Charging Order? The myth

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  • eggbox
    eggbox Posts: 1,764
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    Dakota

    From LR Practice Guide 19
    3.8.2 Modifying a restriction
    Anyone who has a sufficient interest in a restriction may apply for an order that its terms be modified. The modification might relate to a specific disposition or to dispositions of a specified class.

    For example, an applicant may wish to modify the terms of the restriction so that it no longer ‘catches’ a charge. Please note, however, that we cannot accept an application to modify a restriction that extends its effect. To achieve this, the restrictioner must first apply in form RX4 to withdraw it and then in form RX1 for a new restriction.


    You haven't been singled out (as LRR confirmed) BL just applied to modify by re-instating the 14 notification period which doesn't alter the basis of the Restriction regarding notification (and not payment) being the only requirement.

    What (IMHO) you should be concentrating on is getting the Order varied to compel BL to supply the written notification to the LR within 14 days of themselves being notified of the sale.

    Your argument for this is that failure of such hampers the property being sold (as the LR can't register new owner details) which is not the purpose of the Restriction.
  • DAKOTA45
    DAKOTA45 Posts: 592 Forumite
    eggbox wrote: »
    Dakota

    From LR Practice Guide 19
    3.8.2 Modifying a restriction
    Anyone who has a sufficient interest in a restriction may apply for an order that its terms be modified. The modification might relate to a specific disposition or to dispositions of a specified class.

    For example, an applicant may wish to modify the terms of the restriction so that it no longer ‘catches’ a charge. Please note, however, that we cannot accept an application to modify a restriction that extends its effect. To achieve this, the restrictioner must first apply in form RX4 to withdraw it and then in form RX1 for a new restriction.


    You haven't been singled out (as LRR confirmed) BL just applied to modify by re-instating the 14 notification period which doesn't alter the basis of the Restriction regarding notification (and not payment) being the only requirement.

    What (IMHO) you should be concentrating on is getting the Order varied to compel BL to supply the written notification to the LR within 14 days of themselves being notified of the sale.

    Your argument for this is that failure of such hampers the property being sold (as the LR can't register new owner details) which is not the purpose of the Restriction.

    Hi Eggbox… many thanks!

    I am probably not seeing the wood for the trees… I am not selling at the moment but will definitely concentrate on the written notification issue as and when I get to that point…

    Of interest is that which states that an application cannot extend the effect… what does this mean, please? Does not an additional 14 day caution before disposition of the property extend the effect of a standard form k?

    Does it appear to you that I now have TWO restrictions due to there being 2 differently dated JOs?:(
  • eggbox
    eggbox Posts: 1,764
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    "Extend its effect" means it can't be altered from what the Standard Restrictions requirements are. The Standard Form K requires the creditor to be notified a sale is happening; the modified BL doesn't alter that only in the way it happens. No extra effect (such as payment of the debt) can be added.

    Whilst you may have 2 Restrictions showing, the requirements of the modified one also satisfy the standard one; so the fact there are two doesn't (in legal terms) have any extra detrimental effect on you.
  • Land_Registry
    Land_Registry Posts: 5,755
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    eggbox wrote: »
    LRR

    No I meant the Standard Form K not a modified one.

    Apologies eggbox for misreading the post

    I'm not too sure I can shed much light on the thinking behind the wording. Is there an issue with it as it seems quite straightforward and I'm not too sure what else you might expect to be included?

    The Act & Rules changed things quite a bot for the registration of third party interests but only really in how they are protected on the register. What's behind those interests, namely the charging order/debt scenario did not change.
    Official Company Representative
    I am the official company representative of Land Registry. MSE has given permission for me to post in response to queries about the company, so that I can help solve issues. You can see my name on the companies with permission to post list. I am not allowed to tout for business at all. If you believe I am please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"
  • eggbox
    eggbox Posts: 1,764
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    Hi LRR

    I'm only asking as it does appear that third party interests, certainly on jointly owned property, were deliberately weakened by the changes (as this thread highlights) and I wondered if there was any reason these changes had happened?
  • Land_Registry
    Land_Registry Posts: 5,755
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    I don't believe that there was a deliberate attempt to weaken such interests as the key points remain the same - there is a debt and there is a charging order so where in the past these examples might have been registered as cautions they are now registered form K restrictions.

