Charging Order? The myth

eggbox

LR representative

Thank you again for your information.

I understand (as your point out in 3.3 of PG18) that it is not the LR's position to notify which Tenancy has been chosen; but where would a record of the Tenancy (after a CO has been granted) be recorded or known?

Its not the fault of the LR, but I think the courts might do well to consider that many people in the situation of having had a CO made against them are, in many cases, in no position to seek legal advice due to the cost of that advice. And those have been advised, legally, aren't always made aware of this fact and the implications it has (which is why a lot of these type of threads exist, unfortunately)

However, if I could just ask one final question, please. In my correspondence with the Solicitor at the, then, Land Registry Office at Stevenage; She explained that it was most likely that if a property was sold "for value" then a Form K restriction (assuming its terms had been complied with) would be automatically cancelled as being over reached. Given she also said what happened between the Restrictioner and Restrictionee after this process had happened was "not a matter for the Land Registry" can I ask why a "value" has to be involved?

As there is no mention of a value requirement in the Form K Restriction and given you have conformed a Tenant in Common can "give away" their share of the property; why would a value be required to be involved in any disposition of the property.

Land_Registry

I suspect that this may be true in a wide variety of situations and one reason why organisations such as CAB exist as well as some solicitor’s offering a 30 min fixed fee discussion service and of course online forums. Land Registry works hard to provide guidance on matters directly relating to the land register and PG23a, and others in that series are fairly recent additions to that guidance. You may also be interested in an article on page 16 of Landnet 19 (March 2009) which sought to clarify a few points for practitioners although it probably simply reinforces your own understanding.


Without sight of the full wording of the previous correspondence you refer to it is impossible to appreciate the context in which that response was provided so I have responded in general terms only.


Land Registry would need to be satisfied that the form K restriction had firstly been complied with and secondly whether it had been over reached by the completed registration.


In the case of a Transfer for value, by implication there are proceeds of sale, which may give the named person the opportunity to take some further action to protect his/her position or to pursue the proceeds of sale. The restriction will also ensure that the trustees or their conveyancers do not overlook the existence of the charging order when they decide how to apply the proceeds.


In the case of a Transfer not for value there are no proceeds of sale and as such we would take the view that there was no clear evidence that the restriction had been over reached.

eggbox

Land Registry Representative.

I think I speak for many people who read this board when I say your time and direct input on Land Registry matters has been greatly appreciated and invaluable. I hope it will continue!

With regard to your response below,

Land_Registry_representative wrote: »

In the case of a Transfer not for value there are no proceeds of sale and as such we would take the view that there was no clear evidence that the restriction had been over reached.

I just need a little bit more explanation to understand why a transfer not for value would have a different view from the Land Registry than one for value? Especially in light of a CO severing any joint tenancy agreement and leaving both parties free to, as you say, sell of give away their share?

If a Charging Order has been made on a persons "Beneficial Interest" in a property and the person it is against then transfers their share to a third party (for which I can find no legal obstacle to overcome but I am happy to be corrected on that) then I fail to see how the Form K restriction cannot be anything other than overreached as there is no "Beneficial Interest" in force upon which the CO was made. The fact that a direct value hasn't been exchanged, to me, seems irrelevant?

eggbox

Just to add to the above (after reading Landnet 19 you suggest); it does state in the Land Registry guidelines that there should be "valuable" consideration and also to "two trustees". But where (or why) is it stated legally that this criteria must be met?

Land_Registry

eggbox – we are glad you find our contributions useful and we certainly find great value in participating in such forums as it helps us to understand the issues which are 'current' and where we might be able to improve the services (including online guides and FAQs) we offer. With that in mind we will of course continue to participate.

You already appreciate that in order to be able to cancel a form K restriction automatically the registrar has to be satisfied that it has been over reached. The simple transfer to a third party and for no value does not in our view indicate that there is no longer a beneficial interest in force.

