Charging Order? The myth

eggbox

For any new creditor to have the rights to collect the debt secured by the CO, they will have had to have had the original CCJ for the debt re-assigned to them by the Court. You should have been notified of this change, but there's dozens of posters here who say they never received anything from the Court regarding re-assignment.   

New creditors rarely update the LR of their ownership of the debt, hence so many posters are reporting they can't find out who owns the debt when they try to sell. As I've said many times, the system isn't fit for purpose. The good news, however, is that any change of ownership of the debt makes no difference to the ability to sell the property as has been advised on this thread.

All parties involved should remember that no Law is being broken here, and the order of the Court is only not being carried out as the creditor hasn't updated the Land Registry restriction details that would have enabled them to be notified directly. That is no fault of the debtor and, as Land Registry Rep always tells us, it's what's registered on the property deeds that has to be dealt with when a transfer is applied for.  

lyndymay

Husband has passed away. There is a restriction on the property ( his name only). The mortgage is in joint names. House was purchased as joint tenants. I have been told it is now tenants in common. A few questions; 
can the creditor demand a sale?
can I have the house transferred to my name with the restriction remaining on the property until I pass away or sell?
This is the only asset in his name. There is nothing cash wise to pay this off. Any help please. Thank you 

Land_Registry

lyndymay said:

Husband has passed away. There is a restriction on the property ( his name only). The mortgage is in joint names. House was purchased as joint tenants. I have been told it is now tenants in common. A few questions; 
can the creditor demand a sale?
can I have the house transferred to my name with the restriction remaining on the property until I pass away or sell?
This is the only asset in his name. There is nothing cash wise to pay this off. Any help please. Thank you 

Sorry to read of your loss. 

If I’m understanding matters the property is registered in your joint names and you have a form K restriction re his debt and charging order 
The register can be updated to reflect his passing. The death is factual so the register can be updated at any time but there’s no transfer if in your joint names already 
The restriction will remain
eggbox is the expert re creditor’s and sales 

lyndymay

Thank yo thank you. So just to clarify, does that mean that once I notify the LR, the property will be in my name but the restriction will remain til it is sold? ( sorry if it’s a stupid question)

Land_Registry

lyndymay said:

Thank yo thank you. So just to clarify, does that mean that once I notify the LR, the property will be in my name but the restriction will remain til it is sold? ( sorry if it’s a stupid question)

Yes if in joint names - we would update the register and leave the restriction on the register 

Somersetian

Land_Registry said:

eggbox said:

Somersetian

1) She agrees that the buyer's solicitor can certify the notice given the Land Registry but the restrictions will still remain in place even after the transfer. So ownership of the property would transfer but also too the restrictions to the buyer and no properly advised buyer would agree to this.

No, this is not correct. The restrictions remain in place after compliance of the restriction has taken place, however, the restrictions are automatically cancelled by the Land Registry upon the transfer taking place as they become overreached. Your locum can verify this for herself by viewing Practice Guide 76 Section 4. Para 3 where the Land Registry explain;

"We will automatically cancel the Form K restriction once it has been complied with on registering a transfer of the registered estate for valuable consideration. We will assume that if the debt secured by the charging order has not been paid, your client’s interest will have come to an end with the postponement of the charged beneficial interest under section 29 of the Land Registration Act 2002."

2) Whilst agreeing that the Land Registry could in theory override the involvement by the banks, this would in practice not be possible due to it not being straightforward and because of the "huge backlogs" at the Land Registry.

With respect to your solicitor, and a someone who has sold a property during covid in the manner explained above, you can explain she is talking arrant nonsense and shows a complete lack of understanding on the subject. Its nothing to do with the banks other than they might be one of the creditors with a restriction. Any "backlogs", if relevant, would also affect any dealing on the property which they don't. 

If Land Registry Rep is looking in he may wish to clarify the Land Registry's stance on "backlogs", however, this is why I explained a call to the LR is often required to break down the stubborn resistance conveyancers have when these facts are presented to them by the public.

