Charging Order? The myth

Worryworm21

I have spoken to my solicitor who has said she is not comfortable with proceeding unless the companies are notified and they remove the restrictions. One of the companies has sold the debt 3x so unsure how they will consent to remove the restriction? I have advised no where in the wording of the restriction does it state this and she said it would be a requirement that it is removed before completion. I’m not sure what I can do or how to proceed. Does anyone recommend a solicitor who can help me? 

ohitsonlyme

 I have recently sold a property 2 form k restriction removed that was agasint my ex wife's benficical interest

The creditors have now been notified and creditor 1 has asked if our conveyancor could transfer the funds ( too late)

What further action could they take??

We also own a 2nd property also with the same restrictions on them so they still have some potential method of enforcement 

Worryworm21

@ohitsonlyme how did you manage to sell with the restrictions in place please? My solicitor is not willing to do so and I can’t find anyone else willing to support in this matter?

ohitsonlyme

It is a very simple process which I explained to my solictor and he followed my instructions its a matter of finding a solcitor that understands Land registry rules and can read the detail in the form k ie it is ony a notice that can be sent on the day of sale by which time it is too late for the creditors to grab any funds from completion


The buyers solicitors are the more problematical if they dont understand they may create issues with your buyers

ohitsonlyme

Below is copied from another forum that I am a member  it explains all  detail

copied directly from the .gov.uk website updated on the 23/04/2021:

 

Jointly owned property

It is not possible to register a charging order as an ‘equitable charge’ on a jointly owned property unless all the owners / registered proprietors are judgment debtors. Where only one of the owners / registered proprietors is the judgment debtor, the order will be registered as a ‘restriction’.

A notice or restriction does not impose an obligation to make payment when the property is sold. 

In addition, in respect of the removal of restrictions the gov.uk website states:

 

3.7.1 Removal of restrictions

Restrictions may be removed from the register by:

·         being cancelled by ourselves if it is clear that it is superfluous (paragraph 5 of Schedule 4 to the Land Registration Act 2002)

We will cancel the restriction if we are satisfied that the restriction is no longer required. The application must be accompanied by evidence to show that this is the case.

Practice guide 76 charging orders shows that where joint proprietors are registered, and the charging order is not made against all the joint proprietors it is only possible to enter a Form K restriction and not a notice (charging order) on the legal estate.

In addition, practice guide 76 states: 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 restriction K wording will be on the Land Registry documents, which your solicitor will have or you can download these for £3 from HM Land Registry. The wording will or should be like all restriction K wording. Ultimately it means the conveyancer has to give notice but there's nothing in the restriction K wording that stipulates a timeframe or that the debt has to settled from the proceeds of the sale. If your conveyancer or your buyers conveyancer says different then they are wrong. Ask them to show where the restriction K states this.

 

Here are my notes to my original conveyancer, but it's worth noting I had to change conveyancer to get this over the line.

 

1. There are Form K restrictions on the property title registered with HM Land Registry, and I note these are Form K restrictions not final charging orders or equitable charges.

 

2. I do not want there to be any contact with the beneficiaries of the restrictions until the notice required under the terms of the restrictions is issued. This notice can be issued on the day of completion and no notice period is required or timeframe stipulated or specified in relation to the notice and its issuance to comply with the restriction.

 

3. A Form K restriction is not listed in the charges register and is not a charge on the property.

 

4. As the property is jointly owned and the Form K restrictions are in a sole name, the restrictions are not final charging orders.

 

5. The restrictions are standard Form K restrictions and are not against the property title but against the sole interest in the proceeds of sale. The restrictions do not prevent the sale or transfer of the property.

 

6. A Form K restriction is only a means of notification of the property being sold, not an automatic right to payment or an obligation to pay from the sale proceeds. No date or timeframe is specified on the issuance of the notice to comply with the restriction.

 

7. The restrictions do not carry an obligation to pay any of the proceeds of sale. This is for me to negotiate settlement of.

 

8. The purchaser’s solicitor will require an undertaking from you as my conveyancer that the beneficiary of the restriction will be notified. The restrictions will be removed on completion of the purchase. It is important to note again that these are restrictions on the individuals proceeds of sale and not final charging orders against the property.

 

9. Under the terms of the restrictions on the title, HM Land Registry require a letter from you as our conveyancer confirming that the beneficiary of the restriction has been informed of the date of completion. This notice can be sent on the day we complete the sale as the restrictions do not make any stipulation on dates and time frames with regards the notice informing them. There is no 14-day notice stipulation, which is a common misunderstanding with regards title restrictions.

 

10. HM Land Registry will not ask to see the consent of the beneficiary of the restriction as they will receive a transfer notice from the purchasers once the sale is complete. The restrictions will no longer apply at that stage and will be removed by HM Land Registry as the property has transferred.

 

11. The purchaser’s conveyancer only needs to write (give notice) of transfer to the beneficiary of the restriction once their client has completed. At this point the restriction will be cancelled as the transfer is registered to the purchasers.

 

12. HM Land Registry has the notice of transfer and the notice that the beneficiary of the restrictions has been notified in accordance with the requirements of the restriction.

 

13. HM Land Registry will remove the restriction once the terms of the restriction, (written notice to the beneficiary as detailed in the restriction) have been met and the transfer is notified.

 

I hope that helps.

 

Worryworm21

Thank you. I have sent her this already and she advised 

As previously also advised, it is unlikely your buyers will proceed until we can guarantee the removal of these restrictions and they would expect an undertaking which I would not be able to do nor would I feel comfortable  doing without the creditors confirming they were happy to have the restrictions removed. 

I am going to phone the firm Monday and ask if any of the seniors can help but I am not holding out much hope. 

Not sure what more I can do? 

If anyone has any recommendations of forms which have experience in This matter it would be a big help 

fatbelly

Doesn't sound like she wants the job

eggbox

Worryworm21

As I explained, the biggest obstacle will be the solicitors not the process. Most solicitors insist on the restrictions being removed prior to the sale, as they don't  understand that they are automatically removed upon sale as they become overreached. 

The Land Registry Practice Guides explain this, so there is no reason why they cannot give an undertaking to the buyer they will be removed.

I'll send over the relevant details you need to explain to your Solicitor tomorrow,  but you must always remember that Solicitors,
1. Don't like taking information from the great unwashed
2. Very often don't understand the difference between a charging order made on jointly owned property (one debtor) and solely owned property and, most importantly of all,
3. Will try to cover their own a*ses way above helping the interests of their PAYING clients.

So  you need to approach them carefully, but also with the explanation that people have been selling their properties without settling charges upon sale for some time. This is because the 2003 Land Registry rules allow them to do so, and the Law also places no obligation on settling the debts upon sale. 

It is still incumbent on the debtor to settle the debts, not the conveyancing solicitor, and the Law does not state this has to happen when the property is sold. If your solicitor queries this, ask her to show you where the Law states this has to happen. 

Worryworm21

Thank you. I have sent her guidance from the land registry and this was her response and she seems unwilling to budge but I’ll try anything at this point.

RAS

I'd try asking to speak to a Senior Partner in conveyancing, and threaten a formal complaint.