Charging Order - 2 charges in place - do both creditors have to agree action?

[Destinago]

I obtained a charging order in the high court on a debtor's rental property (ie not his home). The mortgage company have first charge. The property may be in negative equity, but house prices are currently increasing.

 

1 - Is either creditor obliged (or likely) to inform the other how much they are owed?

 

This would obviously help in deciding whether to force a sale.

 

2 - Can either creditor force a sale against the wishes of the other?

 

3 - Can either creditor stop a sale by the debtor?

 

4 - Until the debt is repaid I understand the charging order will stand indefinitely. Will the statutory 8% interest also run indefinitely?

 

Thanks.

[unclebulgaria67]

Don't know the answers to your questions. But I do know from other posts that secondary creditors do sometimes force the sale of property and sometimes the first charge (often mortgage company) don't know this is being done. Even if they were told, they may choose to do nothing about it, because they have contingency insurance and can bring their own legal action to recover any debt, if they wanted to do so.

 

Are you certain that it is easy to force the sale of this house ? What steps do you have to take, before you could do this ? You may have to demonstrate to a court, that you have sought payment from the debtor following the charging order with no success and there is no other way to recover the debt, but to force the sale of the house. What costs could you be liable for as part of the process of forcing the sale of the house ? If the property is tenanted, they have certain rights which would have to be considered. Therefore it may not be a quick or cheap process.

 

Think you need to obtain some formal legal advice about this, before you start any proceedings. The cost of doing this and time it would take, may put you off. If I were in this situation, I think I would write to the debtor, asking whether they were in a position to make regular affordable payments, to avoid any further actions, such as an order to force the sale of the property.

 

Do you know all of the possible costs that would be taken off, before any equity is revealed ? There may be nothing left. A house that is subject to a forced sale, often goes for below the normal market rate.

[AndyOrch]

Thread moved to the appropriate forum.

 

Regards

 

Andy

[steampowered]

1 - I don't think they would be obliged to inform you of the amount outstanding. You could ask for it though. It would come out if you tried to force a sale and they objected.

2 - Yes, though the court has discretion whether to order a sale and will take the wishes of the first creditor into account especially if the property is in negative equity.

3 - No, in theory I guess you could get a court order or injunction preventing sale but this would be difficult to get.

4 - Statutory interest will run run if this is provided for by the terms of the judgment and charging order.

[Destinago]

You may have to demonstrate to a court, that you have sought payment from the debtor following the charging order with no success and there is no other way to recover the debt, but to force the sale of the house. What costs could you be liable for as part of the process of forcing the sale of the house ? If the property is tenanted, they have certain rights which would have to be considered. Therefore it may not be a quick or cheap process.

 

I think I would have a good case for forcing a sale. Other attempts to obtain payment have proved fruitless given the inadequacy of current legislation. But it would be pointless forcing a sale if the house was in negative equity - which is why knowing the size of the mortgage would be useful. As for the costs, couldn't I add these to what I'm owed?

 

I guess you could get a court order or injunction preventing sale [by the debtor] but this would be difficult.

 

If true this is bad news. I thought the benefit of putting a charge on a property was that the owner could not sell it without the permission of the charge holder. Is that not the case?

 

It would be pointless if the debtor can sell whenever he likes - even at a loss. The bank will be well placed to pursue him for any shortfall in the mortgage repayment. But I would have to start from scratch. Is that not so?

[steampowered]

I think I would have a good case for forcing a sale. Other attempts to obtain payment have proved fruitless given the inadequacy of current legislation. But it would be pointless forcing a sale if the house was in negative equity - which is why knowing the size of the mortgage would be useful. As for the costs, couldn't I add these to what I'm owed?

Yes, you could probably recover most of your legal costs if successful. But if house is in negative equity a costs order would be pointless if you can't enforce it. Most likely you'd have to pay your solicitors regardless of what you recover from him.

 

If true this is bad news. I thought the benefit of putting a charge on a property was that the owner could not sell it without the permission of the charge holder. Is that not the case?

The owner can still sell the property. However the money would have to be paid to the charge holders. If there is not enough money the owner would receive nothing, so it is difficult to see why he would want to sell.

 

It would be pointless if the debtor can sell whenever he likes - even at a loss. The bank will be well placed to pursue him for any shortfall in the mortgage repayment. But I would have to start from scratch. Is that not so?

Yes, if the property is sold you and there is not enough left over, you will be an unsecured creditor.

[unclebulgaria67]

Is there not a court application the OP can make, which would require the debtor to make a full financial statement, including the current mortgage amount outstanding ?

[steampowered]

Its possible to seek an order that the debtor attend court for questioning about their assets. How productive that would be depends.

[Destinago]

Its possible to seek an order that the debtor attend court for questioning about their assets. How productive that would be depends.

 

Not remotely I'm afraid. Been there. Tried that. 'Personal service' of the court order proved impossible...

[steampowered]

That's unfortunate. I guess you can always ask the bank how much is owing ... whether they'll give that information is another question entirely.