**WON!!!** Widower being taken to court to obtain order to sell property!

[son]

Dear Legal Beagles,

I have found information here most helpful in the past and hope that perhaps you can give me some advice now.

My father passed away 2 years ago. Since this time an old work partner of my father has been chasing down me and my mother for monies owed to him, secured as he says by a final charging order on their property.

The property was registered as Tenants in Common and the 'Final Charging Order' on the land registry appears as a Form K restriction and is not in the Charges Register.

A week ago my mother received court paperwork as this man is asking the judge to have her sell the house to pay him... As I understand this, this is not allowed as it would effect her beneficial interest in the property?

My mother also has my 14 year old brother living at the property in question - (Does this make a difference?)

Am I right to think this? How do I fight this? Also is there anything that I can do now to avoid the courtroom again!

Thanks Guys

[Amethyst]

Re: Widower being taken to court to obtain order to sell property!

Good morning xx

Sorry to hear about the difficulties you are having dealing with your fathers ex work partner. How much approx is he claiming is owed to him?

What form have you been sent by the court (N208? or N1?)

[son]

Re: Widower being taken to court to obtain order to sell property!

Thanks for the response Amethyst.

N208. He is claiming £34,147.89. The original court case was in the names of my father and another work partner (So, Person A is the Claimant against two joint and several Defendants, my father being one of them).
The second defendant has paid 10.5k by arrangement to settle this case already... However suddenly this court instruction has been issued against my mother.

My mother and I are executors of the estate and understand that the paperwork which is in her sole name should be addressed to the Executors and is not... Also, we placed a notice in the Gazette upon death - from my understanding this stops any accruing interest?

The original court case in 2009 was for around 12k and my father had been fighting this however with deteriorating health he simply couldn't. As executors we are not in a position to fight it...

As tenants in common does this stop a charging order from being allowed to be enforced in this instance?

What obligations as executors do we have to pay this, as there was only around 50k in the estate which is all beneficial interest in the property itself...

Should he not be chasing the other work partner?

Thanks for your time! I really appreciate it.

[Diana M]

Re: Widower being taken to court to obtain order to sell property!

The property was registered as Tenants in Common and the 'Final Charging Order' on the land registry appears as a Form K restriction and is not in the Charges Register.

A week ago my mother received court paperwork as this man is asking the judge to have her sell the house to pay him... As I understand this, this is not allowed as it would effect her beneficial interest in the property?

You are correct. A Form K Restriction cannot lead to an Order for Sale.

It's called a "restriction" for a reason. It (in theory) restricts the owners of the property from selling it without notifying the person who placed the Restriction. That's all.

This isn't your mother's debt. It's your late father's debt. But it's also the second Defendant's debt.

You say they (2nd Defendant) settled their share which I'm guessing was after the CCJ (was it?). Without knowing the details of that settlement it's hard to see how a private deal (if it was) can supersede a county court judgement.

Maybe this ex business partner is aiming at the wrong target. Has he (2nd Defendant) got any money and/or a property?

Di x

[Openlaw15]

Re: Widower being taken to court to obtain order to sell property!

You are correct. A Form K Restriction cannot lead to an Order for Sale.

It's called a "restriction" for a reason. It (in theory) restricts the owners of the property from selling it without notifying the person who placed the Restriction. That's all.

This isn't your mother's debt. It's your late father's debt. But it's also the second Defendant's debt.

You say they (2nd Defendant) settled their share which I'm guessing was after the CCJ (was it?). Without knowing the details of that settlement it's hard to see how a private deal (if it was) can supersede a county court judgement.

Maybe this ex business partner is aiming at the wrong target. Has he (2nd Defendant) got any money and/or a property?

Di x

Di, it's really not that simple at all.

The estate inherited the debt so the estate is liable for the debt. How much is the equity in the property? The ownership type was originally shared ownership, ie Tenancy in Common interest each for your late father and his friend. However, a third party had taken out a Charging Order on the property for X amount to secure against an original joint and severally liable debt, which has benefitted interest up to now. Your father died and he transferred his interest (which was a Tenancy in Common 50% ownership) via his Will to your mother, I assume, which means his interest in the property passes to your mother. However it is only beneficial unless the formalities for ownership are dealt with. The law in England/ Wales is that all interests in land must be registered. This will have given your mother a beneficial interest but not a legal interest (ie not by a legal deed).

As the debt was joint and severally liable the beneficiary ie your mother is joint and severally liable for the debt after the estate has been distributed - in other words the debt/ charge passes to your mother along with his gift (by way of his interest) to the property. In the mean time the estate is liable and not your mother. But your mother will be liable for the debt once the estate has been distributed, ie when she gets the interest in the property. The Charge is on the property so the charge follows the property when its changes ownership/ beneficial interest.

