Charging Order? The myth

jmsc3511

Hello. My sale fell through, not because of the Form K Restrictions but because of the survey. But before they pulled out the buyers solicitor was pushing for the debts to be repaid prior to completion. So I'll have to deal with it again next time. Hey ho. But I put this together based on research on here and online which might be helpful to anyone. Eggbox does that all sound accurate?

1. As the debt is a sole debt on a jointly owned property the charging order can only be entered by Land Registry as a Form K Restriction.  Please see the link below -

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/529499/Algorithm_2_-_Joint_proprietors_registered__June_2016_.pdf

 2. The requirement of the restriction is as below

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 [name of person with the benefit of the charging order] at [address for service], being the person with the benefit of /I]an interim[I /I]a final[I charging order on the beneficial interest of (name of judgment debtor) made by the (name of court) on (date) (Court reference.…).

3. As stated the requirement is to:

a) given written notice to the creditor of the disposition/sale of the property (this can even be done by the sellers solicitor)

b) to provide a certificate signed by the buyer or his/her conveyancer to Land Registry to confirm that written notice has been given. (this can be prepared by the sellers solicitor but must be signed by the buyer or his/her conveyancer)

4. When both of these have been complied with then Land Registry will automatically cancel the Form K restriction on registering a transfer of the registered estate for valuable consideration.

Please see point 4, paragraph 3 of Practice Guide 76

Practice guide 76: charging orders - GOV.UK (www.gov.uk)

 5. No RX3 or RX4 form is necessary. Land Registry have confirmed that the restriction tells you what's required, namely a certificate signed by the applicant for registration or their conveyancer. This is done at the point of registering a transfer of the registered estate (but importantly having carried out bullet 3 above).

 Note - The debtor still remains responsible for the debt and can deal with it post sale.

eggbox

jmsc3511

Yes, that looks all good to me.

Land_Registry

Dazza333 said:

Ok help. Recently widowed and long story but having to sell our home. I have three K restrictions on the land registry from over 7 years ago. In my name. House was joint owned with joint mortgage. I am sole beneficiary. The payment of these will leave me with zero funds after mortgage repaid etc. so…. Big question after reading through all the thread and getting a headache. Best way to move forward? Can I get away with not paying them? (Regardless of ethics etc need some income to rent). Been a carer for my wife for 5 years prior to her passing. A total mess of failed life insurance does not help. Help! 

I’m sorry to read of your loss and difficulties
I’ll leave the issue of best way forward and (not) paying the debts for eggbox to comment on. 

The guidance given in this thread explains that once the requirement for a certificate is complied with in each (form K Restriction) case, then each should be automatically cancelled on the registration of a transfer for valuable consideration. 

One extra thing to consider from a registration perspective is whether your joint ownership also included a form A restriction? If it did you’ll need to either apply to get that cancelled or appoint someone to act with you in the transfer.

eggbox

Dazza333

As long as you have solicitors clued up and on board with the rules and regulations around a Form K, then yes, it is possible to sell the property without paying the Charging Order creditors upon sale. If you read the very nexr post from jmsc3511, you will see the basic information you need.

Nadbags85

Hi, read this with interest. I have a particular situation I was hoping for help on?

So, I have a jointly mortgaged shared ownership property (60/40 split in favour of HA) and a form k restriction in my name that was registered in 2010 by BOS. The solicitor firm who acted on their behalf were one of the ones that were dissolved for poor practices but they’re still showing on the Land Registration as the address to send the notification. 

Scenario is: We were looking to staircase to 100% and remortgage at the same time. My understanding is that the conveyancer just needs to provide the certificate, comply with the restriction and the remortgage can complete.

BUT part way through the application the mortgage company have said they are not willing to offer jointly (my credit rating is still suffering) but as my husband is clean we have re-proceeded in his sole name and secured a DiP. 

My question is if in the act of remortgaging and removing my name from the property, he increases his share from 40% to 100%, would this meet the definition of the ‘for value’ point and result in the restriction being cancelled, or would the restriction continue to be present as it wouldn’t meet this definition and would just class as a standard remortgage? 

