Charging Order? The myth

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  • Land_Registry
    Land_Registry Posts: 5,754
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    Organisation Representative
    edited 22 November 2017 at 1:00PM
    Thank you for your reply. I am still confused. Silly question maybe! The severed tenancy does not show on the title then?? The solicitor is really questioning how I have managed to remove my ex from the title when all I did was notify the land registry of his death as expected. Any thoughts.

    Any explanation tends to complicate things but I'll try to put it in a way that hopefully makes sense - it's not an easy subject to understand and just as tricky to explain

    The land register records the legal ownership whilst the severance deals with the beneficial ownership.
    In essence you can't split the legal ownership e.g. half each of the land, bricks and mortar. But you can split the beneficial ownership e.g. half the value as that's in monetary terms.
    So if you have joint registered legal owners and one of them is in debt then a creditor with a CO has an interest in their half of the value of the title. They don't have it in the other owner's half hence it gets 'split' or severed.
    No specific indication is made on the land register as it deals with the legal ownership and the form K restriction is sufficient to indicate the existence of the CO, the creditor's interest and of course names the specific debtor
    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"
  • Thanks Eggbox and land registry.
    That has made it much clearer for me. I appreciate you words of wisdom.
  • MarineBoy
    MarineBoy Posts: 67
    First Anniversary Combo Breaker
    Forumite
    edited 24 November 2017 at 5:43PM
    [Selling from D1D2 to D2 or D2X.]

    Thank you all who have stayed with this thread, and MSE for facilitating it - and especially the batting away of things like 'trust' issues. (I've read almost the whole thread!) I've certainly learned a lot!

    Presumably one reason that solicitors (or their firms) are wary to help, is because they invariably also act on behalf of the big firm creditors in other cases, and can therefore be 'leant on' (now there's a pun!) to cease and desist such helpfulness to the small guy in all this. Thank you again

    It was touched on a few pages ago, but can we confirm the viability - or otherwise - of the following: [I've edited this to concur with a possible answer found]
    Sole Debtor (and defendant) D1, is in joint mortgage with D2.
    D2 now wants to take on a new mortgage (different lender) with new partner X.
    Can D1D2 - sell - the property to D2X, or as previously suggested, only be added back after X has bought the property alone?

    If only the latter, how swiftly and smoothly can X's conveyancer get D2 back onto the deeds and mortgage alongside X?

    [This blog seems to even suggest that it's possible for D1D2 to sell to D2 alone.]
    http://www.tanfieldchambers.co.uk/resources/articles/charging-orders-what-can-go-wrong
    In particular, paragraph 2:
    2. A sale of the entire legal estate of the Ds to D2 alone, or to X, would have resulted in B’s interest being overreached. The subsequent registration of X as proprietor would have meant that B’s charge would have lost all protection (under sections 27 & 29 Land Registration Act 2002).
    MB
    This too, shall pass.
  • MarineBoy
    MarineBoy Posts: 67
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    edited 23 November 2017 at 6:27PM
    Incidentally, maybe this bit of post #3 - from Blueback - has given rise to some confusion:

    by the applicant for registration or his conveyancer that written notice of the
    by the people selling or their solicitor
    Which I believe should read:
    by the people buying or their solicitor

    Sorry if mentioned already, but probably worth repeating as it's right at the start of this thread.

    MB
    This too, shall pass.
  • Sparkles69
    Sparkles69 Posts: 19 Forumite
    edited 24 November 2017 at 8:35PM
    Hi Eggbox,
    I have now talked to someone from the creditors. We slightly discussed my ex business partner & she stated that, if he has gone bankrupt since the order, that they could not persue him for the debt any further. It made me think because I declared myself bankrupt after the c/o was granted and I included the debt in my bankruptcy, so I think that means they wouldn't be able to come after me for the debt. What's your opinion please?
    Thanks, S69.
  • MarineBoy
    MarineBoy Posts: 67
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    edited 25 November 2017 at 7:58PM
    [Repossession implications for Charging Orders]

    It has been stated before that upon voluntary repossession, where the mortgage lender sells the property, any other charges on the property are overreached - and any surplus from the sale is returned to the ex-homeowner.

    Well, I found this, which refers to the creditors being passed any surplus in turn, for them to take their shares. Is this info incorrect, or perhaps out of date, since it was written in 2010?
    http://www.hip-consultant.co.uk/blog/guide-to-home-repossession-ins-outs-123/

    In particular, this section:
    What Happens if There is Money Left Over After a Repossession Sale?