Naturally, you may suggest that even where money changes hands as part of the Transfer we still do not know whether a beneficial interest has been retained. But in considering that we have to also remember the fundamental and original purpose of the form K restriction, which was by referring to the beneficiary, it shows that they have a protected interest; and (as I mentioned before) gives the named person the opportunity to take some further action to protect his/her position or to pursue the proceeds of sale.

Clearly if no monetary value was attached to the Transfer and we were to automatically remove the restriction then we are flying in the face of that original purpose. The option remains though to apply for the restriction to be cancelled as appropriate.

As far as you latest post is concerned I assume you are referring to the 2nd para of page 17 of the Landnet article. You may care to read Practice Guide 24 – private trusts of land for guidance on the importance of valuable consideration (capital monies) and more than one trustee. From a legislative perspective the Land Registration Acts and Rules impact but so too does the Law of Property Act 1925 to which you will find references in that guide.

Finally, it is difficult to see what additional guidance we can provide on this subject. The available guidance is quite extensive as far as how such interests are recorded and dealt with. That guidance does not appear to be in conflict with what has already been posted in this thread to date but naturally does not cover every aspect of the law and the impact of COs specifically.

eggbox

Land Registry Rep

Thanks again for the reply. I agree your explanation has been extensive, for which I thank you,and I agree there is probably very little you can add on the subject as what information you have provided, both here and in the guides you refer to, has been fairly conclusive in confirming what this thread is aiming to point out.

I don't expect a reply on this, but I do still struggle to see how not removing a Restriction (for being over reached) if there is no valuable consideration on the basis it would fly in the face of the original purpose should be a concern of the Land Registry.

Surely, the Land Registry's remit is to record who owns the property concerned and, on that basis, if a person has no legal prevention from transferring their ownership; then the Land Registry's only concern is if any Restriction placed on the registry still has merit? If a CO is made on a person's BI in a property and that BI then, for what ever reason, ceases to exist; how can the LR make a case for BI still being in force when there would be legal papers explaining this would not be the case?

I fully understand the implications that it would make paying a CO on BI very easy to avoid but; I see no legal reason this is a concern for the LR if a person can, legally, give away their share of a property?

Land_Registry

It is all a question of deciding whether or not the interest has been overreached.
This is not something that we can advise on - an understanding of the Law of Property Act 1925, Trustee legislation and also case law is relevant.
Whilst we would not normally refer to other online material than our own you may wish to google terms such as 'interests under the trust has been overreached' the results of which may also help

eggbox

LRR

Thank you for the information. I don't pretend to follow everything I read but I do understand now the considerations regarding "overreaching".

Something I couldn't quite find, though, is the why sole owners are treated differently to joint owners in their obligations when a property is sold?

Land_Registry

eggbox - apologies for slow response on this one

The fundamental difference is triggered by how the law treats such matters (LPA 1925 and Trusts of Land and Appointment of Trustees Act 1996 refer). There is no need to distinguish between legal and equitable ownership whilst land is vested in a sole owner. That is not the case where you have more than one registered proprietor.

In turn this can link to how any proceeds of sale (or capital monies) are dealt with. Where there are joint proprietors the beneficial interest will not always be the same as the legal ownership.

I fear that in posting such snippets of information the original intentions of this thread are perhaps not being met. I appreciate that such understanding can help readers to understand the processes and practice involved re sol/joint ownership but the basic premis behind this thread is the subject of COs.

In the circumstances I am sure you will decide whether you wish to research the subject of joint ownership further but I don't think that there is anything more we can usefully add with regards an understanding of the law here.

eggbox

Land Registry representative

Thanks for the reply. I do actually see why there is a difference, given the explanation you have given, so it does make sense.

With regard to the original intention of this thread, I think any information (snippet or otherwise) helps people understand better a subject many never dreamed they would ever be facing can only be a good thing. Given that many solicitors (judging by posters experiences related on this thread) appear not to understand to the difference of how a Charging Order is registered on jointly and solely owned property ANY information explaining the facts are welcome.