Also, is there a template certificate/wording I can supply the conveyancer? 

Land_Registry

Nadbags85 said:

Hi, read this with interest. I have a particular situation I was hoping for help on?

So, I have a jointly mortgaged shared ownership property (60/40 split in favour of HA) and a form k restriction in my name that was registered in 2010 by BOS. The solicitor firm who acted on their behalf were one of the ones that were dissolved for poor practices but they’re still showing on the Land Registration as the address to send the notification. 

Scenario is: We were looking to staircase to 100% and remortgage at the same time. My understanding is that the conveyancer just needs to provide the certificate, comply with the restriction and the remortgage can complete.

BUT part way through the application the mortgage company have said they are not willing to offer jointly (my credit rating is still suffering) but as my husband is clean we have re-proceeded in his sole name and secured a DiP. 

My question is if in the act of remortgaging and removing my name from the property, he increases his share from 40% to 100%, would this meet the definition of the ‘for value’ point and result in the restriction being cancelled, or would the restriction continue to be present as it wouldn’t meet this definition and would just class as a standard remortgage? 

Also, is there a template certificate/wording I can supply the conveyancer? 

Remember - 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
So it’s not about ‘for value’ but all about whether the transfer is for valuable consideration. The consideration is a key part of any Transfer so you need to understand what that is going to be/state re your staircasing/transfer scenario 
As for a template certificate/wording a conveyancer would state “I certify that…….” and confirm what they’ve done. 

Snookie12cat

Can you advise - I am buying a house with what I believe are Form K restrictions - the other side has written to the creditors notifying them of the sale, however we were no informed they were not clearing the charges until the 11th hour, so completion did not happen.

Will they need to notify them again if the completion date has changed, and will these restrictions 100% fall off on completion? Is a legal undertaking from the other side going to 100% remove these after completion? I do not want to purchase a house were I am unable to register it in my name as the charges cannot be removed.

The orders read like this:

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 his conveyancer that written notice of the disposition was given to [name of person with the benefit of the charging order] at [address for service], being the person with the benefit of /I]an interim[I /I]a final[I charging order on the beneficial interest of (name of judgment debtor) made by the (name of court) on (date) (Court reference.…).

FoxLark

Hi,
New here and I have Form K restrictions on my property. 
Currently in the early stages of a sale and trying to get my solicitor to understand that we don't need to repay the debts or complete RX3's or RX4's. I filled in a contact form for the Land Registry and got an answer as above, however the original contact form wasn't included in the response so although it says "the process is as you've described" you can't actually see what I've described  So, I'm writing to explain for a fourth time and I have 2 questions:

a) I am asking my solicitor to inform the creditors of our sale....when is the latest I can ask her to write to them and give them the completion date. Can I ask her to tell them post completion as they only need to be informed of the transfer which h obviously happens post completion?

b) If my solicitor is still not willing or refuses to believe me/notify when I ask her to, can anyone recommend a solicitor who does understand this and is willing to act on my instruction?

Thanks in advance

FoxLark

eggbox

Foxlark, 

The creditor only needs to be informed a sale is happening, they don't need to be given the completion date. However, whilst there is no time limit on when the creditor can be informed of a sale happening, the Land Registry can't proceed with the transfer until the buyer (or his agent) has certified, to them, that the creditor has been informed of a sale happening. 

We're still struggling to find solicitors willing to act for clients on this matter, but if you look back through recent thread history you will find posters who have succeeded. It may be worthwhile sending them a PM to ask who they used?

FoxLark

Thanks eggbox

As the transfer happens post completion I'm assuming I'm ok to get the solicitor to inform the creditors the day of completion. Then it can be assumed that receipt is the next working day as per the 1st class post rule...... So the day after completion the buyers solicitors can provide a certified letter to the Land Registry confirming the creditors have been notified and the transfer can happen.

Oh, ok. I honestly don't understand why some solicitors find it tough to comprehend, seems fairly clear and straightforward to me.....

FoxLark