Selling/buying a house with a charging order restriction

smithyj1986

So the house with the final charging order is my dads. He sadly passed away last year and the house is now owned by my Mum

My sisters buying the house from my Mum who has agreed to pay my dads charging order from the sale of the house but my sister and my mums solicitors are arguing to the process that’s required before we complete (which we were ready to do) 

My Mums solicitor is saying theyll sign a document which says my Mum promises to pay the charging order on the day of completion at which point the restriction is removed once they have confirmation from santander that the debts paid and then the land registry remove the restriction and my sister can put the house in their name

However 

My sisters solicitor is saying the house can’t be sold with the restriction on so they’re asking my mums solicitor to fill out an RX3 form now, send it to Santander (where the debt is owed), they then send the form to the land registry who will remove the restriction BEFORE the sale. Then we complete.

But I can’t understand how or why santander, or even the land registry, would agree to remove the restriction with the debt still outstanding?

user1977

You're right. I'm not sure why it's not just being treated like an ordinary mortgage, where the selling solicitor gets a redemption statement and deals with paying it off from the proceeds. 

smithyj1986

The house has no mortgage against it as it was paid off a long long time ago. So would the redemption certificate be required still? 

Tiglet2

What is this charging order if not a mortgage?  My thoughts below:

My Mums solicitor is saying theyll sign a document which says my Mum promises to pay the charging order on the day of completion at which point the restriction is removed once they have confirmation from santander that the debts paid and then the land registry remove the restriction and my sister can put the house in their name

This could take quite a number of weeks.  Mum wouldn't have the funds to settle the charging order until completion day.  Then mum's solicitor would have to transfer the funds to Santander.  Santander would close the debt and apply to the Land Registry to remove the restriction.  Land Registry have a back log of work, so may be some time before they action it, since there would no longer be a current sale transaction and the solicitor would not be able to request it to be expedited.  Only when this has been done, would your sister's solicitor be able to make their own application to Land Registry to change the ownership into your sister's name.

My sisters solicitor is saying the house can’t be sold with the restriction on so they’re asking my mums solicitor to fill out an RX3 form now, send it to Santander (where the debt is owed), they then send the form to the land registry who will remove the restriction BEFORE the sale. Then we complete.

This is the normal procedure where, usually, the seller and the buyer are not known to each other and are not related.   The solicitors acting for them do not complete on transactions where there is an unsettled debt.  The debt would need to be settled before the sale exchanges.  This situation is different because seller and buyer are related, but the solicitor still needs assurances (a legal Undertaking) to ensure that your sister will not inherit a debt or that the solicitor cannot get the register changed to show the new ownership. 

But I can’t understand how or why santander, or even the land registry, would agree to remove the restriction with the debt still outstanding?

They won't.  Ideally, your mum would settle the debt before exchange.  If that is not likely to happen, then it will be up to your sister's solicitor to decide how they wish to proceed.  If your sister is happy to proceed to completion without the debt being settled prior, then your sister's solicitor may well ask for a signed waiver to release them from any responsibility following completion, but it is very much in your sister's solicitors hands.

steampowered

If you can get the charge removed before completing the transaction, that will be far the easiest option, and it would be best to just get on with it.

Saves messing around with undertakings between solicitors or waiting until completion before anyone approaches Santander.

user1977

smithyj1986 said:

The house has no mortgage against it as it was paid off a long long time ago. So would the redemption certificate be required still? 

It's got a charge registered over it to secure a debt. That's a mortgage.

smithyj1986

Thanks so much for this response. It’s exactly what I needed.

If they went for the process my sisters solicitor is requesting, how long is it likely to take?

Theyre saying the RX3 form would be sent to Santander this week, then santander send it to the land registry. At that point, the solicitor is going to expedite it once the land registry has it bu saying there’s a house sale going to fall through if the restrictions not removed? 

Tiglet2

smithyj1986 said:

Thanks so much for this response. It’s exactly what I needed.

If they went for the process my sisters solicitor is requesting, how long is it likely to take?

Theyre saying the RX3 form would be sent to Santander this week, then santander send it to the land registry. At that point, the solicitor is going to expedite it once the land registry has it bu saying there’s a house sale going to fall through if the restrictions not removed? 

This would be the best course of action, but your mum would need to settle the debt first.

smithyj1986

She can’t settle the debt until the money is released from the house on completion day? 

Tiglet2

In that case, an RX3 submitted to Land Registry, without evidence of settlement, will be unsuccessful.  In a sale and a purchase, it is always the purchaser's solicitor who has to be satisfied with the paperwork/enquiries etc before they will commit to an exchange.  Your sister will need to speak to her solicitor for their advice.

smithyj1986

If they were to sign the waiver or this undertaking document which my Mum will sign to say she promises the debt will be paid on completion and not transferred to my sister would that be ok?