Sorry my bad! (my turn)

Hi Sequenci We did have this little "discussion" previously (if you look back you said you'd had a bad day so hope it's not the same again!) But it's two or more people who need to be the sellers and not buyers as they will have the "benefit" of being "joint owners". Hence the CO cannot then be attached to the legal estate as it would with a sole owner. It makes no difference if the sale is made to either a joint or a sole purchaser as the third party.

As Sequenci points out, the LR PG 76 (Section 5 para 3) states that the Restriction will become overreached and automatically removed without application if the property is sold for value by the owners to a third party. You need to get your Solicitor to earn his money by pointing this out to the buyers Solicitor that this will be the case. There are instances now arising where people are selling up without discharging the CO simply because it is a choice as also pointed out by the Land Registry in Landnet 19 (pages 16/17); “Although generally a claim against an equitable share cannot be protected by restriction, the Land Registration Act 2002 expressly provides that for the purposes of entering such a restriction, Land Registry may treat someone entitled to the benefit of a charging order relating to an interest under a trust as if they had a claim against the trust property itself. This does not however entitle the judgment creditor to enter a restriction that would interfere with the ability of the trustees to overreach interests under the trust. We regularly have to reject on this basis applications for restrictions where judgment creditors have sought to prevent the registration of any disposition without their consent. The strongest form of protection that we are likely to approve follows the wording of Form K, which is set out in schedule 4 to the Land Registration Rules 2003 (which means the creditor cannot "block" a sale as some people believe) An applicant seeking to register a disposition can easily comply with this restriction by sending a notice to the address specified and supplying the necessary certificate. The purpose of the restriction is not to prevent a disposition from being registered. (which is what should be pointed out to buyers conveyancers) It should however ensure that the judgment creditor is informed that a disposition has taken place so that they may try to recover payment out of the proceeds held by the trustees. The restriction will also ensure that the trustees or their conveyancers do not overlook the existence of the charging order when they decide how to apply the proceeds.” (meaning they have a choice not a legal obligation)

I understand this to be the case if the property is solely owned but, as far as I can see, there is no legal obligation placed on the seller of a joint property to settle a charging order on Beneficial Interest from the proceeds of a house sale. As it hasn't attached to the legal estate it can only be notified by a Restriction which is a "reminder" the debt exists. It doesn't, however, place any definite obligation of settlement upon the seller or their conveyancer.

For anyone interested, there is now detailed confirmation on the MSE "Charging Order The Myth" site of a property being able to be sold without the creditor with the CO on Beneficial Interest being paid from the proceeds of the sale. If you look for the posts.of Brightonian you will see what was required to enable this to happen. It wasn't all plain sailing as there was initial Solicitor resistance. But through persistence he has managed to achieve what has long been understood in that there is no legal or automatic right of payment to the creditor upon a sale as there is only a Restriction of notification to deal with on Jointly Owned Property where only one of the owners is the debtor.

It's my understanding, too. Although I'm unclear if the CO holder is able to block a sale in these circumstances if, either, the property is being sold at under market value (eg: to a relative) or they want the sale to happen in the future when property prices may increase and allow them to be repaid? However, if the property is sold the underlying CCJ will still be in place which still allows other enforcement methods to try to recover the debt.

Yes that's right, mortgage first then CO,s in order or date registered. But if nothing left to pay after mortgage not a lot they can do.

Gramtrad2 Unfortunately, the above only refers to a Restriction which is registered where a Charging Order has been made against one of the JOINT owners of a property. Under these circumstances the Charge can only be made against the financial interest in the property of the debtor. In the case of Sole owners Charging Orders are made against the property itself and so attaches to the legal estate. These, therefore, have to be paid when the property is sold to allow a transfer of a property to proceed. Whether that prevents your partner from making a claim (given her interest preceded the Charges) would probably depend on what she can provide as evidence to support the claim?

