Charging Order? The myth

Land_Registry

eggbox wrote: »

Land Registry representative

Can I ask if the LR has to carry details of whether the registered owners of a property are Joint Tenants or Tenants in common? I'm asking as, from what information I am gathering, a Charging Order against one of the owners appears to sever the a Joint Tenancy agreement (you may be able to confirm this?)

I'm interested as "Tenants in Common" has, apparently, different implications on the death of one of the owners than if the Joint Ownership was still in tact.

An explanation re the two types of ownership and their impact from a land registration perspective is contained in our Public Guide 18

Section 2.2 of Public Guide 18 also explains the impact of holding a property as tenants in common form a land registration perspective and is perhaps relevant to your final question. There may well be wider implications regarding the beneficial title(s) of each legal owner as well such as matters relating to wills, inheritance and so on but as I suspect you already appreciate these are not part of Land Registry's remit

Invariably a joint ownership will be registered as joint tenants unless evidence is lodged at the time of registration e.g. forms TR1/TP1 are completed to show that they hold it as tenants in common.

Thereafter the type of ownership can change either where an application is lodged to sever the joint tenancy e.g. using form SEV or form RX1 or we receive information which demonstrates how the beneficial joint tenancy has come to an end e.g. one of the owners becomes bankrupt.

Sections 8.1 and 8.2 of our Practice Guide 19 may also be of interest to you with regards how Charging Orders and indeed Bankruptcy can indeed sever the joint tenancy.

minic

Land Registry Representative,

I'm sorry if this is going off-topic a bit but I have a query relating to tenants in common.

I went bankrupt in Feb 2012 at which time my joint tenancy changed to tenants in common. Now I have been discharged from bankruptcy as my year is up can I now apply for the title to go back to joint tenants again rather than tenants in common?

M.

eggbox

Land Registry representative

Thank you for the information. I'm pretty certain many people reading this board (and I include myself here) will be shocked to discover that the Law automatically changes the tenancy situation after a Charging Order is granted. Simply because they aren't made aware of the fact by anyone.

I know the LR can't give advice but I would like your comments on the following, if possible, please. On my own LR deeds, there has been no From A restriction placed since my ex had a form K Restriction registered through her CO (and I know this is the case with many other posters on this board who relate what is showing on their LR deeds.) Why would this be as there would be no obstacle to selling the property (if either of us died) as there would normally be with Tenants in Common (which the Form A ensures)?

Also, in section 2.2 Tenancy in common on your website it states,

"Owning property as tenants in common means the property belongs to you jointly but you also own a specific share of its value. You can give away, sell or mortgage your share."

With that being so, if either tenant in common sold their share would the terms of the Form K restriction, as far as the LR is concerned, be seen as being met (and, therefore, not prevent any new owner of the share being registered at the LR) as long as a certificate has been supplied that the Restrictioner has been notified as required?

Land_Registry

minic - in circumstances where the form A restriction was added as a result of the bankruptcy you would need to apply to have the restriction cancelled using form RX3 - see section 5.1 of Public Guide 18

The evidence that the bankruptcy has come to an end would be one piece of evidence but you also need to satisfy the registrar that nothing else has happened in that period which would in effect also have severed the joint tenancy and made you tenants in common.

The reason for this is that you can only have one form A restriction on the title but there are a variety of circumstances which can trigger it's registration.

You may also wish to read Practice Guide 34 and section 6.4 specifically for clarification. This guide also explains the procedures associated with personal insolvency in relation to land registration as well.

Land_Registry

eggbox wrote: »

Land Registry representative

Thank you for the information. I'm pretty certain many people reading this board (and I include myself here) will be shocked to discover that the Law automatically changes the tenancy situation after a Charging Order is granted. Simply because they aren't made aware of the fact by anyone.

I know the LR can't give advice but I would like your comments on the following, if possible, please. On my own LR deeds, there has been no From A restriction placed since my ex had a form K Restriction registered through her CO (and I know this is the case with many other posters on this board who relate what is showing on their LR deeds.) Why would this be as there would be no obstacle to selling the property (if either of us died) as there would normally be with Tenants in Common (which the Form A ensures)?

Also, in section 2.2 Tenancy in common on your website it states,

"Owning property as tenants in common means the property belongs to you jointly but you also own a specific share of its value. You can give away, sell or mortgage your share."

With that being so, if either tenant in common sold their share would the terms of the Form K restriction, as far as the LR is concerned, be seen as being met (and, therefore, not prevent any new owner of the share being registered at the LR) as long as a certificate has been supplied that the Restrictioner has been notified as required?

eggbox - I shall do my best to deal with your post although much of what I am able to comment on will be contained within our online guides.

