Charging Order? The myth

fatbelly

This is how the bl law article puts it:

The debtor and his joint owner’s freedom to sell the property is not affected by such a restriction. They could sell the property as if there was no charging order against the debtor. All that was required was that the new buyers or their solicitor write to the creditor informing them that they now owned the property and then confirm to the Land Registry that they had given that notice. Then the buyers could register the property with no further complications.

The creditor, who is sitting back, waiting to get paid, instead just receives
a letter confirming that a sale has already taken place, typically a week or two after the sale so there is little they can do to get the debt paid.

In theory the creditor could apply for a freezing order against the debtor to
try and obtain the cash from the sale proceeds. However, most creditors will
never make such an application:

Shame it doesn't seem so easy in practice!

dawnyp64

aaaw,harisumo...thanks very much..and youre right.if people actually knew what their rights were,there wouldnt be this mess/confusion,but the only way theyre gonna know is by learning from other peoples situations and outcomes.I WILL update as it goes on and let everyone know how it goes,good or bad....lets hope its the former!!..

thechippy

dawnyp64 wrote: »

firstly..my 'c' isnt working on my laptop (just noticed a couple of mistakes!lol)
now back to business..
terryw..i agree with all you say and thats been my understanding of the whole situation..however both solicitors seem to be of the same opinion of englishmade..and the buyers solicitor wont budge on this matter.
Im now wondering whos in the wrong here.
Everything that you all have said on here makes sense,can be backed up as fact and seem to be the way forward,BUT,the solicitors do not see it that way..how can that be??..if its the law,why are they not abiding by it??..all i know is,if this sale doesnt go thru,it WILL most definately be repossessed..and im getting to the point where i dont actually care..its made me ill!!..

Firstly, you need a solicitor who understands these things!
Remember, they are working for YOU and their actions should be with your interests at heart.

What your solicitor should do is send a letter of undertaking to the buyers solicitor that the restriction will fall away at the point of sale (which is fact) - truthfully speaking, that should be enough.

Can you change solicitor??

Sparklyfairy

englishmade wrote: »

However, the problem comes when the (buyers) solicitor requires all charges entered on the charges register be discharged. The charging order creditor will not withdraw the charge without payment. Okay, the charge cannot be enforced by the creditor after the sale is completed, but they remain on the property title. Would you be happy to buy a property on this basis?
I agree, it can be done, but in reality it won't work with the either the buyer or sellers solicitors. Hope I am wrong.

You are incorrect. What you are quoting here are the rules for solicitors dealing with charging orders, not restrictions. Restrictions are not an equitable charge. It has been stated on this thread many times & can be seen here. The restriction falls away upon completition. The LR updates their docs with the new owner's details & as I just stated any restrictions (paid or unpaid) fall away. It is not up to the LR to deal with or contact a restriction holder (creditor). The new buyers will NOT have the restriction remain (the details & names of those with the charge would differ from the new owners for a start & the details such as the sale date would confirm any lax administration that may arise from land registry's end)...this has been brought up earlier in this thread.....

Sparklyfairy

Moral of the story is hire a solicitor who knows the law & will fight your corner when your buyer's solicitor is an idiot!

Sparklyfairy

Further reading from the HMRC link I added above states:

"
A notice or restriction does not impose an obligation to make payment when the property is sold. However if the judgment debtor (or any one of the co-proprietors) attempts to dispose of the property, the District Land Registry will advise the claimant of the interest in the property. Prospective purchasers will be wary of buying a property subject to a notice or restriction and, more often than not, will want the notice or restriction removed before completing the sale. This is normally sufficient incentive for the judgment debtor to pay the judgment debt. Even where they do not do so voluntarily, the fact that they have received money and have failed to pay the judgment debt is valuable evidence in support of a request for a judgment summons.
Do not agree to have the notice or restriction removed until the judgment debt has been paid."

This is shocking advice from HMRC quite honestly. The last sentence rings true for Dawny..

Sparklyfairy

Also to add - you will not find any written documents supporting that the restriction falls away upon completion from the LR - none as per professional practice. However, why not ask your buyer's solicitor to contact the LR & speak to one of their solicitors on the matter as Eggbox has & had it verbally confirmed that the slate is essentially "wiped clean" via the LR when a sale takes place..

Sparklyfairy

Grr so winds me up the info from HMRC - basically says "You do not have to pay a restriction - it's not illegal if you don't. But don't do it." So misleading!

Also, here's the form RX4 - Application to Withdraw a Restriction from the LR http://www1.landregistry.gov.uk/upload/documents/RX4.pdf

No where on it does it state "Has the restriction been paid?"

With this link & the above from HMRC clearly stating A notice or restriction does not impose an obligation to make payment when the property is sold, surely that should satisfy the buyers solicitor?

thechippy

Sparklyfairy wrote: »

Grr so winds me up the info from HMRC - basically says "You do not have to pay a restriction - it's not illegal if you don't. But don't do it." So misleading!

Also, here's the form RX4 - Application to Withdraw a Restriction from the LR http://www1.landregistry.gov.uk/upload/documents/RX4.pdf

No where on it does it state "Has the restriction been paid?"

With this link & the above from HMRC clearly stating A notice or restriction does not impose an obligation to make payment when the property is sold, surely that should satisfy the buyers solicitor?

Thing is Sparkly, with everything to do with the Government, HMRC, lending institutions etc - we are dealing with idiots....;)

fatbelly

Sparklyfairy wrote: »

Grr so winds me up the info from HMRC - basically says "You do not have to pay a restriction - it's not illegal if you don't. But don't do it." So misleading!

Also, here's the form RX4 - Application to Withdraw a Restriction from the LR http://www1.landregistry.gov.uk/upload/documents/RX4.pdf

No where on it does it state "Has the restriction been paid?"

With this link & the above from HMRC clearly stating A notice or restriction does not impose an obligation to make payment when the property is sold, surely that should satisfy the buyers solicitor?

I'm not a solicitor nor legally trained but it looks to me that the buyer or their solicitor just ticks on the RX4:

The applicant is specified in the restriction as the person(s)
who must consent to a disposition, give a certificate or receive
notice.

Why is that so difficult?