Charging Order? The myth

eggbox

in0125

Well, hopefully, your experience re-inforces to readers of this thread just what kind of people solicitors are, in covering their own ar*es before their clients. Despicable behaviour given they are being paid by their client. The advice from now on would have to be to get soliciotrs to confirm in writing what they will be doing upon sale.

Your probably stuffed in regard of a return of the funds as the creditor is the legal owner of the funds. So you're only hope, therefore, is to contact the SRA to see if there has been a breach of duty of care given the solicitor has not acted upo your imstructions. The key thing to explain to them, is that you DIDN'T wish to proceed with the sale if the creditors funds were being paid upon sale. The solicitor, therefore, has acted in bad faith in not informing you that was what was happening, which was against your wishes.

Jcbkabs
Look back through the recent pages as there are a couple of posters who have provided the service required. Message the poster concerned for the details. (just don't use in0125's soliciotr!)

eggbox

Jcbkabs said:

Hi eggbox  they’ve come back with 

‘Unfortunately doing what you propose risk a claim against us by the beneficiary of the form K restriction for breach of trust. You could also face action against you by the beneficiary of the charging order as one of the joint trustees of the property.“ just need to find a solicitor that will do as I ask I’ve tried 10 locally none so far

You reply that there is no risk as there is no breach of trust. The Law only only confers ownership of the funds, nowhere does it specify that the funds have to be handed over upon the sale of the asset or, crucially,by whom. This is why many other people have sold their properties, without the conveyancer paying their creditor upon sale, and no action has been forthcoming from any creditor.  

This is why there are a plethora of soliciotrs now warning creditors of the weak security of only having a standard Form K restriction registered for their debt such as the example below,

https://www.stevens-bolton.com/site/insights/articles/charging-orders-a-false-sense-of-security

Penguin2350

Good afternoon, new to this but I have looked and read quite a few posts but i'm tying myself up a bit!
My husband left almost 11 years ago and has never stayed another night in the home or paid a penny since, I took the mortgage on on my own but I was never in a position to remortgage and the company we are with would not remove his name from the mortgage so he is still on my mortgage. Mortgage due to be paid in full in next 4 months but he has a CO from 2012 that I was not aware of and only knew when I remarried and changed the details on LR
I want to take him off the deeds when mortgage paid so it is soley in my name as i have paid the mortgage on my own, my question is can I do this and will it remove the CO? 
Thanks  

Land_Registry

Penguin2350 said:

Good afternoon, new to this but I have looked and read quite a few posts but i'm tying myself up a bit!
My husband left almost 11 years ago and has never stayed another night in the home or paid a penny since, I took the mortgage on on my own but I was never in a position to remortgage and the company we are with would not remove his name from the mortgage so he is still on my mortgage. Mortgage due to be paid in full in next 4 months but he has a CO from 2012 that I was not aware of and only knew when I remarried and changed the details on LR
I want to take him off the deeds when mortgage paid so it is soley in my name as i have paid the mortgage on my own, my question is can I do this and will it remove the CO? 
Thanks  

I’m assuming that the title is registered in the joint names of you and your ex husband. You’ve updated the register re your own name in marriage. And there’s a form K restriction referencing the CO against him 
You can certainly remove him as an owner but only if the two of you together transfer the legal ownership. So you need him involved to achieve that. 

As far as the form K restriction is concerned that can be overreached and automatically cancelled but that won’t happen if you both transfer it from joint names to just your own by way of a gift or if for a sum of money that reflects his ‘share’ of the beneficial ownership. 

I mention that last point merely for wider clarification as it seems there’s no beneficial share’ that you’d be paying him anyway. 

So simplest answer is yes you can transfer it together to just your name. But it wouldn’t remove the CO. That would only be removed automatically if for example you actually sold the property and complied with the restriction wording. 

Poppy2740

Hi, I would like to thank you. I moved in to my new home today with having 2 CO. My solicitor was on my side and the information I got from here and helped me. so thank you so much. 

CassandraGreensmith

Hi, we are selling our property to our local council, our property is owned jointly, my husband has 3 restrictions on our property worded:

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 ***, being the person with the benefit of an interim charging order on the beneficial interest of Mr *** made by the *** court on *** (Court reference ***).

They relate to 2007, 2009 and 2010. The 2009 one has the date as 1009… oops lol.

