Charging Order? The myth

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shufmuff

Firstly, it is a Charging Order, but a CO can't be registered on jointly owned property if only one owner owes the debt. That's why a Restriction was registered notifying that a CO exists against one of the owners.

Unfortunately, its quite common for creditors to not respond when a sale is made and, in many cases as this thread has demonstrated, they even deny are owed money. This, primarily, happens as Court records of the dealing aren't kept or updated meaning, over a period of time, the details of the CO get lost, mislaid or forgotten. Its a scandal really as it prevents many people from selling up, as many solicitors are ignorant of the Land Registry rules.

All that was required to sell your house, therefore, was for the creditor to be informed that a sale was proceeding, and confirmation of such was given to the Land Registry. If you were to be the recipient of any excess funds after the auction sale of the property, you should ask the Court to release your funds as the creditor has not been forthcoming to claim the funds. 

This will, unfortunately, cost you a fee and you should check with the Court which form to apply to the Court with. But if their is a few thousands being held back, it should be worth it.

Angelcrackers

I was talking to a mortgage broker recently and explained we hoped to sell and follow the steps above. He was quite insistent that the restriction Ks would have to be cleared but that also if we didn't and went down the route of trying to negotiate after we had moved. That any partial settlement would then show up back on our credit report. I said these dated from many years ago but had dropped off the report. He said it didn't matter, any partial settlement meant the creditor could re add it to our report as a payment arrangement. 

I'm now wondering if I have completely misunderstood the 500 pages I've read over the past few months. I didn't think it was possible for these old debts to suddenly be re added. But it's thrown me into a massive doubt fest.

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Angelcrackers

Your broker, almost certainly, won't have any knowledge on what this thread explains. However, in my opinion, he is explaining that if a mortgage is required by your buyer, then the Restriction would have to be removed prior to any new mortgage being granted to your buyer.

This isn't contradicting what this thread explains (which is confirmed by the Land Registry) rather it's explaining that it's a requirement of mortgage companies as they want to make sure they are the first charge on the deeds before they lend secured funds. There isn't much you can do about this as they won't be interested in you avoiding payment of the debt upon sale, and they will insist on removal or no mortgage will be granted to the buyer.

Regarding your brokers comments on partial settlement being agreed and recorded on your credit file, this is only possible within 6 years of the debt having been recorded as defaulted or a CCJ having been granted for the debt.** After 6 years, no information can be recorded on your credit file beyond that the debt is closed (and which won't record any delinquency.) 

If you agree any settlement figure after the 6 year period has elapsed, then the dealings of such cannot be re-entered onto your credit file (you can easily confirm this with any credit reference agency)

**The exception to this is mortgage debt. Whilst the interest on a mortgage is statute barred after 6 years, the original loan takes 12 years to become statute barred.

Angelcrackers

Hi @eggbox so in effect we wouldn't be able to sell then unless it is to a cash buyer? It seems we maybe stuck as I'm guessing not many of those about these days. 

CStar75

Hi, apologies if I've posted in the wrong area. My husband passed away this year and I'm working through his probate. Our family home was owned on a tenants in common basis and now I'm looking to transfer the deeds over to me, having received the forms via the land registry helpline. My husband was issued a restriction, from a high street bank, for an old debt in 2018. What is the process with this please? Can I transfer, does it have to be settled first or at all? Thanks.

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CStar 75

The Restriction shouldn't pose any problem in transferring your husbands share to yourself. Transferring, however, doesn't normally remove the Restriction. Hopefully, Land Registry Rep should be able to clarify this for you.

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Angelcrackers said:

Hi @eggbox so in effect we wouldn't be able to sell then unless it is to a cash buyer? It seems we maybe stuck as I'm guessing not many of those about these days. 

Unfortunately, that is usually the case. A lot, however, will depend on your conveyancer and if they are willing to help. There's no reason for the Restriction to be cancelled prior to a sale, as the Land Registry clearly explains it will be cancelled upon registering the new owners details on the deeds. They just aren't (usually) very helpful in this area

Angelcrackers

My post seems to knock everything on the head of what is being said on this thread. I've read through the whole thing more than once and it seems to suggest we could move with my restriction Ks as long as the creditor's are alerted on moving day. However, it now looks as though the opposite is true then? I am stuck in this house with the restriction Ks unless I win the lottery?

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Angelcrackers

What's explained on this thread is factual, what you are, perhaps, not comprehending is that mortgage lenders and most conveyancers won't help you achieve what you want to do, which is a different matter? 

Where a Form K restriction is registered on a property, to enable the house to be sold all that is required is compliance of the Restrictions terms. Which in this case is to notify the creditor the property is being sold and to verify this has been done to the Land Registry. That's it. Once the new owners details are registered on the deeds, the Restriction will then be removed as over reaching occurs. The Land Registry's own Practice Guides will confirm this to anyone who wants to check.

Several people on this thread, myself included, have sold property's in this manner and without settling the Charging Order, notified by the Restriction, upon sale. The reason this can happen is because the Charging Order granted to the creditor, can't be registered as an equitable charge, whereby, the debt has to be repaid before any new owners can be registered on the deeds. 

But whilst the details of what you have read are correct, it is also explained that there needs to be help from the buyers side and also your conveyancer, to move the sale forward in the manner explained. So, what is required is to find a buyer and a conveyancer who can help accommodate what you are trying to achieve. Nobody said that was easy, just that it was possible as posters on the thread have demonstrated.

Land_Registry

CStar75 said:

Hi, apologies if I've posted in the wrong area. My husband passed away this year and I'm working through his probate. Our family home was owned on a tenants in common basis and now I'm looking to transfer the deeds over to me, having received the forms via the land registry helpline. My husband was issued a restriction, from a high street bank, for an old debt in 2018. What is the process with this please? Can I transfer, does it have to be settled first or at all? Thanks.

Not one for this thread but if the property is registered in your joint names then there are two things to apply for. The first is to update the register re his death. And the second is to apply to cancel the form A restriction, which I assume is registered re the TIC aspect you refer to. So forms DJP + death certificate and forms RX3/ST5 and assume those are the forms you have been sent.
As to the legal charge (mortgage) and it's restriction then the bank would normally apply direct to us for that to be removed.