It's very rare for a Charging Order to lead to a Sale but the Chargee can come after both the estate and your father's friend to secure the debt of the charge as both were joint and severally liable. £34,000 is rather a substantial amount of money. Your mother can be put on the property's deeds, as a restriction is not watertight (ie it's only a beneficial interest). It would cost may be a couple of hundred pounds for your mother to have the legal interest. A restriction merely lets the world know that there is a beneficial interest to the property. It depends how much equity is in the property really. I think the reason why the chargee has come after your mother is because her interest to the property is not a secure as the your late father's friend's.

I am was not sure if the property can be held on trust for you and your family as you do not have a legal interest (ie no deed) but having thought about it again it must do. If you already lived in the property when the father held the legal interest the property actually should be held on trust for you and your family as there a legal joint tenancy which automatically creates a beneficial ownership/ property held on trust, as equity follows the legal interest.

[son]

Re: Widower being taken to court to obtain order to sell property!

Thanks Di & Openlaw.

So a bit more information following that...

- From my understanding my fathers 50% is held in trust for Myself and two brothers, however my mother has 'Life interest?' i.e. she can stay in the house for the rest of her life?... Does this effect?

- So, the fact that the paperwork has been addressed to my mother personally is not correct? (It should be addressed to the executors?)

- Also, does the interest on this stop because we filed with the Gazette?

How shall I approach this?

[Diana M]

Re: Widower being taken to court to obtain order to sell property!

My father passed away 2 years ago. Since this time an old work partner of my father has been chasing down me and my mother for monies owed to him, secured as he says by a final charging order on their property.

The property was registered as Tenants in Common and the 'Final Charging Order' on the land registry appears as a Form K restriction and is not in the Charges Register.

A week ago my mother received court paperwork as this man is asking the judge to have her sell the house to pay him... As I understand this, this is not allowed as it would effect her beneficial interest in the property?

Am I right to think this? How do I fight this?

Has your mother received an application for an Order for Sale?

If so then I think you should seek formal legal assistance because the roof over your mother's head (and your brother's head) could be at risk if you don't get this right. Judges have discretion on whether to grant an Order for Sale or a Suspended Order for Sale but your mother needs proper legal representation.

Do you have a copy of the original CCJ? Was it an instalment or a 'forthwith' judgment which could be varied if necessary?

Do you know where to contact the 2nd Defendant should that be needed?

Di x

[Diana M]

Re: Widower being taken to court to obtain order to sell property!

The original court case was in the names of my father and another work partner (So, Person A is the Claimant against two joint and several Defendants, my father being one of them).
The second defendant has paid 10.5k by arrangement to settle this case already... However suddenly this court instruction has been issued against my mother.

My mother and I are executors of the estate and understand that the paperwork which is in her sole name should be addressed to the Executors and is not... Also, we placed a notice in the Gazette upon death - from my understanding this stops any accruing interest?

The original court case in 2009 was for around 12k and my father had been fighting this however with deteriorating health he simply couldn't. As executors we are not in a position to fight it...

May I ask a few more questions to clarify things.

Did your late father contest (file a Defence etc.) the county court claim or was the CCJ a result of a Default Judgment? Did your father die before the proceedings reached a conclusion (sorry for the indelicate question).

Was the basis of the settlement with the 2nd Defendant that the Claimant would no longer pursue them for the debt once they'd paid £10.5k? Even if that was the case I believe that may not prevent you (as executor for your father's estate) having a potential claim against the the 2nd Defendant.

If the original CCJ was for £12k and the 2nd Defendant paid £10.5k how come the current debt is £34k? Interest on the £1,500 shortfall can't be over £30k can it?

What is the value of the property, does it have a mortgage on it, and if so in whose name is the mortgage and how much is outstanding?

As executor of your father's estate you effectively step into his shoes so you can fight this on his behalf.

Di x

[Openlaw15]

Re: Widower being taken to court to obtain order to sell property!

Thanks Di & Openlaw.

So a bit more information following that...

- From my understanding my fathers 50% is held in trust for Myself and two brothers, however my mother has 'Life interest?' i.e. she can stay in the house for the rest of her life?... Does this effect?

- So, the fact that the paperwork has been addressed to my mother personally is not correct? (It should be addressed to the executors?)

- Also, does the interest on this stop because we filed with the Gazette?

How shall I approach this?

It doesn't change the charge's interests as the charge was prior to your father's death, prior to any trusts.

In general

If the property is held on a trust - the formalities must have been dealt with: ie title (ownership) must have passed from deceased (settlor) to trustee (or executor) for the beneficiaries. A trust mean the property is safe if it has been done correctly. Life interest means for the life of your mother for instance, and in remainder means, for example, the survivors have it after her, ie you and your two brothers. Do you have a copy of this Will - was the Trust a term of the Will or prior to the Will? It's normally a term of a Will that where a gift (ie interest in property) were to fail rather than the gift being lost it goes back to the estate: resultant trust.

[son]

Re: Widower being taken to court to obtain order to sell property!

Thanks Both! I really appreciate your time and knowledge.

- Yes the application is for Order for Sale.

- He contested the claim and at one point had it dismissed, however it went on an on... Eventually it just resulted in Charging Orders being granted on both him and the co-defendants properties.

