Debt charges on a house we are buying

ellbels95

We are currently in the process of buying a property. We are right at the very end where everything has been done (searches etc) and the only thing holding up exchanging is that there are a number of charging orders on the property.
the guy we are buying off is a bit of a rouge but has been clear from the off set.
He currently has a repossession order granted by the court whereby the house has to be sold by a particular date due to being in debt with his mortgage company. They have agreed that the sale is enough to pay the outstanding debt for themselves. 

However there are also a number of charging orders on the property from a variety of companies which the owner says he does not have the funds to pay this off. This is the only thing stopping the exchange, his solicitor appears to be really dragging his feet sorting these. The seller states that they will just be written off as he hasn’t got the money and is telling us not to worry.

Basically what I’m wanting to know is can the charging orders be removed if he can’t pay them and how much longer is this process going to go on for? Apparently the solicitor has been waiting for final figures from these companies for 2 months now. 

Any insight or experience of this would be appreciated.
thank you 

fatbelly

The charges will be 'over reached' if the ownership transfers to you.

The problem is if these are actual charges rather than just restrictions then you may have to wait till the mortgage lender gets possession and see if they accept your offer.

Your solicitor should be able to advise you.

ellbels95

fatbelly said:

The charges will be 'over reached' if the ownership transfers to you.

The problem is if these are actual charges rather than just restrictions then you may have to wait till the mortgage lender gets possession and see if they accept your offer.

Your solicitor should be able to advise you.

Thank you for this. 

The charges are actual debts secured against the property rather than the mortgage (mortgage company not bothered as long as they get their money) 
so there’s a solicitors debt on there for example and one for a car lease. 

Can these be transferred to another property he owns or written off do you know? 

fatbelly

Does he own another property? Yes, once the creditor has a ccj they can apply for a charging order at any property he owns.

I assume he owns this property in his sole name. I asked if it was showing as a restriction as that is how sole debts show on a jointly owned property and they are easier to deal with

housebuyer143

If they are interim charging orders they will be overreached on registration in your name providing the restriction is followed. 
If they are charging orders (almost certainly are if he's the sole owner) then they will not be overreached and he needs to have these charges removed before you complete, because you won't be able to register the property in your name with outstanding charges on the title. 

silvercar

They would be removed from the property if the lender repossessed and was then the seller of the property. While you are buying from the actual seller, the seller has to ensure that these charges are removed. This usually means the charge holders accepting that there is no money for them after the mortgage is cleared and agreeing to withdraw these charges (perhaps subject to them coming to a repayment agreement with the seller). Or perhaps there is enough money for these charge holders to have some repayment if not the total amount. Whichever way round, it looks like the seller isn't going to see any money from the sale, so I would say anything he says with a pinch of salt.

ellbels95

fatbelly said:

Does he own another property? Yes, once the creditor has a ccj they can apply for a charging order at any property he owns.

I assume he owns this property in his sole name. I asked if it was showing as a restriction as that is how sole debts show on a jointly owned property and they are easier to deal with

If you search and get the land registry documents they show on there yes. If that’s what you mean? 

So it would be a case of these creditors moving it against another property that he owns (which he does) does this take a lot of time ? 

silvercar

ellbels95 said:

fatbelly said:

Does he own another property? Yes, once the creditor has a ccj they can apply for a charging order at any property he owns.

I assume he owns this property in his sole name. I asked if it was showing as a restriction as that is how sole debts show on a jointly owned property and they are easier to deal with

If you search and get the land registry documents they show on there yes. If that’s what you mean? 

So it would be a case of these creditors moving it against another property that he owns (which he does) does this take a lot of time ? 

It involves getting each charge holder to agree. There could be a long and painful process for any one of them. it also depends on there being enough equity in the other property to satisfy the charge holder.

Hoenir

ellbels95 said:

This is the only thing stopping the exchange, his solicitor appears to be really dragging his feet sorting these. 

Solicitors' don't work for a client unless they are going to get paid. Vendor is the one that going to have to negotiate settlement if there's insufficient equity in the property. . 

RHemmings

ellbels95 said:

However there are also a number of charging orders on the property from a variety of companies which the owner says he does not have the funds to pay this off. This is the only thing stopping the exchange, his solicitor appears to be really dragging his feet sorting these. The seller states that they will just be written off as he hasn’t got the money and is telling us not to worry.

What could possibly go wrong? 

peterhjohnson

As I understand it (and I may be wrong), the seller's solicitor:

1. Finds out the redemption amount for each charge
2. Gives each charge owner an undertaking to pay off the charge from the sale proceeds in return for the creditor releasing the charge.
3. You (+ maybe your lender) pay the seller's solicitor in the normal way at completion
4. Seller's solicitor pays off the debts
5. Seller's solicitor pays the seller the balance.