Form K restriction for final charging order

Tobster86

I was awarded a final charging order against a rogue landlord for failing to adequately protect or return a deposit.


Finally getting around to registering it, it appears that I need to apply for a restriction by submitting an RX1 to HM Land Registry using "Standard Form K".


I'm hitting a bit of a stumbling block regarding this; there seem to be suggestions strewn ambiguously all over the internet that the restriction isn't actually effective; that upon selling the property, the debtor only has to tell you they're selling the property, and not actually pay you. Others seem to indicate that it is effective. Some cases suggest that solicitors by default think you need to pay off all creditors, until you point them to "special article".


Examples
This one says they don't work, and you should apply for a non-standard restriction to get 14 days notice:

https://guildfordchambers.com/charging-order-works/


This thread suggests cans/can'ts based on joint ownership:
https://www.consumeractiongroup.co.uk/topic/219049-charging-orders/


This MSE (and the MSE it links to) very much goes along with Form K being apparently useless:
https://forums.moneysavingexpert.com/discussion/5229128/conveyancer-who-understands-interim-charging-order


This sort of leans towards them being effective, but rather vaguely:
https://www.brightstonelaw.co.uk/blog/restrictions-harry-peradigou/




The wording of Form K very much, when studied, seems to imply that all the proprietor has to do is tell you when a disposition occurs:
"No disposition ... is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to [creditor] ..."
And therefore not actually pay you.



How can I fathom what applies to my situation? (Final charging order, sole owner debtor).


Should I just proceed with RX1 Form K, or go back to court to get a non-standard restriction?


FWIW, the debtor is a member of a community that I can't mention for reasons of political correctness, but Brad Pitt played one of them in the 2000 film "Snatch". If there's a way to defeat a Form K without paying, they will probably find it!

D_M_E

I am not a lawyer but this is what I would do:

A form K I think only applies where the property is jointly owned, so the creditor (you) can only apply for a Charging Order on the bit of the property which is attributable to the debtor and this is why a Form K restriction with the wording you quote is used and, as you have found, it's simple for the debtor to escape payment by notifying the creditor of an impending sale.

What I would do - if the debtor is the sole owner of the property, is go for a full charging order on the property and get it registered before the debtor either sells or adds a joint owner to the property.

I believe you have to get a court order to achieve this and any costs incurred can also be added to the order.

Have you tried sending the bailiffs in and/or escalating to the high court for High Court Enforcement and see if they can enforce your award?

member100

Hi. I’m not sure if this will get read. However I’m in the same position. I have a full charge against a sole owner. So can’t complete a RX1 form. However land registry have told me to protect the charging order I have. I have no idea what they are on about. 

Rocox

@Tobster86 I'm in a similar position. Did you get any further clarity on the effectiveness of the Form K and whether the limited protection that it offers can be strengthened? 

MichaelRobinson

Read the guidance from HMLR in Practice Guide 76. 

If you have secured a charging order against a sole proprietor of a property then your Charging Order will be registered against the legal title. That means upon disposal your debt will have to be satisfied.

If two people own the property and your judgment is against one of them and you obtain a charging order then you may only register the charging order as a restriction against the beneficial interest of that person. The standard wording in those circumstances is weak because on the day of completion the debtor's conveyancer is only obliged then to write to you and you are no better off.

What can you do if you have a charging order over a beneficial interest?
First, once you have the Charging Order apply under s46 Land Registration Act 2002 for non-standard wording so that you are given at least 14 days prior notice of the disposal. If this is not granted then consider an application under s14 Trusts of Land and Appointment of Trustees Act 1996 to enforce your interest in the land that you have acquired through the Charging Order (especially if all you have is a K Restriction on a Beneficial interest of one owner rather than a Notice on the Legal title).

Remember to register both the Interim Charging Order and the Final Charging Order when they are granted.

Some people believe the Charging Order over a beneficial interest creates a constructive trust. It doesn't. What you have to do is to enforce the Charging Order rather than thinking that obtaining it is the job done.

housebuyer143

You can't get a final charging order on a jointly owned property so if this is the case a Form K is the best you can get. If they are a sole owner, go to court and get a final charging order and then they will have to pay you when it's sold. 

A form K as you suggest it legally does not need to be paid when the property is sold, they need only notify you they have sold out/are selling it. 

What you will find though is that they will be unable to remortgage etc with your charge on theire so you will be able to screw them if they have a mortgage. Many solicitors have no idea on form K either, so there is a great chance it will be paid on a sale.

autoplay

I think that https://www.brightstonelaw.co.uk/blog/restrictions-harry-peradigou/ should be right. Otherwise, the restriction k will be useless and there is no reason why there will be useless restrictions in the Land Registry. This will be a waste of the resources of the Land Registry.

The lawyer who deals with the sale knows that the debt still exists and should keep the money of the debt from the proceed of the sale to give to the beneficiary of the charging order. The duty to inform the creditor of the sale should be to inform him that the money of the debt is kept for him. This should be implied. Otherwise  a k restriction will not make any sense especially that no notice in advance of the sale should be given to the creditor to give him enough time for example to ask for a third party debt order from the proceed of the sale

RAS

Read the "Charging Order-the Myth" thread in the stickies. A lawyer who knows the law can meet requirements and not pay back the debt on jointly owned property.

The OP's debtor is  sole owner.

housebuyer143

autoplay said:

I think that https://www.brightstonelaw.co.uk/blog/restrictions-harry-peradigou/ should be right. Otherwise, the restriction k will be useless and there is no reason why there will be useless restrictions in the Land Registry. This will be a waste of the resources of the Land Registry.

The lawyer who deals with the sale knows that the debt still exists and should keep the money of the debt from the proceed of the sale to give to the beneficiary of the charging order. The duty to inform the creditor of the sale should be to inform him that the money of the debt is kept for him. This should be implied. Otherwise  a k restriction will not make any sense especially that no notice in advance of the sale should be given to the creditor to give him enough time for example to ask for a third party debt order from the proceed of the sale

Unfortunately what you think makes sense and the reality and not the same. Form K interim charging orders do not need to be paid on completion. There is no legal mechanism to make the solicitor hold the money to pay them but many wouldn't call them useless. 

autoplay

So what is the purpose of a restriction k?

autoplay

And, what if we make a third party debt order application against the lawyer holding the money from the proceed of the sale.

I have read that we can serve ourself a third party debut order to go quickler before the money of the sale is given to the creditor