The situations surrounding charging orders and their impact on the land register and 'tenancy' are explained in our Practice Guide 19 (sections 8.1 and 8.2) and Public Guide 23A

As you will note from PG19 a form A restriction may also be applied for. If form K and form A restrictions are both applied for then a notice should be served by Land Registry on the registered proprietors. On that basis I am unsure as to why they would be unaware.

As you already appreciate the most common approach to protecting a charging order in such circumstances is to simply register a form K restriction, the impact of which is to some extent explained in the Guides as mentioned. A person entitled to the benefit of a charging order relating to an interest under a trust, as in the case where there are joint proprietors but the order is against just one, is treated as having a right or claim in relation to the trust property so a restriction may be entered.

Whilst the form K may not act as an obstacle to any sale nor necessarily would a form A restriction as the surviving joint proprietor may simply appoint a second person to act jointly with them for the receipt of the capital monies.

As far as the form K restriction is concerned and compliance therewith we have already covered this in previous posts. Provided the necessary evidence is lodged to show that the terms of the restriction have been complied with then the Transfer can proceed.

This may of course give rise to further questions but I think it is important to emphasise the point you have made previously with regards the impact of a form K restriction and which is also made in P9 of Public Guide 23A as referred to.

Finally and to be absolutely clear on this point for other readers it is important to recognise that Land Registry record such information, where applicable, on the land register but it is not our role to then police/enforce such interests unless instructed to by the courts or required to do so within the terms of the Land Registration Act 2002. You already appreciate that we cannot provide legal advice and it is important that anyone affected by a charging order and who does not understand the legal and wider impact to seek independant legal advice - the land registration aspect is just one part of the process

ms_rls

I contacted LR yesteday and was told that there was definitely no Charging order showing on my property.
I contacted NRAM to discuss and ask why this was the reason for refusing the change of parties when it clearly didn't exist. NRAM were adamant there was a charging order showing on the unsecured loan. I also found court documents stating the interim charging order was discharged and mentioned this to NRAM. I've been asked to send a letter along with copies of the court documents.
As you can imagine I'm not best pleased!

eggbox

Land Registry representative

Firstly, thank you for the time to respond to my questions. I will have a look through the PG's you recommend.

With regard to the following, however,

Land_Registry_representative wrote: »

As you will note from PG19 a form A restriction may also be applied for. If form K and form A restrictions are both applied for then a notice should be served by Land Registry on the registered proprietors. On that basis I am unsure as to why they would be unaware.

if a Form A restriction is applied for after a Charging Order is granted then, obviously, the registered owners would be informed. But if no Form A is applied for (as has been the case in my situation and as I mentioned many others on this board) then has a situation arisen where a tenancy arrangement has been altered in Law but no notification has been made to the registered owners who may remain ignorant of this fact and the possible implications I previously mentioned?

Land_Registry

eggbox wrote: »

With regard to the following, however,

if a Form A restriction is applied for after a Charging Order is granted then, obviously, the registered owners would be informed. But if no Form A is applied for (as has been the case in my situation and as I mentioned many others on this board) then has a situation arisen where a tenancy arrangement has been altered in Law but no notification has been made to the registered owners who may remain ignorant of this fact and the possible implications I previously mentioned?

eggbox - are you referring to a situation where a form A restriction is entered without an actual application being made i.e. as a result of some other evidence being lodged to imply that the joint tenancy has altered?

And if so do you mean as a result of the registration of a form K restriciton to protect a charging order against one of joint proprietors?

eggbox

Land_Registry_representative wrote: »

eggbox - are you referring to a situation where a form A restriction is entered without an actual application being made i.e. as a result of some other evidence being lodged to imply that the joint tenancy has altered?

And if so do you mean as a result of the registration of a form K restriciton to protect a charging order against one of joint proprietors?

What I am relating to is where a Form K has been entered (in relation to a CO against one of the joint owners) but no Form A restriction has been entered. This is certainly the case regarding my situation as our LR deeds only show a Form K as being registered. There is no Form A restriction registered and we have never been notified by the LR (or anyone else) that out joint tenancy has been severed as a result of the CO.

Land_Registry

The key points to consider here are
a) the charging order effectively charges only the beneficial interest and not the legal interest
b) in such cases a Form A restriction would be registered if the person with the benefit of the charging order applied for one to be entered; no Form A restriction was already registered; and the registered proprietor(s) did not succeed in any objection (if any) to the entry
c) the joint tenancy is severed by virtue of the charging order but it is important to recognise that the presence of a Form A restriction on the register for your property does not necessarily signify which kind of ownership it is held as - see section 3.3 of PG18.

Point c) is crucial in understanding the purpose of the land register in relation to joint ownership and the issues of joint tenancy.

Land Registry would only notify you of the application to register a Form A restriction. The Courts will be able to advise whether they should notify you although I very much suspect that they would rely on your being aware of the court action and subsequent impact which would then trigger the need to seek legal advice, which should then cover the impact on you and your joint owner.