6 Charging Orders

[gramtrad2]

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.

 

 

 

Hi,

This is very interesting. It is a bit complicated and I am a bit thick. So I hope that I have this right; if not please ignore me and I shall keep taking the medication!

 

I have a situation where I have 6 charging orders against my property. These were all forced by banks etc and 2 have statutory interest clocking up each month. After the mortgage, there is very little equity and the likely hood is that there would be little available in the event of a forced sale.

 

The house is in my name only; my wife shares it with me and has done since I bought it. Funds were used from our previous house, to purchase the property.

 

What I should have done was to register my wife's interest in the property at an early date; I did not and the charges went on before I realised that I should have done that! Solicitors have advised me (12 months ago) that my wife would probably not be able to jump in font of the charges to grab a slice of any equity when, eventually the property is sold.

 

I wonder if this new directive will help to strengthen any claim that she has.

[eggboxy1]

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?