Restriction Order

philb82

Hello

I have a restriction order in my name on a joint mortgaged house. I've read the 'Charging Order The Myth' thread and understand that the order doesn't need to be paid off when the house is sold. However I have a couple of questions. Firstly what happens to the order after a house is sold, does it turn into an unsecured debt? Secondly will a restriction order put people off buying a house?

Basically if we wanted to sell would we encounter any problems because of my debt?

Thanks
Phil

jonesMUFCforever

Are you sure its called a restriction order?
Restriction order as far as I can gather on Google is to do with mental health issues.

Tixy

In theory the restriction should not stop you selling the home, and the debt would indeed then become unsecured.

However when selling your house the restriction will be visible to a potential lender (or their solicitor) and in practice this can cause issues. In fact some people have had their own solicitors stating that the debt must be repaid from the debtors share of the equity.

If you are plannning to sell and intend to settle from your equity its unlikely to cause you an issue. If you are hoping/intending not to then you are likely to encounter difficulties.

philb82

Tixy wrote: »

In theory the restriction should not stop you selling the home, and the debt would indeed then become unsecured.

However when selling your house the restriction will be visible to a potential lender (or their solicitor) and in practice this can cause issues. In fact some people have had their own solicitors stating that the debt must be repaid from the debtors share of the equity.

If you are plannning to sell and intend to settle from your equity its unlikely to cause you an issue. If you are hoping/intending not to then you are likely to encounter difficulties.

Thanks for your help.

If we do sell then I would pay off the debt with the sale funds.

However if I didn't pay it off would my debt stay on the title deeds even with the new owner(s) living in the house?

I need to clarify how it works!

Thanks
Phil

sithemadmonkey

To clarify, I assume your creditor has had a charging order obtained against you, which has been registered against your property as a restriction, presumably because the debt is solely in your name but the house is jointly owned?

What's the exact wording of the restriction (obviously, minus any names that you wish to redact)?

Different wordings place different burdens on the house owner before they are allowed to transfer the ownership to someone else - some (known as a standard 'Form K') only require the creditor to be informed of the sale, whereas others require the creditor to sign something acknowledging notice of the sale; which is obviously much harder to obtain.

In all cases, however, if a sale is allowed to proceed then the restriction will be 'overreached' and will essentially drop off the title register.

I would post your query on the Charging Order - the myth' thread that you mention - it's still active, and Eggbox and Land Registry Representative are both very helpful with these sorts of issues.

Land_Registry

sithemadmonkey has summed it up for you.

It tends to be eggbox who covers off the wider issues for you around the debt/charging order on that thread rather than us.

To back up the earlier post the form K restriction is overreached on a Transfer for value, namely a sale so the restriction would in the vast majority of cases be automatically removed as and when the new owners were registered.