Buying house with Interim charging order

middleagedriver

Hi, we in final stages of agreeing an exchange date for a property we are buying that has an interim charging order against the title. We are a bit in the dark with this one as our solicitor says there 'may' be an issue at exchange but that's all they can say.

Seller solicitor has confirmed they have a statement of accounts and this will be settled with the equity of the sale. But our solicitor is wanting a signed RX3/RX4 handed over on or before completion. Will the sellers solicitor have enough information to complete this form ASAP (mortgage offer expires in 2 weeks) based on having the statement of accounts?

Redacted title entry below:

(XX.XX.XXXX) RESTRICTION: No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, 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 XXXXXXXXXXXXXXXX being the person with the benefit of an interim charging order on the beneficial interest of XXXXX XXXXX made by the County Court Money Claims Centre on XX XXXX XXXX (Court reference XXXXXXX).

dimbo61

So the sellers may have an outstanding mortgage on the property and a charging order for another debt.
Your solicitor will be the best person to give you advice on this.
I am sure your mortgage lender will not allow exchange/completion without clear title ( IE No debts on the property )
Your solicitor is acting for both you and the mortgage lender.
Hope you can get this sorted ASAP.
As with a mortgage the interest is increasing daily so an accurate figure is needed to repay ALL debts on the property 

Tiglet2

middleagedriver said:

Hi, we in final stages of agreeing an exchange date for a property we are buying that has an interim charging order against the title. We are a bit in the dark with this one as our solicitor says there 'may' be an issue at exchange but that's all they can say.

Seller solicitor has confirmed they have a statement of accounts and this will be settled with the equity of the sale. But our solicitor is wanting a signed RX3/RX4 handed over on or before completion. Will the sellers solicitor have enough information to complete this form ASAP (mortgage offer expires in 2 weeks) based on having the statement of accounts?

Redacted title entry below:

(XX.XX.XXXX) RESTRICTION: No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, 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 XXXXXXXXXXXXXXXX being the person with the benefit of an interim charging order on the beneficial interest of XXXXX XXXXX made by the County Court Money Claims Centre on XX XXXX XXXX (Court reference XXXXXXX).

The seller's solicitor will need to provide your solicitor with the required assurances/undertakings that the beneficiary of the interim charging order has agreed to the removal of the restriction on the title following repayment of the debt on completion.

Your solicitor will not contact the seller or the beneficiary directly, so it is important that the seller's solicitor deals with the repayment of the debt, details of which are provided in the statement of account and the correctly completed RX3/4 forms, which will be provided to and submitted by your solicitor when registering you as the new owner.   

Solicitors work towards exchanging once all outstanding issues are resolved, not before.  I'm sure your solicitor has told the seller's solicitor when your mortgage offer expires.

middleagedriver

dimbo61 said:

So the sellers may have an outstanding mortgage on the property and a charging order for another debt.
Your solicitor will be the best person to give you advice on this.
I am sure your mortgage lender will not allow exchange/completion without clear title ( IE No debts on the property )
Your solicitor is acting for both you and the mortgage lender.
Hope you can get this sorted ASAP.
As with a mortgage the interest is increasing daily so an accurate figure is needed to repay ALL debts on the property 

We would have spoke direct with the solicitor. But we were only told about this via email late on Friday. By the time I realised I was too late to ask as they had left for the day. So now have 2 days over the weekend of worrying about it. 

middleagedriver

Tiglet2 said:

middleagedriver said:

Hi, we in final stages of agreeing an exchange date for a property we are buying that has an interim charging order against the title. We are a bit in the dark with this one as our solicitor says there 'may' be an issue at exchange but that's all they can say.

Seller solicitor has confirmed they have a statement of accounts and this will be settled with the equity of the sale. But our solicitor is wanting a signed RX3/RX4 handed over on or before completion. Will the sellers solicitor have enough information to complete this form ASAP (mortgage offer expires in 2 weeks) based on having the statement of accounts?

Redacted title entry below:

(XX.XX.XXXX) RESTRICTION: No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, 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 XXXXXXXXXXXXXXXX being the person with the benefit of an interim charging order on the beneficial interest of XXXXX XXXXX made by the County Court Money Claims Centre on XX XXXX XXXX (Court reference XXXXXXX).

The seller's solicitor will need to provide your solicitor with the required assurances/undertakings that the beneficiary of the interim charging order has agreed to the removal of the restriction on the title following repayment of the debt on completion.

