Charging Order? The myth

Sparklyfairy

TheChippy - yes we ARE! Further proof of their foolish guidence from the above link:

"Do not discount a charging order because of the lack of, or even negative, equity in the property when you consider the matter, because the equity position will usually improve with time." !!!!!!!

What a load of muppets!

For clarity - the full link is here:http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm667320.htm

Sparklyfairy

Very good point, FB. I did think that but I think everyone on this thread gets somewhat muddled by who does what & until I found this, I never thought it was very straight forward.

Sparklyfairy

Ok, last post from me for tonight !

Let's get waaaay back to square 1 again.

Just to reiterate, this thread is primarily about Standard restrictions - Form K - LR link http://www1.landregistry.gov.uk/training/free-online-resources/restrictions/standard-restrictions/standard-restrictions-form-k

This page states:

Form K (Charging order affecting beneficial interest - certificate required)
No disposition of the
[choose whichever bulleted clause is appropriate]

• registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction
• registered charge dated [date] referred to above, other than a disposition by the proprietor of any registered sub-charge of that 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 [name of person with the benefit of the charging order] at [address for service], being the person with the benefit of [an interim or a final] charging order on the beneficial interest of I]name of judgment debto[/I]r] made by the [[I]name of court[/I on I]date[/I (Court reference I]insert reference[/I)

Ok, layman's terms: The new owner's details cannot be registered until LR receive a doc signed by the new owners or their solicitor that the restriction holder (creditor) has been told(written to) about the sale of the property. That's it. No time limits involved. Could be done on day of completion.

This is for one of the most common types of Restrictions, but there are many many types, each slightly different.

Eggbox has stated time & again that this thread is based on the form k restriction.

I think those who come on here questioning the details aren't clarifying which type of restriction they have.

Englishmade, I suspect your restrictions aren't as straight forward as the form K restriction. Take a look at your paperwork & see if it is worded as above. This is all any solicitor needs to know/do inorder to complete a purchase.

Anyone who has a thick solicitor needs to shove their LR restriction paperwork under their nose & SPELL it out to them!;)

(....quietly gets off soapbox & slips away...)

fatbelly

Well, I'm a debt adviser so I get to see a few of these restrictions. All the ones I have seen are in the standard format. Again, quoting the bl law article about getting a non-standard restriction:

The Land Registry may approve an application to allow a restriction in
non-standard wording if it appears:

That the terms of the proposed restriction are reasonable, and
That applying the proposed restriction would be straightforward, and not place an unreasonable burden on him.

In our view, the Land Registry should allow a restriction which actually gives
some protection to creditors. However, we have yet to make such an application
and suspect that the Land Registry will not readily allow such non-standard
wording.

In then considers taking court action to get non-standard wording on to the Land Registry record:

If the Land Registry refuses to allow a non-standard word restriction, then a creditor may wish to consider making an application to the court.
Inevitably there are risks with this:

Creditors should bear in mind that if the application is unsuccessful then
they will have wasted the costs of making the application.
So far as we can ascertain, an application along the lines suggested
has not yet been made.

But as there appears to be a misunderstanding amongst the majority of solicitors that charge = restriction, why should the creditors go to extra lengths when in practice a restriction works for them in nearly all cases?

Sparklyfairy

Actually, FB, there's a heck of a lot of Restrictions already in effect as laid out below by the Land Registry & some already state that payment must be made prior to the registering new owners with the LR...clearly this is NOT a standard form k restriction. I suspect this is what englishmade has..

Full list of standard restrictions here:

http://www1.landregistry.gov.uk/training/free-online-resources/restrictions/standard-restrictions

Solicitors need to realise that a Restriction is NOT a one size fits all! There can be differing requirements to satisfy it before registering can take place. The form K, however, is clearly straight forward in what is required.

After having a quick look through the standard LR restrictions above - it appears Form O & Form P can require consent of the charge holder before registeration takes place.....

eggbox

The thing to keep in mind here is that it is perfectly legal to sell your property, with a Restriction, without passing any proceeds to the Restriction holder. That is the Law as it stands on a Form K Restriction end of! (and I do agree with Sparkly on the HMRC site info; and even the LR Solicitor advised the information they gave, regarding the LR contacting the Restriction holder when a sale was being made, was wrong, too!)

The problem is, however, that people with this knowledge is in its infancy and Solicitors and lenders alike aren't going to suddenly change how they have operated for years overnight. This is why we should be very grateful to Dawny for highlighting her plight on this board and showing us the obstacles that will be presented if you don't take certain beforehand steps.

The Recession has caught out thousands of people who probably never dreamed they would ever get involved in this type of scenario, but that has also brought more "eyes" onto the problem and people have researched what the actual law is on CO & Restrictions. SO we need a conserted effort to keep plugging away at Solicitors, buyers and lenders to make it "normal" for sales to be made in this manner and to make lenders see that this is not the road to take when negotiating UNSECURED DEBTS!

In Dawny's case, if NR, her Solicitor and her buyers Solicitor and lender, don't have the brains to understand that letting the sale go through is the best solution (given her ex is relinquishing his equity to NR) then, in my book they all deserve to lose out.

I can't possibly tell what Dawny to do here but if I was in her position I would have a look at the "Quick Sale" companies that buy your houses for cash (albeit for a hefty discount off market value) who aren't going to be a silly as the other people involved in this sale. I'm sure with a little negotiation with her ex his equity could be used for the discount required. Just a thought anyway?

Sparklyfairy

If anyone has any problem with their solicitor, why don't they negotiate completing the form RX4 - application to withdraw a restriction themselves (because they can) which would relinquish this responsibility from their solicitor?

dawnyp64

hi Everyone!!...just had a look at the new posts,and it seems that whatever is wrong or right,the solicitors decide what happens/doesnt get done..
my situation now is this..
i have to hand over 50% of the equity,even tho i dont agree the ex is entitled to that, as he hasnt lifted a finger re paying the mortgage,organising the sale and he certainly isnt helping now.by saying he doesnt want his address given to NR,who have requested it.
Apparently,he will hand over his share of the equity to NR,but it hasnt been even stated by my solicitor if thats even enough to lift the restriction....dont forget,he was the one who said they may need the whole of the equity to get the restriction lifted to go forward with the sale...what a confused mess!
Honestly..its just really grim

dawnyp64

Sparklyfairy..whats this RX?,has it been mentioned already?(may have missed it)..also,my buyer was informed by his solicitor that if he went ahead with the sale regardless of the restriction,he will have the mortgage offer withdrawn..

eggbox

Dawny

I know it all seems rough on you at the moment but keep in there!

Can I just ask you to give a little more info on why the property would be repossed if this sale doesn't go through, please?

Only asking to help better understand your options.