    I suspect by 'weakening' you mean that in the past the cautioner would have been notified of the sale (Transfer) for example and given time to object. Any objection would probably have been groundless if the order had been overreached but there was still a process to be followed.

    The current form K shortens that process considerably as it makes the point re the sale being able to proceed providing they confirm that the creditor has been notified.

    My view would be that the form K has helped to clarify the registration requirements in such cases rather than weakened the actual interests involved.

    Practice Guide on Charging Orders explains the complexities involved around Charging Orders and how such things may be viewed by the parties involved, albeit the creditor's perspective is highlighted in more detail.
    Official Company Representative
    I am the official company representative of Land Registry. MSE has given permission for me to post in response to queries about the company, so that I can help solve issues. You can see my name on the companies with permission to post list. I am not allowed to tout for business at all. If you believe I am please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"
  • eggbox
    eggbox Posts: 1,764
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    Dakota

    I think LRR has set out why there wouldn't be any further changes as the 2003 rules were designed to simplify the registration process which they have.

    The fact BL don't agree is a problem for them not the LR.
  • DAKOTA45
    DAKOTA45 Posts: 592 Forumite
    EGGBOX….What I didn't realise until you mentioned it on here was that having a CO turns joint ownership into something called Tenants in Common… I haven't looked into the implications of this yet and how it will affect my situation, if at all…Does this mean that my husband, who has always paid the mortgage (I have never worked in the 40 years since we married) will retain a greater share of the property?
  • eggbox
    eggbox Posts: 1,764
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    edited 21 March 2015 at 9:36AM
    Hi Dakota

    I have been looking into this but I haven't found anything concrete regarding the implications of shared ownership after a CO is granted against a joint owner?

    As far as I can see, the Law assumes the split is 50/50 unless there is a Deed of Trust to say the otherwise due to an agreement between the owners? A Deed may be made to reflect a large deposit paid by one of the owners or, as in your case, to reflect the fact your other half has paid all of the mortgage.

    Whether a Deed of Trust is only effective if made prior to the date of the CO I have yet to discover? As I see it (or can find any evidence to the contrary) a CO made against Beneficial Interest doesn't "fix" what the "interest" is at the date the CO is granted. It only, appears, to attach to whatever "interest" is realised by the debtor when the property he/she jointly owns is sold? As LRR has confirmed, the details registered on the Land Registry only reflect who legally owns the property and not what the percentage share of ownership is?

    Now here's the rub; if everything is fine and dandy in the rose garden between a couple who jointly own property and a Deed of trust is signed to say ownership is, say, 10/90 then there is no problem. But it is a legal document and if anything went wrong in the relationship then the person owning 10% has a problem if the property has to be sold?

    So extreme caution has to be exercised if you enter such an agreement as it could bite you in the rear end if things go wrong between joint owners.
  • DAKOTA45
    DAKOTA45 Posts: 592 Forumite
    edited 21 March 2015 at 11:57AM
    EGGBOX… extremely interesting!

    As I understand it, joint ownership means that both partners each own 100% of the property so it can't be divided as such and a creditor can only take 50% of any equity…

    Tenants in Common can split the percentage any way they choose…so is there any legal reason, given that there is a CO in place, that we could not divide the estate as we wish?

    (Obviously, I trust my husband)!

    This debt is not his fault and the consequences of my actions will affect him adversely… which the Court doesn't seem to take into consideration when allowing the CO to be modified…(He begged me not to enter into legal proceedings with the creditor… but because I believed in Justice, I stupidly went against his wishes, unfortunately).
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