Your solicitor will not contact the seller or the beneficiary directly, so it is important that the seller's solicitor deals with the repayment of the debt, details of which are provided in the statement of account and the correctly completed RX3/4 forms, which will be provided to and submitted by your solicitor when registering you as the new owner.   

Solicitors work towards exchanging once all outstanding issues are resolved, not before.  I'm sure your solicitor has told the seller's solicitor when your mortgage offer expires.

So sounds like if sellers solicitor can provide evidence and the RX3/4 form we should be ok.

housebuyer143

This is a form K restriction which do not need to be paid off on completion. Many solicitors don't understand these and insist they are. But all that needs to happen is for one party to write to the people owed the money to inform them of the sale. 
They do that, they certify to land registry that they have done that and the charges fall off after completion. They cannot be removed before completion and cannot be removed using the RX3 RX4 form.

I bought a house recently with four restrictions on it and I know far more than I want to now. In the end we completed and as expected the charges fell off on the register of our title.

Google on this forum, charging orders the myth and you will see hundreds upon hundreds of post going into detail about this.

housebuyer143

This post here sums it up perfectly for you.

https://forums.moneysavingexpert.com/discussion/comment/79087791#Comment_79087791

middleagedriver

housebuyer143 said:

This is a form K restriction which do not need to be paid off on completion. Many solicitors don't understand these and insist they are. But all that needs to happen is for one party to write to the people owed the money to inform them of the sale. 
They do that, they certify to land registry that they have done that and the charges fall off after completion. They cannot be removed before completion and cannot be removed using the RX3 RX4 form.

I bought a house recently with four restrictions on it and I know far more than I want to now. In the end we completed and as expected the charges fell off on the register of our title.

Google on this forum, charging orders the myth and you will see hundreds upon hundreds of post going into detail about this.

Thanks for that, I had no idea what a form k was until now. My solicitor wants a RX3 or RX4 on completion so I can only imagine they would submit the form when transferring the property to myself.

I will speak to the Land Registry and my solicitor. But I'll have to take the advice of my solicitor, just hope the form doesn't take long to complete

housebuyer143

middleagedriver said:

housebuyer143 said:

This is a form K restriction which do not need to be paid off on completion. Many solicitors don't understand these and insist they are. But all that needs to happen is for one party to write to the people owed the money to inform them of the sale. 
They do that, they certify to land registry that they have done that and the charges fall off after completion. They cannot be removed before completion and cannot be removed using the RX3 RX4 form.

I bought a house recently with four restrictions on it and I know far more than I want to now. In the end we completed and as expected the charges fell off on the register of our title.

Google on this forum, charging orders the myth and you will see hundreds upon hundreds of post going into detail about this.

Thanks for that, I had no idea what a form k was until now. My solicitor wants a RX3 or RX4 on completion so I can only imagine they would submit the form when transferring the property to myself.

I will speak to the Land Registry and my solicitor. But I'll have to take the advice of my solicitor, just hope the form doesn't take long to complete

Definitely raise it and ask them to refer to a senior member of staff because the land registry won't accept a RX3 or RX4 form to remove these.. That was the stance mine took and they were advised by land registry that they wouldn't do this as they needed to follow the correct process as per the restriction. 

I ended up having to inform myself and going higher at the firm as the sale would have fallen through as my solicitor did not understand form K at all. 

Good luck, I hope you exchange soon.

housebuyer143

On reading again, if you seller plans to settle the charges (even though they don't have to) it might be much easier and could be as simple as an undertaking from the sellers solicitor to pay and remove the changes after completion.

Depends if they are paying them off or not as to the course of action to be taken. 

middleagedriver

housebuyer143 said:

On reading again, if you seller plans to settle the charges (even though they don't have to) it might be much easier and could be as simple as an undertaking from the sellers solicitor to pay and remove the changes after completion.

Depends if they are paying them off or not as to the course of action to be taken. 

Yeah they plan to settle the charge.

Redacted enquiry for context:

There  is  a  restriction  registered  in  favour  of  XXXXXX.  We  will  require  an  RX3/RX4  (whichever  is applicable) to be handed over on completion duly signed. Please provide your undertaking to discharge your  clients'  liability  and  forward  to  us  the  appropriate  discharge  documentation  on  or  before completion.

FURTHER OBSERVATION: 

We note your response that you are in receipt of the redemption statement from XXXXX and upon Completion  and  out  of  the  sale  proceeds  you  Undertake  to  pay  the  requisite  sum  to  XXXXXX. However, we will require an RX3/RX4 (whichever is applicable) to be handed over on completion duly  signed.  Please  provide  your  undertaking  to  forward  to  us  the  appropriate  discharge documentation on or before completion