If the debt "owed" isn't listed on the DC letter you can pretty much well assume it's just been passed down the line and can be ignored as such. However, if you genuinely don't owe anything then you need to point this out to them explaining any further letters will be passed on the police as fraud.

Thanks and signed. Anyone bothering to read the MOJ consultation paper that decided on the £1000 limit will see the Government caved on the £25,000 limit as THEY believed it would cause more bankruptcy. But that speculation was not based on the information supplied by the creditors who stated that a higher CO threshold would cause them to "review their lending practices". Anyone who has applied for a loan over the last three years will see that they have already done that as it is far, far harder now to obtain credit. It is also far harder to obtain a low rate APR; so with these new safeguards (and risk elimination) already in place I cannot see why the availability of a CO should still be on the table for creditors who are offering high rate "unsecured" lending and still advertising that this type of loan doesn't involve putting up your house as security.

No, the case law taken into consideration by the MOJ that protect family and primary residencies were as follows; Caselaw - 'Mesher' type orders – provides protection as long as a minor is resident at the property concerned. The use of such orders was confirmed by a ruling in the case of Harman vs. Glencross 1986. Further powers are provided in the Trusts of Land and Appointment of Trustees Act 1996. Caselaw - Royal Bank of Scotland vs. Etridge 2001 - This case established the precedent that, where a joint loan has been taken out by, with a jointly owned property as collateral, such as the matrimonial home, it is incumbent on the lender to explain to all lendees at the time of signing the potential consequences of default. In this case it was ruled that one party had signed the forms without being informed by the lender of the possible consequences and that the Royal Bank of Scotland did not have the legal right to enforce by way of charging order. Caselaw - Bank of Ireland Home Mortgages vs. Bell 2001 - This case established the circumstances in which an order for sale would be granted, even if it concerns a family home. The equity available on the property must be sufficient to pay off the judgment creditor and all other interested parties and still leave enough money to adequately rehouse the debtor and dependent.

It will be a Charging Order but, if you jointly own the property and the debt is solely owned, the CO can only be made against your Beneficial Interest (your share of any equity in the property). This type of Charge can only be notified on the Land Registry by a Restriction notifying anyone who has an interest in buying the property that a Charging Order has been made against one of the owners. A Restriction, however, confers no right of automatic payment to the creditor if and when the property is sold. The Restriction also becomes "over reached" when the property is sold for a "valuable consideration" and is automatically removed by the Land Registry, as such, providing the terms of the Restriction have been met. The most common form of Restriction for this type of Charge is a Form K which only requires the Restriction holder to be notified that a sale has occurred. A creditor can apply for an Order For Sale with any Charging Order but the chances of them getting them on Primary of family residencies are virtually nil. Judges have much wider powers of discretion on granting an OFS and, has also been mentioned, there is now case law preventing such a move on those Primary and Family residencies.

From Barclay's "Loan Jargon Buster" webpage that explains the different type of loans available, "UNSECURED LOANS Unsecured loans are available if you don't own your home or don't want to secure a loan on your property."

Again, the difficulty a creditor has in obtaining an OFS has to be weighed against the ease with which they can obtain a CO.

Whilst nobody can deny the ease with which a creditor can now obtain a Charging Order, I think the extreme difficulty a creditor has in obtaining an OFS has to weighed up against what you are stating (certainly where consumer debt is concerned.) The Ministry of Justice even confirmed, in the consultation paper that brought about the £1000 limit, that there is now case law preventing an OFS on family and primary residencies. And whilst, in theory, a creditor with a CO can pursue an OFS, the Court statistics that reveal that only 5 in 1000 CO's are ever pursued to a OFS stage highlight the known difficulty by creditors in obtaining them. The main reason a Charging Order is pursued by a creditor is to secure and prioritise their debt owed, but we shouldn't be helping them further by heaping unnecessary pressure on debtors who may not be in possession of all the facts.

Phew! I thought I was going bonkers then!

