Charging Order? The myth

eggbox

Yes that would be okay

in0125

Victorlab22 said:

Hi, looking for some advice. We’re in the process of buying our first house. The register has the following restriction on it (confidential info redacted):

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 XX Mortgages Limited (Co. Regn. No.) and care of XX MX LLP, being the person with the benefit of an interim charging order on the beneficial interest of Mr John Doe made by the Manchester County Court on 8 July 2014 (Court reference xx).

Our solicitor has advised that this can be removed from the register once the sale is complete and that they have the evidence to demonstrate that this restriction has been complied with. Is it that simple and will we have any issues being registered as the new owners when we buy the property? Will our mortgage company refuse to lend us the money? We’re a bit apprehensive as this seems risky.  

Thanks, V 

What was the outcome may I ask

blockhead22

Ok after reading this thread and taking some great advice I managed to sell my property and move home with restriction K's in place. We did not have to settle the restriction K's before or on completion.

The key to this was our conveyancers understanding and attitude, they were on our side and acted for us. The letters didn't go out until the day of completion and so far I haven't heard anything further, except a couple of DCA chasing letters and a couple of calls.

I have to say that the advice I got from NDL and CAB was very misleading and if I had taken their advice it would have disadvantaged me considerably.

eggbox

blockhead22

Good to hear you managed to sell and also that your conveyancer was so helpful. If you are happy to do so, could you PM me details of who the conveyancers were, please, as I get messaged weekly by posters asking if I can recommend someone?

And I know CAB can be a bit of a let down, but can I ask what advice NDL gave that could have disadvantaged you, as they have been fairly helpful in the past? 

MistyZ

Currently in the heat of battle so the information I'm after may well be somewhere in this mammoth (and amazingly helpful) thread.  Apologies if I'm therefore asking silly questions.  Here goes: do creditors generally readily comply with the process?  And how do they know they'll at some point get their money / who is responsible for ensuring that they are paid?    

eggbox

There are no silly questions but it depends on what you mean by comply? Creditors are only part of the process in having to be notified a sale is proceeding. Regarding compliance with a Form K Restriction, however, they aren't obliged to do anything. The norm also seems to be that creditors (certainly debt collection agencies) don't seem to do anything when notified a property is being sold. There could be many reasons for this but the main one, I feel, is because it requires someone to do some work digging out a, years old, file and it probably  gets pushed to one side for that reason? 

There is no guarantee with a charging order that a creditor gets paid. This is simply because there may not be sufficient funds, in the asset that's charged, when sold. But, assuming there is; the  reason creditors feel confident they will get there money, is due to the vast amount of conveyancers who have been paying creditors, from the sale proceeds, for as long as charging orders have existed. This is still the norm today.

Regarding who is responsible for ensuring the creditor gets paid, the answer is the Law as they have granted the charging order giving the creditor the right to the money. However, the Law does not state who, physically, has to hand over the money. Also, as many people have found to their cost when using Civil Law; you have to do all the work yourself to get your money.

So, whilst a creditor may legally be entitled to receive the money under the Law; the Law won't do anything to help him get the money, physically. If a creditor wanted to pursue a debtor who had sold their property without settling the CO debt, it would be incumbent on the debtor to put in the effort again to chase and also to spend money again, bringing the matter to Court.

That is almost certainly why they don't chase as it would be difficult and require more expense. Given they are getting paid on the vast majority of charging orders they hold, the odd one here and there isn't going to cause too many problems*

As many Law firms will tell you on their websites, a Form K Restriction is very poor security for a creditor due to the ease by which a debtor can sell their property, obtain all the proceeds, and before the creditor has any real time to act.    

*I would repeat, for new readers, that this thread is aimed at banks and DCA's, whereby, they benefitted from high interest rates on "unsecured loans" only to gain "security" after the debtor defaults. That simply isn't fair. But this thread is not advocating someone tries to evade paying, for example, a builder who has completed proper work on the property, but has had to resort to a CO as they haven't been paid. In that instance the CO should be settled.

MistyZ

Thanks eggbox.

In fact the purchase in question is of a property that has one owner and the debt is his alone.  I realise now that this thread is NOT about this situation, but about charging orders, or rather 'restrictions', where there are joint owners and the restriction applies to just one of them.

Nonetheless, it has still been extremely helpful in that we now realise that our solicitor is most likely following the correct procedures in this particular instance.  

FoxLark

Hi,

We've found ourselves in a disastrous situation and really need some help urgently as we're in serious danger of losing our sale and the purchase of the house it has taken us 2 years to find!

We have Form K restrictions on our property, we're 3 months into a sale and purchase, and our solicitor, who hasn't actually done any work on our transactions for the last 2 months as she's been too busy apparently, has suddenly e-mailed us to say that she refuses to continue with the sale and purchase unless we repay the debts relating to the restrictions, despite me sending her confirmation from the Land Registry that this isn't necessary.

Can anyone PM me any conveyancing solicitors who understand how this actually works and are willing to act according to the way Form K restrictions work vis a vis the Land Registry?

We will be eternally grateful for any help as this just may save our sale and purchase.

Thanks

FoxLark
x

Zebsclone

Hi.

Trying to sell a house and have 3 charges.
One is the original right to buy covenant which expired after 10 years but even though we bought the house almost 20 years ago is still proving to be an issue for solicitors I have spoke to so far, application is lodge to remove.
And we have 2 charges relating to a credit card from 2006. 
So if I can ask for a dm of any solicitor who understands how to proceed in this situation it would be great.

Thanks in advance

alewin

What does "valuable consideration" mean in the transfer?
Does it mean that both owners cannot just gift the property to someone and have the charging order removed or does the transfer have to be for a reasonable monetary value?

I own a property in joint names with one other person and there is a charging order in my name. Can the other joint owner who does not have the charging order against their name, gift the property to their child without affecting the restriction and other joint owner and without notifying the creditors. Or is the charging order restriction against the property as a whole with no transfers allowed?

Hope the above makes sense.