Anyway I actually didn’t even realise they existed and we really need all the money from our sale for our new house. Any advice? We have been passed to solicitors through our estate agents and so I was going to call them tomorrow to discuss, is this a good idea? As we are selling to the council directly and they are cash buyers who use the councils own in house legal department does this make a difference? I’d say we did have to pay them I have no idea the balance, would interest have been accrued all this time?

thanks in advance all

CassandraGreensmith

Hi,

 I’ve not had a reply on here yet, however my solicitor approached the councils legal department who said “As far as we are aware having previously completed purchase matters of a similar nature, we would require discharge from the creditors concerning the interim charge orders x3 referred to in the title register before agreeing to progress with the purchase of the above-named property.  I also take this opportunity to refer you to section 8.3 of Practice Guide 76 in relation to the procedure for removing Form K restrictions which provides, ‘existing beneficiary of the Form K restriction should apply to withdraw it using form RX4’.  On this basis, we would require your formal and unequivocal undertaking to arrange to remove the restrictions on or before completion”

So looks like they’re going to have to be paid but I have no paperwork and no idea how much is even owed they were from 2008 and 2009 so they’re not on any register, any ideas?

 Thanks

eggbox

CassandraGreensmith

As it’s the Council you may well be dealing with a jobsworth mentality and who may well be rigid in explaining what’s required to proceed. But its still worth getting your Solicitor to approach them with the following information and which the Land Registry will verify. So your Solicitor need to explain that,

The 2002 Land Registry Act regarding property that is jointly owned; recognised that it was unfair for a creditor to obtain a Charging Order over the whole of a property when only one of the joint owners was responsible for the debt owed. Therefore, the Act provided that only a Form K Restriction could be registered on the deeds, notifying that a charging order existed against one of the joint owners, where any charging order had been obtained against only one of the joint owners.

Further, whilst section 8.3 of Practice Guide 76 provides instruction on how a creditor can remove the Form K Restriction prior to a sale proceeding; the Land Registry have had to acknowledge that this instruction is of no use when the creditor, as is now happening, refuses to acknowledge ownership of the debt, or has gone out of business. These instances usually occur when several years have passed since the charging order was granted.

Therefore, the Land Registry will now confirm to you that, if the terms of any Form K Restriction registered have been complied with, then a change ownership can be registered. The terms of a Form K Restriction are two-fold; the first is that the buyer (or his agent) must notify the creditor named as the beneficiary, that a sale of the property is proceeding. The second is that they must certify to the Land Registry that the required notification to the creditor, has been undertaken.

It is important to note and understand, however, that compliance of a Form K restriction does not remove it from the register prior to sale. However, as explained in the Land Registry Practice Guide 76 Para 3,

  “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 (except where the transfer is to one, or more, of the existing proprietors). 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.”

Therefore, should a creditor with the benefit of a charging order, not come forward to claim monies owed after being notified of the sale of a property, all proceeds will then pass to the seller. The debt still exists, however, the debt returns to being an unsecured debt, and is then only a concern for the seller and the creditor as the property has been discharged as a claimable asset to be charged for the debt, as the Form K restriction became overreached at the point the new owners details are registered.

Good Luck!

Despair_2

Hi I am new on here, I have been reading this post with interest, my case is a bit different but I think I am not the only one this has happened to. I want to get this mortgage charge and restriction off my property for good. It was never my debt in the first place but ended up in my name when I got my ex husband's name off my mortgage and the deeds. Long story, I have tried myself to get it removed including the Land registry who said I need to get legal advice as they can't give me any. The bank refused to remove it. I have tried several solicitors who just say can't help. I don't believe this is legal and wondering if anyone can advise what type of solicitors I should go to?
This is very old debt.  Below is what has happened. Has anyone ever heard of this before?
2003 the bank that put this mortgage charge on my property, did a charge off. Which closed the account.
They then sold the debt unsecured.
They kept the charge in their name.
2007 the new owners tried to take me to court to get a charge for the same debt. This got kicked out as you can't have 2 charges for the same debt.
2011 the owners of the debt declared it unenforceable in writing, stating they cannot do anything legally to force me to pay. 
2015 the original bank went into liquidation and did a TR4 to transfer the restriction and charge to another bank. This bank refuse to remove the charge until the debt is paid?
The debt is not owned by them, it has been unsecured  20 years and declared unenforceable 12 years, and 4 years before the charge was transferred to this other bank. 
So they hold a charge with no debt attached to it. 
I can't see how this can be legal? Has anyone heard of this before, I have all the evidence that this is fact and not sure why I can't find a solicitor to take it on? Thank you in advance

Despair_2

Hi still not heard anything from this site as yet.  Can anyone please advise?
I am not sure how this cannot be classed as no longer needed? They don't own the debt, and the unsecured debt is unenforceable, so how can the bank have any legal right to keep the charge on my property? It does not make sense. What I heard was that if a debt was sold then the charge should be removed or reassigned to the new owners.  Not sold unsecured 20 years ago and the original bank keep the charge 20 years later. What kind of solicitors would I need to approach? Thank you in advance