Charging Order? The myth

Land_Registry

As it has just gone past 86,000 views it would be wrong to ignore it surely.

The issue for us is that we don't record on the register the percentages held. Sometimes applicants include the details in the form or papers lodged on registration but the finer details of who holds what is a separate matter often recorded in a deed of trust, will or other paperwork delaing with the beneficial ownership aspects.

Have I interpreted the question correctly though as I am sure you are aware of that already.

eggbox

Land Registry Rep

Thanks for the reply. Yes, I understand that to be the case if owners choose to be Tenants in Common and can arrange on registration what the percentage should be agreed (but I did think this information had to be registered at the Land Registry?) However, the people concerned had no idea that the Charging Order had altered their ownership arrangement (which, in my experience, neither does anybody else you talk to on this matter) from Joint Owners to Tenants in Common.

So iit was explained to them what the changes were and also that the change defaulted to a 50:50 share percentage upon the Charging Order being granted. They then came back to ask the question on being able to alter the percentage shares to help sort them financial dealings associated with their divorce.

I cannot find anything that prevents this request and, as far as I am aware, a CO on BI does not indicate that a percentage share is fixed at 50:50? Also, as this type of CO can only be notified as a Restriction and cannot prevent a sale occurring; I would have to assume it places no other limitations as to the owners percentage shares being altered?

Land_Registry

Many choose the tenants in common aspect alone and do not refer to any specific shares - the reason for this is that it is often 50:50 whilst they are both alive

What were the circumstances behind the change? - did the applicant apply for both a form K and a form A restriction for example?

The issue around who holds what 50:50 or 40:60 or otherwise is a specific element to the trust and not one which we would normally deal with. Making a request to change the record held by Land Registry would alter nothing as far as I can see as the form A restriction would simply remain in place.

eggbox

LRR

Thanks again for the reply.

To clarify, there is only a Form K registered by a creditor on the LR details. I think I have mentioned this following point before, but in all of the cases I have dealt with regarding CO's being made against one of the joint owners of a property, and thus making them Tenants in Common, no Form A Restriction is ever found on the Land Registry? Is there a reason for this?

As I said, the couple didn't choose to be tenants in common they were made such by the CO. They just want to know if there is anything preventing them legally altering the percentage ownership each has? But when you say making a request to change the record held would alter nothing because of the Form A held, which change are you referring to?

Land_Registry

The reason is probably a very simple one - it is never applied for.

I am not too sure if you are referring to two separate scenarios here, one procedural and one actual?

With regards your first point the debtor may decide to bring it to the court's attention that the property is held as beneficial joint tenants but because their charging order is against one of them then they now hold it as beneficial tenants in common - if the court agrees they then have the option of also applying for a form A restriction.

However you then suggest that the form A restriction never appears on the register.

Your second point refers to this specific scenario and the CO having made them tenants in common - does that mean that the register does have a form A restriciton or is it simply that the CO refers to them being tenants in common now?

In each case the only record we would hold is whether a form A restriction has been registered. If it has then changing the shares would not alter the circumstances from a registration perspective.

eggbox

Thanks again LRR

Land_Registry_representative wrote: »

The reason is probably a very simple one - it is never applied for.

Correct me if I am wrong but you appear to indicating it's the owners of the property who should be applying? If this is the case then it is no wonder there is such an absence of Form A Restrictions appearing on the register as owners have no idea they should do this. Does the absence of a Form A on the register, however, have any effect on the owners tenancy arrangement?

Land_Registry_representative wrote: »

With regards your first point the debtor may decide to bring it to the court's attention that the property is held as beneficial joint tenants but because their charging order is against one of them then they now hold it as beneficial tenants in common - if the court agrees they then have the option of also applying for a form A restriction.e.

Again, this isn't going to happen given the overwhelming ignorance of home owners on what a CO does to their ownership status. But it begs the question under what circumstances could the court disagree?

Land_Registry_representative wrote: »

Your second point refers to this specific scenario and the CO having made them tenants in common - does that mean that the register does have a form A restriciton or is it simply that the CO refers to them being tenants in common now?

To explain what I mean here, a Joint Owner of a property receives a CO against a debt he/she solely owns. They receive notice of this through the Courts but nowhere is it pointed out to them that their ownership agreement has changed (if it was originally a joint ownership.) They then discover, through message boards and professional solicitors websites, that they are no longer joint tenants but tenants in common as a CO automatically severs the joint arrangement. They then obtain a copy of their Land Registry file which shows the Form K Restriction having been placed by the creditor but they see no other indication of their ownership status (You will see verification this is what happens from earlier posters who still believe they are Joint Tenants after searching their LR file?) So, as you may understand, its very confusing to establish what is going on?

Land_Registry_representative wrote: »

In each case the only record we would hold is whether a form A restriction has been registered. If it has then changing the shares would not alter the circumstances from a registration perspective.

