Charging Order? The myth

Arthlee

Hi eggbox

The debt relates to a work partnership where our small company went under and my partner disappeared. I was eventually ruled liable for half the debts and am paying them off slowly.The biggest debtor was not so patient and ignored all offers - no explanation given. They now have the restriction entered.

eggbox

Arthlee

Sorry to hear that but a CO doesn't really get them any return and, if you read this thread through, it doesn't ensure them anything when you sell the house either.

How are they chasing the debt since the Charging order was granted?

witofabanker

I have an unusual and rather technical CO query.

I own a property jointly with my father. I inherited my interest when my mother died many years ago. He still lives in the property. I believe that, at the point I acquired my interest we were joint tenants, i.e. there was no Form A restriction.

A few years ago, I had a dispute with an organisation and they obtained a CCJ against me. They subsequently obtained a final CO. This is shown on the Land Registry record as a restriction requiring them to be served with a notice if there was any change in ownership. As an aside the restriction mentions my father's name specifically but not mine.

I have read elsewhere that a CO converts a joint tenancy into a tenancy in common but this isn't specifically noted in the Land Registry record. As my father is quite elderly I want to establish whether a) this is correct and b) what implications if any does it have for IHT purposes. My understanding is that I would be able to deal with any property issues more quickly if there is a joint tenancy in place when my father passes away.

If there are disadvantages to a tenancy in common, I am happy to pay the debt subject to the CO to remove it from the record. If I do this, would it reinstate the joint tenancy?

eggbox

witofabanker

I had this discussion a while back with the Land Registry Representative as it was my understanding a Form A Restriction had to be in place for a tenancy in common agreement? But a CO definitely converts a joint tenancy agreement to a tenancy in common. However, have a look at the previous posts #859 to #863 on this board as they may be of help.

Puablo

Hi all,hope I'm doing this correctly? I have a debt with HFC being controlled by Restons solitors. In 2011 they managed to get a charging order on my parents house for my debt, my dad had the same name and passed away in 2008! I did find out out about the order some months later from my brother and contacted Restons with my present address and set up a payment plan which due to my own problems etc I did'nt keep up after a good number of payments and fell behind . I then received a 'Notice of Execution of Warrant' at my present address without any other warning and contact the bailiff name and number who 'suggested' I speak to the Court and have the judgement 'Set aside'
I have done this but Restons have contacted me by letter and basically stated that they were correct in their applications and I am wrong! I know I owe the money but what do I do? withdraw the application to set aside the judgement and prevent Restons fees or continue?

brightonian

Looks like I've been stuffed by the Land Registry...

From my solicitor:

I have spoken to the Land Registry again (a different person this time) and she, like the person before her was adamant that they would not remove the restriction unless a certificate was provided by Natwest, or their solicitors and the only way we are going to get one of those is to pay off the charge. She said there was no way round it and overreaching will not apply in this case.

Interesting they say they need a certificate from NW or their solicitors. I'd have thought they would have sent an RX4 in? The Form K says a certificate is needed person registering the estate doesn't it? But ho hum, if it's not sorted by Friday next week (exchange and completion) then that is that. Game over, goodbye £16,000.

eggbox

Brightonian

Correct me if I am wrong but it sounds as if you are still trying to get the Restriction removed before you sell?

The LR cannot remove the Restriction prior to a sale unless the Restrictioner agrees. if the house is sold, however (for value and provided the Restrictioner has been notified) that is when the Restriction becomes overreached and the Restriction has to be removed as such. This will happen because the new owners rights outweigh the Restrictions terms,

The Land Registry aren't there to advise only state what the rules are. Which is why your Solicitor needs to ask the LR what happens to the Restriction after a sale is made and its terms have been met.

Hopefully LR Representative will be along to confirm this!

eggbox

Puablo wrote: »

Hi all,hope I'm doing this correctly? I have a debt with HFC being controlled by Restons solitors. In 2011 they managed to get a charging order on my parents house for my debt, my dad had the same name and passed away in 2008! I did find out out about the order some months later from my brother and contacted Restons with my present address and set up a payment plan which due to my own problems etc I did'nt keep up after a good number of payments and fell behind . I then received a 'Notice of Execution of Warrant' at my present address without any other warning and contact the bailiff name and number who 'suggested' I speak to the Court and have the judgement 'Set aside'
I have done this but Restons have contacted me by letter and basically stated that they were correct in their applications and I am wrong! I know I owe the money but what do I do? withdraw the application to set aside the judgement and prevent Restons fees or continue?

Puablo

A creditor can't charge an asset owned by another person not associated with the debt, but happened to the ownership of your Dad's house after he passed away?

brightonian

Eggbox:

My understanding is that upon registration by the new owners they send an RX3 to have the Form K removed, which cannot be reasonably objected to, as I legally have no interest left in the property and was one of two owners and the other owner was not named in the restriction, as basically at registration by the new owners the Form K is overreached and cancelled?

Now, what I need to be able to do is contact the (right person at the) Land Registry and get them to tell me that is what will happen, so I can forward it to my solicitor, because unless that happens, she is going to give all the equity in the house to Natwest Bank OR the sale will fall through.

The way my solicitor spoke is as though the only people who can remove the Form K are NWB or their solicitors, and the LR won't. To quote (apparently) the LR "She said there was no way round it and overreaching will not apply in this case.". As overreaching of the Form K would only occur at the registration stage, I can only assume the LR were speaking post sale.

Today is exactly six years since the original default, so tomorrow at least that will be gone from my credit file!

eggbox

Brightonian

It took me a while to understand why, but need to understand that the LR won't confirm directly what will happen should a sale take place. They can only confirm it when the registration takes place at the point the Restriction becomes overreached.

But what they can confirm is what is says in their Practice Guide 76 where at Section 5, Para 3

Entry of a restriction does not protect the priority of the interest to which it relates for the purpose of s.29, LRA 2002. A charging order affecting only the beneficial interests under a trust is liable to be overreached along with those interests by the operation of ss.2 and 27, Law of Property Act 1925. Accordingly, a Form K restriction will be usually be cancelled automatically, without application, when a transfer which appears to overreach the beneficial interests is registered.

Which, as a sale by two joint owners to a third party for value DOES overreach a Form K Restriction they would have no alternative to cancel it. But they can't be seen to be offering advice which is why your Solicitor needs to forget about applying for a pre-removal of the Restriction and just confirm the above with the LR.