No, you are stating that the Seller has to sell to two people - What is required (and what the legislation states) is for the Purchaser (which can be single or multiple) to buy off two or more owners

Response; The legislation link you give states; "Purchaser not to be concerned with the trusts of the proceeds of sale which are to be paid to two or more trustees or to a trust corporation" Purchaser is singular and the purchase monies have to be paid to two or more. The key aspects are that there are a) purchase monies and b) there are more than two people selling and therefore in receipt of those monies As far as I am aware how many people provide those monies does not come into play here. I will have a look at the case law quoted but if there is a section as to which you are referring it would help to point that out first

Just to correct this slightly, I asked a Land Registry Representative about this and this is their reply; "a sale is a sale whether it is to one, two, three or even four. The two or more and/or sole issue is relevant with regards who is selling and not who is buying. For example a Transfer for money by two or more registered proprietors to a third party (sole or joint) will overreach "

Whilst I certainly agree we won't see the the end of them for a while; I do think the writings on the wall for their future effectiveness as the facts regarding the powers of a Form K Restriction (or lack of them) become more widely known. Articles like THIS in the Daily Mail are beginning to slowly appear pointing out the limitations to the creditor with a Form K Restriction. And whilst I understand a Restriction still has the power to allow the creditor to go for an OFS, it's a fairly futile option given the MOJ have pointed out (in their last CO assessment paper) that there is now case law preventing this happening on family and primary residencies. Even without that last fact we know from court statistics that creditors are not going for this option due to the very unlikely chance they are granted by a judge anyway (certainly on consumer debt.) We also know from posters experiences that the creditors have had it extremely easy getting paid from obtaining a Restriction due, it would appear, from a combination of ignorance, incompetence and fear on the part of conveyancers insisting the CO notified by the Restriction HAS to be paid off before a sale can commence. Given this latest Practice Guide now gives the option for sellers to explain to conveyancers that this is not the case, a wider knowledge of this information has to, I feel, see some change in the future on what is currently happening.

The Land Registry have just produced a new Practice Guide 76 regarding Charging Orders HERE Of particular interest is Section 5 which at paragraph 3 reads, "Entry of a restriction does not protect the priority of the interest to which it relates for the purpose of s.29, LRA 2002. A charging order affecting only the beneficial interests under a trust is liable to be overreached along with those interests by the operation of ss.2 and 27, Law of Property Act 1925. Accordingly, a Form K restriction will be usually be cancelled automatically, without application, when a transfer which appears to overreach the beneficial interests is registered." Which information will, hopefully, a) be of use to sellers when conveyancers are telling them that the CO related to the Restriction has to be paid off prior to any sale being completed and b) eventually deter creditors from going down the CO route (if it can only be made against Beneficial Interest) as it will come to be seen as an ineffective debt collection method with poor security.

lindyhop If a hearing date has been set you need to write to the court to get it rescheduled explaining evidence you require to defend yourself has not been forthcoming. Make sure you notify the court what this evidence is, when you sent for it and that you don't want to waste the courts valuable time by turning up at the hearing and having to explain that Lloyd's have not complied with their legal commitments. (How long have you been waiting by the way?) My personal experiences would tell me that it's unusual for Lloyd's to chase a debt under £5k but you can't rely on these statistics as my experiences also tell me they usually farm these amounts out to debt collection agencies too? But the whole process is far to random to call so hope for the best but plan for the worst. Which, in this case, is to make sure Lloyd's provide you with a correctly executed CCA agreement which gives them the right to pursue the debt through legal channels. If they can't then the CO is never going to happen so post back here what they provide you with.

OK, well its at this stage you need to use any evidence you have to prevent the CCJ being registered as without that they can't proceed to a Charging Order. Was the loan taken out prior to 2006 and, if so, have you made a CCA request to Lloyds?

lindypop Is the "hearing that is pending" for a Final Charging Order or is it Lloyds trying to gain a CCJ?

lindyhop Can I ask if you have had a CCJ registered against you for the debt? And are you assuming a no "protection of restriction (K)" as you are the sole owner of the property? A bit more info would help. thanks.