifying the creditors 

eggbox

KathrynConfused said:

Thank you. Yes, sorry  I should have said. The debts are both single debts on a jointly owned property. Does that mean they are restrictions? I really appreciate any help. I'm getting so confused 

Let me explain it this way,

Person A gets a Charging Order registered against him for a debt he owes. The creditor wants to register it agains the persons financial interest he has in a property. As Person A is the sole owner of the property then the creditor is able to register the Charging Order on the property deeds as an equitable charge which is similar to how a mortgage is registered on the deeds. The debt then has to be discharged on the sale of the property in the same way a mortgage is.

Person B gets a Charging Order registered against him for a debt he owes. The creditor wants to register it agains the persons financial interest he has in a property. Person B, however, is a joint owner of the property but only he owes the debt. In this situation the creditor can't register the Charging Order as an equitable charge as they could with Person A. In this instance the creditor can only register a Restriction on the deeds notifying that the Charging Order exists.

Both Person A and Person B have exactly the same Charging Order registered against them, its just that their ownership details (sole and joint) dictate how the CO can be registered on their deeds.

And yes, most Restrictions are registered as a Standard Form K which only requires notification and certification to be carried out for the property to be transferred to a new owner.

KathrynConfused

Thank you so much for taking the time to explain that. Much appreciated.

KathrynConfused

Coincidentally we received a letter from Drydens Fairfax claiming that one of us has Final Charging Order so this thread is invaluable.

AngieBaybe2

Hello all. Eggbox you are a star - but you and the Land Registry Representative have been invaluable on this thread. Thank you. 

I wanted to ask about Deed of Trusts. We are selling our property and have discovered a Form K restriction placed there for a debt owed by my husband. Following the advice here l, I am looking for a solicitor to help who understands the process - me certainly doesn't.

We have a buyer, going through the process and the restriction has only just been placed.

We have a Deed of Trust which states I get 85% of the proceeds after disposal. This is because I have been paying for the mortgage for the last few years.

My question to both eggbox and LRR is can this take precedent over the restriction which although just showing now, is dated for November 2020. The Deed of trust was entered into in 2018. We did not register this with Land Registry we were told it was not necessary but it is still a legally binding document?

I am just considering our options - can I use this to ensure I get my 85% whilst my husband forfeits his 15%?

Thank you in advance,

Land_Registry

AngieBaybe2 said:

Hello all. Eggbox you are a star - but you and the Land Registry Representative have been invaluable on this thread. Thank you. 

I wanted to ask about Deed of Trusts. We are selling our property and have discovered a Form K restriction placed there for a debt owed by my husband. Following the advice here l, I am looking for a solicitor to help who understands the process - me certainly doesn't.

We have a buyer, going through the process and the restriction has only just been placed.

We have a Deed of Trust which states I get 85% of the proceeds after disposal. This is because I have been paying for the mortgage for the last few years.

My question to both eggbox and LRR is can this take precedent over the restriction which although just showing now, is dated for November 2020. The Deed of trust was entered into in 2018. We did not register this with Land Registry we were told it was not necessary but it is still a legally binding document?

I am just considering our options - can I use this to ensure I get my 85% whilst my husband forfeits his 15%?

Thank you in advance,

The way you’ve worded it I think it’s eggbox you need here as you seem to be asking if the deed of trust impacts on his ability to pay any debt and/or once we’ve sold if he decides to settle the debt then it’s just his 15% that gets used. 

Neither issue affects the legal ownership which we register. If you follow the thread you appreciate that a sale can overreach the form K restriction providing it’s complied with as per the wording. 

What happens next re the purchase monies, beneficial shares and the debt aren’t matters we can advise on 

AngieBaybe2

Land_Registry said:

AngieBaybe2 said:

Hello all. Eggbox you are a star - but you and the Land Registry Representative have been invaluable on this thread. Thank you. 

I wanted to ask about Deed of Trusts. We are selling our property and have discovered a Form K restriction placed there for a debt owed by my husband. Following the advice here l, I am looking for a solicitor to help who understands the process - me certainly doesn't.

We have a buyer, going through the process and the restriction has only just been placed.

We have a Deed of Trust which states I get 85% of the proceeds after disposal. This is because I have been paying for the mortgage for the last few years.

My question to both eggbox and LRR is can this take precedent over the restriction which although just showing now, is dated for November 2020. The Deed of trust was entered into in 2018. We did not register this with Land Registry we were told it was not necessary but it is still a legally binding document?

I am just considering our options - can I use this to ensure I get my 85% whilst my husband forfeits his 15%?

Thank you in advance,

The way you’ve worded it I think it’s eggbox you need here as you seem to be asking if the deed of trust impacts on his ability to pay any debt and/or once we’ve sold if he decides to settle the debt then it’s just his 15% that gets used. 

Neither issue affects the legal ownership which we register. If you follow the thread you appreciate that a sale can overreach the form K restriction providing it’s complied with as per the wording. 

What happens next re the purchase monies, beneficial shares and the debt aren’t matters we can advise on 

Thanks for the response LRR - apologies, what I was trying to find out was if the solicitors refuse to complete without settling the debt could we then rely on the Deed of Trust to decide how much of the proceeds could be used to settle the debt i.e. his 15% as stipulated in the Deed of Trust whilst the remaining 85% is remitted to me?

Land_Registry

AngieBaybe2 said:

Land_Registry said:

AngieBaybe2 said:

Hello all. Eggbox you are a star - but you and the Land Registry Representative have been invaluable on this thread. Thank you. 

I wanted to ask about Deed of Trusts. We are selling our property and have discovered a Form K restriction placed there for a debt owed by my husband. Following the advice here l, I am looking for a solicitor to help who understands the process - me certainly doesn't.

We have a buyer, going through the process and the restriction has only just been placed.

We have a Deed of Trust which states I get 85% of the proceeds after disposal. This is because I have been paying for the mortgage for the last few years.

My question to both eggbox and LRR is can this take precedent over the restriction which although just showing now, is dated for November 2020. The Deed of trust was entered into in 2018. We did not register this with Land Registry we were told it was not necessary but it is still a legally binding document?

I am just considering our options - can I use this to ensure I get my 85% whilst my husband forfeits his 15%?

Thank you in advance,

The way you’ve worded it I think it’s eggbox you need here as you seem to be asking if the deed of trust impacts on his ability to pay any debt and/or once we’ve sold if he decides to settle the debt then it’s just his 15% that gets used. 

Neither issue affects the legal ownership which we register. If you follow the thread you appreciate that a sale can overreach the form K restriction providing it’s complied with as per the wording. 

What happens next re the purchase monies, beneficial shares and the debt aren’t matters we can advise on 

Thanks for the response LRR - apologies, what I was trying to find out was if the solicitors refuse to complete without settling the debt could we then rely on the Deed of Trust to decide how much of the proceeds could be used to settle the debt i.e. his 15% as stipulated in the Deed of Trust whilst the remaining 85% is remitted to me?

As mentioned not one for HMLR but hopefully eggbox can offer something re the debt/settlement angle for you 
The Deed of Trust affects your beneficial ownerships after all and as you already appreciate it’s not necessary to update the registered details re such an arrangement - that’s the clue that it’s not something we can advise you on