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sequenci

A guide to Charging Orders & Orders for Sale

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Is the Deed of Trust dated before or after the charging order?

 

If before, perhaps send the solicitor a copy to inform him that the ex no longer has a beneficial interest in the property.


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If your Partner's beneficial interest in the property was already charged to the solicitor, I don't think he would be able to dispose of that interest through a Deed of Trust ... any transfer would be subject to the charge.

 

I'm not sure the solicitor would be able to get an order for sale over a debt of £4000. Most likely they will be paid from the sale proceeds when the property is sold.


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Thanks for replying, it sounds like the advice I have taken from my solicitor was incorrect, she advised me to do a deed of trust and charged me £300. She also advised me to go to the court hearing and present it to the court. So what you are saying is that when I come to sell my house I will have to pay my ex's solicitor his debt from his solicitors' s advice for our divorce. This doesnt sound fair tome.

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When someone's property becomes subject to a charging order, the beneficiary of the charging order has the right to get paid first when the asset is sold. Any money which is leftover goes to the owner. Of course your ex's creditors can only charge his share of the property and not your share of the property.

 

Once the property has been charged it no longer fully belongs to the ex. That is the point of a charging order. If it did not work like this people could easily get around charging orders by gifting the property to a friend or family member.

 

Your ex can only declare a Deed of Trust over property which belongs to him. Once the property is charged he no longer owned 1/2 of the house. That it is why it is extremely important whether or not the charging order came before or after the Deed of Trust. In this case, at the time of the Deed of Trust your ex effectively owned 1/2 of the house minus the charging order ... which is the bit he was able to transfer to you.

 

It doesn't necessarily mean you got bad advice from your solicitor. A Deed of Trust was still a very sensible thing to do. It is just that the Deed of Trust does not defeat the charging order.

 

Does the Deed of Trust contain any warranty/undertaking/promise from your ex that he is able to transfer full title to the property, or that his share of the property is not subject to any encumbrances? If so, it is possible he might be liable to reimburse you for the charging order.


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The declaration of trust states that the parties agree to hold the legal estate in the property ontrust to myself alone and that remains the sole benfit of myself. There is no way he will reimburse me for this, this leaves me now short to buy another property.

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When someone's property becomes subject to a charging order, the beneficiary of the charging order has the right to get paid first when the asset is sold. Any money which is leftover goes to the owner. Of course your ex's creditors can only charge his share of the property and not your share of the property.

.

 

 

 

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.

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copy of that Rule would be useful?


:mad2::-x:jaw::sad:

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what proceedure to get ristriction off Land registry on selling a house as the other sides solicitor wants one removed before completion, it is a joint account but is only a restriction on partner, seems to me that I am going to suffer as an innocent party, which in law seems to be wrong as I see it, I will be prejudiced by this??


:mad2::-x:jaw::sad:

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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)

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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.

 

It just need the money to be paid to two people, isn't that the case? (not sure if anything has changed recently)

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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.

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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.

 

That's what I put, the money has to be paid to two people - e.g. the sellers :)

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Sorry my bad! (my turn)

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Sorry my bad! (my turn)

 

Haha :)

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Thanks for your explanation. I have written to court asking that I am allowed to attend the hearing beingthe joint owner onthe mortgage and to put my case forward, it has been my family home for 25 years why should I sell it to settle my ex, s debt in a divorce settlement which by the way didntgo in my favour, this law takes the p**s!

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I have recently discovered that orders for sale after a charge order can only be obtained for debts under the Consumer Credit Act 1974. This includes credit card debts and unsecured personal loans such as bank loans and HP. However, debts to utility companies such as gas, electricity, water and even council tax (which are not under the Consumer Credit Act),can bring about a charge order but cannot result in a order for sale.

Such creditors have to wait until your house is sold to get their money back.

