Conveyancer who understands interim charging order.

Rockit

Hi all,

We are currently in the process of selling our house and moving for work purposes. We need the equity in our property to put down as a deposit for another property. On looking at our land registry docs we have found that we have four "Form K" restrictions.

The house is in joint names with my wife and I. The restrictions are for individual debts that we had back in 2007 when we got into financial difficulty. Our situation has since much improved and we have been paying off these debts as part of arrangements we made with the individual companies.

Thanks to this site and others which I will link to below, we have found that a Form K restriction does not entitle companies to be paid on completion of the sale like a regular charging order. All it requires is that a solicitor write to the companies informing them that our property is being sold.

However, our conveyancer does not understand this or anything about form k restrictions (even after being pointed to the info online) and simply wants to pay the companies off to get rid of the restrictions. This is unacceptable to us.

Has anybody been in the same situation and can recommend a conveyancer that understands these type of restrictions and can allow us to sell our house with out these companies eating up our equity?
Many thanks!

LINKS
Government Publication on Charging Orders.
"Entry of a restriction does not protect the priority of the interest to which it relates for the purpose of section 29, Land Registration Act 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 sections 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."

Article in Practical Conveyancing.
"Where the proceeds of sale are paid to two trustees – even if those two are the same as the beneficiaries whose interests have been charged – the charging order is overreached and the creditor has to pursue the trustees for the money."

Beat My Debt.com Article on how to deal with Form K restrictions.

Article on charging orders
"However, if the property was jointly owned by the debtor with other non debtors, for example husband and wife owning the property and only one of them being the actual debtor, the creditor was not entitled to enter an “agreed notice”.

Instead the creditor could only file a “restriction” in the following terms:
“No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyance that written notice of the disposition was given to [creditor] being the person with a benefit of an interim/final Charging Order on the beneficial interest of [name of debtor]”.

This restriction was and remains, practically useless. "

Rockit

Apologise as a new user I can not add links. I have copy and pasted snippets of info from the various articles should folk wish to google them.
Thanks.

Land_Registry

Rockit - I would suggest linking your thread to the MSE thread Charging order-the myth and seeing if eggbox can advise in a direct message perhaps? - doubtless you have dipped into the thread already though

The posters on that thread will be able to cite examples from personal experience and satisfaction hopefully

Rockit

Cheers, have just done that now!

saabay

There is no need to pay them off. All your solicitor needs to do is give the appropriate notice to allow him to produce the certificate that he has done so. This will then satisfy the terms of the restriction. What you do about the actual debts is a separate issue. This is just designed so that creditors are aware that you may have liquidised an asset and could have some money kicking around for them to take a bite of.


It is another common thing many conveyancers don't understand. All they need to do is read the thing. It is not a legal charge.


I recently bought a property for a client and there were two of these restrictions on there. The seller's solicitor just gave me that certificate and the registration went ahead and the restrictions were removed. Simple. I don't know what they did about the debts and, frankly, it was none of my business!

terryw

saabay wrote: »

There is no need to pay them off. All your solicitor needs to do is give the appropriate notice to allow him to produce the certificate that he has done so. This will then satisfy the terms of the restriction. What you do about the actual debts is a separate issue. This is just designed so that creditors are aware that you may have liquidised an asset and could have some money kicking around for them to take a bite of.


It is another common thing many conveyancers don't understand. All they need to do is read the thing. It is not a legal charge.


I recently bought a property for a client and there were two of these restrictions on there. The seller's solicitor just gave me that certificate and the registration went ahead and the restrictions were removed. Simple. I don't know what they did about the debts and, frankly, it was none of my business!

Thank you so much for this post. Unfortunately few conveyancers appear to understand this. See the eggbox thread thread for much discussion about this.

I know that I am asking a lot but
1. Where can the wording of the appropriate notice and the certificate to which you refer be found

And

2. Is it possible for you state the name of your own firm or any firm of conveyancer's who understand this?

Many thanks

Land_Registry

I doubt if there is any wording to be found online as in essence a notice and certificate rely on the opening lines, namely

'I hereby give you notice......' and 'I certify that......' with the subsequent details being relevant to the transaction and the rest of the form K restriction wording itself for example

saabay

terryw wrote: »

Thank you so much for this post. Unfortunately few conveyancers appear to understand this. See the eggbox thread thread for much discussion about this.

I know that I am asking a lot but
1. Where can the wording of the appropriate notice and the certificate to which you refer be found

And

2. Is it possible for you state the name of your own firm or any firm of conveyancer's who understand this?

Many thanks

As LR Rep says regarding the wording.


Not sure which other conveyancers would understand Form K but I've come across many that don't. Feel free to PM and I can let you have firm details.

eggbox

saabay wrote: »

There is no need to pay them off. All your solicitor needs to do is give the appropriate notice to allow him to produce the certificate that he has done so. This will then satisfy the terms of the restriction. What you do about the actual debts is a separate issue. This is just designed so that creditors are aware that you may have liquidised an asset and could have some money kicking around for them to take a bite of.


It is another common thing many conveyancers don't understand. All they need to do is read the thing. It is not a legal charge.


I recently bought a property for a client and there were two of these restrictions on there. The seller's solicitor just gave me that certificate and the registration went ahead and the restrictions were removed. Simple. I don't know what they did about the debts and, frankly, it was none of my business!

I totally agree with everything you have stated. Can I just ask, however, if your clients purchased their property by cash or mortgage?

Only asking as, whilst the above is true, mortgage lenders have a resistance to lend if Restrictions aren't removed prior to sale? Whether this is their actual stance or is taken on the advice of, perhaps, uninformed Solicitors acting for them is unclear?

saabay

It was a mortgage purchase. The only duty to the lender is to ensure that any restriction does not remain on the title following registration of their charge. As the restriction is tied to the proprietor it comes off on registration of the new owner as the certificate given overreaches the restriction.

eggbox

Well that's good to hear but, as you may see from the main thread on this subject on "Charging Order the Myth", its been virtually impossible to get lenders to agree to proceed without first having the Restriction removed prior to the advance. Wrong, as you say, as there is no charge registered against the land; but that is what is happening.

Can I please ask, therefore, how you approached the Restrictions removal with the conveyancer acting for the lender as that info would be REALLY useful to an awful lot of people.