    If the sale price achieved is enough to settle the mortgage debt in full and there is money left over the lender will instruct its solicitors to distribute this surplus to whoever is entitled to receive it. If there are other debts secured on the property then it will be passed to the next creditor in line, usually the one whose interest was registered on the earliest date. If there are no other debts then the proceeds will be paid to you. You will need to provide the solicitors with identification documents and you’ll need to have a bank account in your own name. You’ll normally need to sign a receipt.

    Where the proceeds are paid to a creditor the whole surplus proceeds will be paid to them regardless of what they are actually owed. If, after taking what is owed to them, there is still money left over it will be their responsibility to pass it on to the next in line.

    If the person or organisation which appears to be entitled to the surplus proceeds cannot be traced, or if it is unclear who is next in line, the solicitors may choose to pay the money into the Court Funds Office, where it will be held until someone makes a valid claim on it. That claim must be made to the County Court and will be heard by a judge.
    This too, shall pass.
  • The trouble is, MarineBoy.
    They normally sell the house for a lot less than it's worth.
    S69.
  • DAKOTA45
    DAKOTA45 Posts: 592 Forumite
    MarineBoy wrote: »
    [Repossession implications for Charging Orders]

    It has been stated before that upon voluntary repossession, where the mortgage lender sells the property, any other charges on the property are overreached - and any surplus from the sale is returned to the ex-homeowner.

    Well, I found this, which refers to the creditors being passed any surplus in turn, for them to take their shares. Is this info incorrect, or perhaps out of date, since it was written in 2010?
    http://www.hip-consultant.co.uk/blog/guide-to-home-repossession-ins-outs-123/

    In particular, this section:
    What Happens if There is Money Left Over After a Repossession Sale?

    If the sale price achieved is enough to settle the mortgage debt in full and there is money left over the lender will instruct its solicitors to distribute this surplus to whoever is entitled to receive it. If there are other debts secured on the property then it will be passed to the next creditor in line, usually the one whose interest was registered on the earliest date. If there are no other debts then the proceeds will be paid to you. You will need to provide the solicitors with identification documents and you’ll need to have a bank account in your own name. You’ll normally need to sign a receipt.

    Where the proceeds are paid to a creditor the whole surplus proceeds will be paid to them regardless of what they are actually owed. If, after taking what is owed to them, there is still money left over it will be their responsibility to pass it on to the next in line.

    If the person or organisation which appears to be entitled to the surplus proceeds cannot be traced, or if it is unclear who is next in line, the solicitors may choose to pay the money into the Court Funds Office, where it will be held until someone makes a valid claim on it. That claim must be made to the County Court and will be heard by a judge.

    But surely this only applies if it's a charge rather than a restriction?

    Where the house is owned by two people and only one of them is a judgement debtor, then 50% of what's leftover after the house is sold goes to the joint mortgagee… D45
  • eggbox
    eggbox Posts: 1,764
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    Sparkles69 wrote: »
    Hi Eggbox,
    I have now talked to someone from the creditors. We slightly discussed my ex business partner & she stated that, if he has gone bankrupt since the order, that they could not persue him for the debt any further. It made me think because I declared myself bankrupt after the c/o was granted and I included the debt in my bankruptcy, so I think that means they wouldn't be able to come after me for the debt. What's your opinion please?
    Thanks, S69.

    Unfortunately, the information you have received is not correct. Charging Orders already in place cannot be included in Bankruptcy Proceedings
  • eggbox
    eggbox Posts: 1,764
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    Forumite
    MarineBoy wrote: »
    If the sale price achieved is enough to settle the mortgage debt in full and there is money left over the lender will instruct its solicitors to distribute this surplus to whoever is entitled to receive it. If there are other debts secured on the property then it will be passed to the next creditor in line, usually the one whose interest was registered on the earliest date. If there are no other debts then the proceeds will be paid to you.
    [/I][/COLOR]

    Unfortunately, it seems to have been written by someone who doesn't understand the subject and mechanics of what happens under a power of sale?

    The reason any surplus funds get passed back to the debtor is because when a power of sale occurs ALL other charges are wiped from the register. Therefore, no other charges will (or can be at that point) registered on the deeds.

    It doesn't mean the creditors can't lay claim to the surplus proceeds but they aren't automatically entitled to them, under the previous charge, as the charge on the assett involved has been wiped when a power of sale occurs.

    If you have read this thread through you will see a poster (from around 3-4 years back from memory) that became quite aggressive towards this threads aim as the power of sale had lost her several thousands of pounds?

    The posters anger was because their "charge" (I believe for a business loan) had been wiped when the debtors property was repossessed and the debtor was, subsequently, paid the proceeds from the sale of the property.
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