 

1) agreed
2) it is very straightforward hence the very simple registration guidance provided
How complicated the wider issue of the debt/charging order maybe why some solicitor’s see th8ngs differently 

Whilst we do have a backlog the reality is we always do as we are a registration authority so in a sale/purchase we register post-completion. 

Why does that matter? Well the guidance explains how a form K is overreached provided the restriction is complied with. And as the restriction states the requirement is to give notice of the disposition to the creditor and that’s pre-completion, not post. 

On the phone call front the point I was trying to make is that a caller will simply be directed to the guidance as signposted. 

We’re not here to convince anyone or change minds although I can appreciate eggbox’s point. We provide guidance as explained and whether that’s followed or not is always down to the reader

@eggbox

@Land_Registry

Apologies for coming back to what I had hoped would be solved by now, but solicitors are still resistant to the giving of notice and certification as they're not assured that the restrictions will be removed on transfer. The latest is that, while agreeing with the theory, the Land Registry will not automatically remove the restrictions but may choose not to remove them. This is apparently born out of their experience but it doesn't ring right to me. Would there be a situation when, if the Form K restriction requirement had been fully complied with, that the Land Registry would keep the restrictions in place?

It's driving me completely mad and causing a huge amount of stress to myself and the rest of the chain.

Somersetian

Forgot to add - solicitors are trying to get in touch with Land Registry to confirm the ability to do this as per the practice guide but cannot get hold of anyone. Any alternative contact route would be hugely appreciated.

Land_Registry

There is zero point in contacting us to confirm the ability to do this as per the practice guide. They would simply be referred to the PG 76 guidance as stated as there’s no ‘theory’ involved. 

The guidance is quite clear - “We will automatically cancel the Form K restriction once it has been complied with on registering a transfer of the registered estate for valuable consideration. We will assume that if the debt secured by the charging order has not been paid, your client’s interest will have come to an end with the postponement of the charged beneficial interest under section 29 of the Land Registration Act 2002.“
The solicitor must decide for themselves as to how they proceed based on an understanding of the legalities involved. 

If they are basing it on experience I’d guess that’s linked to their dealing with other forms of restriction but only they can clarify/confirm. 

The choice is theirs, not ours, as to how they proceed. We register the outcome of their decisions/completion so if they comply with the restriction as guided we automatically remove the form K as explained. If they choose to pay off the debt and apply to cancel the form K then we process that application - we don’t go back and say, hold on you don’t need to do that……..as that’s not our role. 

As eggbox’s posts have often inferred many solicitors go the settle/cancel route as that’s their understanding/experience but it may also be what their client decides re the debt and why they’ve sold? We don’t know for the reason stated. We register the outcome of the decisions they/you make. 

eggbox

Land_Registry said:

There is zero point in contacting us to confirm the ability to do this as per the practice guide. They would simply be referred to the PG 76 guidance as stated as there’s no ‘theory’ involved. 

 

Land Registry Rep, you are, of course, correct that there should be no need for any solicitor to contact the when the required information is in black and white in the Practice Guides. Unfortunately, however, this has only confirmed what I was explaining when I said that solicitors won't accept information if its come from the general public. They will also only believe what's in the Practice Guides if its been "verbally" confirmed by someone "official" at the Land Registry. 

To understand why this happens, people need to understand that the overwhelming majority of solicitors will always put their own interests before the interests of their clients. Because of this, they aren't then about to take even the slightest risk on information provided by Joe, or Josephine, Public. There will, therefore, always be the need of a security blanket for them, provided in this case by the verbal reassurance from an "official source", before they even consider acting as their client wishes.





  

     

Jcbkabs

Hi all 

after a bit of help I have a restriction on my jointly owned home it in my name for a MBNA credit card debit. 

my question is if I pay my mortgage off(so no mortgage company has a interest in it) and transfer property from my wife and myself to my wife and our son name we would notify the MBNA of the disposal my reading of it is land registry would the remove the restriction as my name would no longer be on the title is this correct?