They may threaten you with further enforcement action after obtaining a charge order on your house, but they are empty threats. I hope this information is of help to anyone worrying about a possible order for sale from debts to any utility company who has obtained a charge order against their property.

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As far as I am aware any creditor with a CO can attempt to obtain an Order for Sale? I don't think any reason for the debt prevents an OFS being attaempted?

 

 

And whilst they are extremely difficult to obtain (as there is case law and TOLATA that stacks up against them being granted as well as the difficulty in persuading a Judge they are proportionate?) I'm fairly sure Councils have a legal duty to follow to the max attempts to recoup debts owed?

 

 

Would be interesting to know where your info came from, though?

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Section 94 of the Tribunals, Courts and Enforcement Act 2007 was brought into force on 17 May 2012. The Act incorporates a new section 3A into the Charging Orders Act 1979 and has given the Lord Chancellor the power to make regulations providing that:

 

charging orders may not be imposed to secure an amount below a certain threshold; and

charging orders may not be enforced by orders for sale if the amount in question is below £1,000. This will only apply to debts regulated by the Consumer Credit Act. Indications at the current time are that this change will be introduced in December 2012.

 

The Second Change

Section 93 of the Tribunals, Courts and Enforcement Act 2007 will come into force on 1 October 2012. The amendments allow an application for a charging order to be made in cases where the debtor has not defaulted on payment of an instalment judgment. However, it should be noted that:

 

The court must take into consideration the fact that there has been no default when deciding whether to grant the order for sale; and

An order for sale to enforce the charging order may not be made at the same time as the application for the charging order unless the whole or part of an instalment which falls due under the judgment remains unpaid.


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I have recently discovered that orders for sale after a charge order can only be obtained for debts under the Consumer Credit Act 1974. This includes credit card debts and unsecured personal loans such as bank loans and HP. However, debts to utility companies such as gas, electricity, water and even council tax (which are not under the Consumer Credit Act),can bring about a charge order but cannot result in a order for sale.

Such creditors have to wait until your house is sold to get their money back.

They may threaten you with further enforcement action after obtaining a charge order on your house, but they are empty threats. I hope this information is of help to anyone worrying about a possible order for sale from debts to any utility company who has obtained a charge order against their property.

 

 

 

Do you have a source for this information?

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I found the information in a PDF document from the House Of Commons Library.

The document is titled "Enforcing A Charge Order". The document reference is SN/HA/6614 and the author is Lorraine Conway. Section 3.2 deals with orders for sale. Paragraph 3 says "Creditors not covered by the Consumer Credit Act 1974 (such as individual creditors, utility companies and local authority) are unable to take this measure and have limited means to recover monies owed to them"

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The new Regulations relate only to regulated debts defined within the Consumer Credit Act 1974. According to the Government, the reason for introducing a financial threshold only to these types of debt and not all debt is because the lender has priced the recovery risk into their premium interest rates. Creditors not covered by the Consumer Credit Act 1974 (such as individual creditors, utility companies, government and local authority) are unable to take this measure and have limited means to recover monies owed to them.6

 

 

I think this may be the passage you are referring to? It is confusing as I think the paper is referring to the £1000 threshold only applying to Charging Orders on CCA debt? Certainly any individual owed money can apply for a CO and OFS so it is a liitle confusing?

 

 

Edited by eggboxy1

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Yes that is the passage I was referring to and it does seem confusing. However the £1000 threshold applies to all charge orders whether the dept is covered by the Consumer Credit Act or not. The passage is from section 3.2 which is dealing with orders for sale. Knowing that utility companies can obtain charge orders I interpret the passage means that they can't obtain an order for sale.This implies that utility companies who obtain a charge order would have to wait until the property is sold to recover their money.

Edited by chiefmegawatty

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style="text-align:center;"> Please note that this topic has not had any new posts for the last 1276 days.

If you are trying to post a different story then you should start your own new thread. Posting on this thread is likely to mean that you won't get the help and advice that you need.

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