Interim Charging Order/ Restriction On Property

Hi, i am looking for some advice. My parents are in the middle of selling their house to my brother and when the searches ave been done it turns out there is an interim charging order from a creditor in 2007, they are unsure if this was ever made a full charging order? Then in 2011 the same creditor placed a restriction basically stating they need to be notified about any change of ownership. My parents soliciitor is now telling them that the debt must be paid or the mortgage company will not give the mortgage on the property with this restriction/charge in place. Can you please tell me if this is the case or not? I have looked for this info online and it seems their solicitor has got it wrong? Also if the solicitor is wrong could you recommend a solicitor that knows about restictions/ charging orders as they are happy to swap if possible.

2 Answers

I can certainly see why the solicitors are saying it should be paid. The creditor has an "equitable interest" (or at least claims to have one) in the property. This means that strictly speaking, upon a sale by two trustees the interest would be overreached and would attach to the proceeds of sale. In practice though, if the debt were not paid then following completion your brother's solicitor would have to:

a) serve the notice required by the restriction and inform the LAnd Registry they had done so; and
b) make an application in form UN3 to remove the charge

On receipt of confirmation that notice had been served re the restriction and of the UN3 application Land Registry would contact the creditor and inform them they had 16 days (I think) to object. If they did not lodge a valid objection the entries would be removed but if they did object and the Land Registry were not satisfied that the objection was invalid (if the sale price was less than market value this might be valid grounds) the matter would have to be referred to a tribunal.

If the creditor was successful the debt would need to be paid before the new mortgage could be registered and even if it wasn't the delay could lead to the conveyancer being sued for breach of duty as he must not use the mortgage funds unless he is in a position to immediately register the charge.

In any event, even if the entries were removed your parents would still have to pay the debt out of the sale proceeds, unless they could prove they didn't owe it

Good morning

I am having a very similar situation I’m going through a sale of my property and my conveyancer has asked me about a restriction on the land registry. I told them that it was a loan to start a business back in in 2000 but I don’t have any paper showing amounts. My conveyancer explained she has never delt with restriction or charging orders before but they must have Simone in their department that’s had. My conveyancer did not know what to do so I emailed the creditors solicitor on the land registry document, several days later I received an email back saying it was such a long time ago they may need to check their archives. May I jus had also that the trust that gave me the business loan went into liquidation the same year has the restriction was placed. Any how I gave my conveyancer details to contact them and she has sent them around 3 letters and same again in emails with no response.I have also contacted the land Registry for advice and they have stated that the sale will go as normal in respect of changing ownership. But I get the feeling my conveyancer is not acting in my best interests. The buyer solicitor is ready to exchange but my conveyancer is stalling.

Any advice would be good advice at this point thanks Gary