What circumstances, from a registration perceptive, can be affected by NOT having a Form A registered?

Land_Registry

eggbox wrote: »

Thanks again LRR

Correct me if I am wrong but you appear to indicating it's the owners of the property who should be applying? No. The applicant is invariably the person with the benefit of the CO so if they don't apply (or the court does dot instruct) then a form A restriction would not be registered If this is the case then it is no wonder there is such an absence of Form A Restrictions appearing on the register as owners have no idea they should do this. Does the absence of a Form A on the register, however, have any effect on the owners tenancy arrangement? - not too sure what you mean by tenancy agreement here? Do you mean trust deed for example as a TA in our context would be where they are renting etc so doubt if you mean that?

Again, this isn't going to happen given the overwhelming ignorance of home owners on what a CO does to their ownership status. But it begs the question under what circumstances could the court disagree? - I suspect none if the property is jointly owned but the CO is against just one of them but this is really a quesiton of law

To explain what I mean here, a Joint Owner of a property receives a CO against a debt he/she solely owns. They receive notice of this through the Courts but nowhere is it pointed out to them that their ownership agreement has changed (if it was originally a joint ownership.) They then discover, through message boards and professional solicitors websites, that they are no longer joint tenants but tenants in common as a CO automatically severs the joint arrangement. They then obtain a copy of their Land Registry file which shows the Form K Restriction having been placed by the creditor but they see no other indication of their ownership status (You will see verification this is what happens from earlier posters who still believe they are Joint Tenants after searching their LR file?) So, as you may understand, its very confusing to establish what is going on? - I appreciate that it can be but it is important to recognise that the land register is NOT the sole indication of the type of ownership which exists - see Public Guide 18 section 3

What circumstances, from a registration perceptive, can be affected by NOT having a Form A registered?- apologies but I don't really understand this question.

But I suspect you are referring to when does the form A restriction come into play? If so then we have probably covered this before as it is invariably when capital monies are involved as and when the owners deal with the property, sell, mortgage or lease being the 3 main examples.

eggbox

Hi LRR

Apologies if the questions rambled but I think I have one of the answers required now from another department of the LR (who I emailed before I asked you yesterday) who have confirmed with the following;

"Dear Mr Xxxxx

Thank you for your email below.
The percentage of ownership held by respective parties is something that is contained in the equitable estate and, as such, is something that Land Registry do not get involved in; we are only concerned with the Legal estate. However, the presence of a form K restriction should not prevent any alteration taking place."

So that one has been dealt with, but what is still confusing me is whether or not the Joint Tenants arrangement between owners is automatically severed and they become Tenants in Common the moment a CO is made against one of the owners (which is what I meant by the Tenancy arrangement but sorry if I used the wrong jargon!)

This is what Solicitors websites will tell you and seems to be confirmed on the LR Public Guide 18 where at 3.4 Has you ownership changed at Para 3 it states;

"events such as the bankruptcy of an owner who owns the property as a beneficial joint tenant, or a charging order in favour of a creditor of a beneficial joint tenant, may have changed your kind of ownership without you realising it. In such cases the law splits the property automatically into the same number of shares as there were beneficial joint tenants. If there were two joint tenants, they would each have a half share as tenants in common."

If a Form A Restriction is NOT applied for does this affect the ownership arrangements or are the owners automatically TIC regardless?

Land_Registry

The response you have received mirrors my own although clearly they have explained it a little better than I managed - apologies

As far as the remaining question is concerned the answer is provided in the extract from the guide and I have emboldened the relevant part for you

"events such as the bankruptcy of an owner who owns the property as a beneficial joint tenant, or a charging order in favour of a creditor of a beneficial joint tenant, may have changed your kind of ownership without you realising it. In such cases the law splits the property automatically into the same number of shares as there were beneficial joint tenants. If there were two joint tenants, they would each have a half share as tenants in common."

Whether a form A restriction is applied for or not the circumstances around the CO would appear in your example to have split the property into equal shares in the eyes of the law.

If the law deems that to be a 50:50 split and the parties decide that they wish to adjust that in some way then a formal deed would presumably enable them to do so. If no form A restriction exists on the title already then they can apply to register one based on the agreed shares although the apportioned shares would not be referred to on the register.

How the law would then interpret this and/or what impact that would have on the CO would not then be a matter for Land Registry.

eggbox

Hi LRR

Firstly, no apology needed as any information is gratefully received and we appreciate the time taken.

All I would say is that because of the LR's "non advisory" capacity it is, sometimes, a little difficult for Joe Public to get direct answers because of this required policy and explanations can leave room for ambiguity (although I'm sure that is not the LR's intention and your colleague was fairly direct in his response on this occasion.)

So please bear with us if we have to ask again for items to be clarified!