- The debt reached £30k approx, due to costs being added which was another 11k and then interest since 2009.

- There appear to be no terms with the second defendant, and they have now stopped paying the claimant. In my knowledge a figure of 30k was agreed and she was paying them... and then simply stopped.

- In terms of the trust, yes this was is in the Will and the Land Registry Title appears to have a new restriction at the end relating to this.
'RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by and order of the court.'

- The property value is approx 370k and has a mortgage of 216k so there is equity there now.

- Please see below the claimant's particulars that came with the claim:

CLAIM NO.

IN THE COUNTY COURT AT XXXXXXX
BETWEEN:

CLAIMANT
-and-
DEFENDANT

CLAIMANT’S EVIDENCE IN
SUPPORT OF HIS CLAIM
MADE PURSUANT TO PART 73.10
OF THE CIVIL PROCEDURE RULES
AND PRACTICE DIRECTION 73


1. The Claimant on 14 July 2009 obtained a Final Charging Order against the property XXXXXXX, registered at HM Land Registry under Title No. XXXXX and copies of the Final Charging Order and the Official copy of register of title are exhibited hereto marked XXX and XXX respectively.
2. The Claimant is seeking an order for sale of the above named property.
3. The Claimant is able to identify the following Creditors registered with priority on the Charges Register of Title No. XXXXX
(i) National Westminster Bank plc
(ii) Central Trust Ltd
4. The Claimant does not know the amounts owed to either of the abpve named Creditors.
5. Although it is unknown what the estimated sale price of XXXXXXX would reach, it is estimated that the property would sell for a sum in the region of £371,000 and £415,000.
6. The Defendant is by virtue of survivorship the sole proprietor of the property and to the best of the Claimant’s knowledge the Defendant is in possession of the said property.
7. The Claimant seeks to enforce the Final Charging Order in respect of XXXXXX by way of the property being sold.
8. To date the sum due and owing to the Claimant is £34,147.89 and continues to accrue at the daily rate of £4.78

STATEMENT OF TRUTH

I believe that the facts contained in this statement are true.
Signed and Dated.

[Openlaw15]

Re: Widower being taken to court to obtain order to sell property!

Thanks Both! I really appreciate your time and knowledge.

- Yes the application is for Order for Sale.

- He contested the claim and at one point had it dismissed, however it went on an on... Eventually it just resulted in Charging Orders being granted on both him and the co-defendants properties.

- The debt reached £30k approx, due to costs being added which was another 11k and then interest since 2009.

- There appear to be no terms with the second defendant, and they have now stopped paying the claimant. In my knowledge a figure of 30k was agreed and she was paying them... and then simply stopped.

- In terms of the trust, yes this was is in the Will and the Land Registry Title appears to have a new restriction at the end relating to this.
'RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by and order of the court.'

- The property value is approx 370k and has a mortgage of 216k so there is equity there now.

- Please see below the claimant's particulars that came with the claim:

CLAIM NO.

IN THE COUNTY COURT AT XXXXXXX
BETWEEN:

CLAIMANT
-and-
DEFENDANT

CLAIMANT’S EVIDENCE IN
SUPPORT OF HIS CLAIM
MADE PURSUANT TO PART 73.10
OF THE CIVIL PROCEDURE RULES
AND PRACTICE DIRECTION 73


1. The Claimant on 14 July 2009 obtained a Final Charging Order against the property XXXXXXX, registered at HM Land Registry under Title No. XXXXX and copies of the Final Charging Order and the Official copy of register of title are exhibited hereto marked XXX and XXX respectively.
2. The Claimant is seeking an order for sale of the above named property.
3. The Claimant is able to identify the following Creditors registered with priority on the Charges Register of Title No. XXXXX
(i) National Westminster Bank plc
(ii) Central Trust Ltd
4. The Claimant does not know the amounts owed to either of the abpve named Creditors.
5. Although it is unknown what the estimated sale price of XXXXXXX would reach, it is estimated that the property would sell for a sum in the region of £371,000 and £415,000.
6. The Defendant is by virtue of survivorship the sole proprietor of the property and to the best of the Claimant’s knowledge the Defendant is in possession of the said property.
7. The Claimant seeks to enforce the Final Charging Order in respect of XXXXXX by way of the property being sold.
8. To date the sum due and owing to the Claimant is £34,147.89 and continues to accrue at the daily rate of £4.78

STATEMENT OF TRUTH

I believe that the facts contained in this statement are true.
Signed and Dated.

Di is right, you're the person appointed to deal with your father's estate, ie appointed representative/ executor.

So you are essentially holding your father's estate for the benefit of the beneficiaries, a bit like a trustee. There is £154, 000 in equity so your defence should be is that there is adequate security, that the third party chargee merely holds a beneficial (equitable) interest to realise its security against the debt and no more, ie the third party has no proprietary (right to property interest in the property. Furthermore, a mortgagor (ie a bank's rights) in comparison would not have any rights to realise its property in this scenario where the security is sufficiently adequate under the rules of equity (branch of courts dealing with equity). So equity should not provide this third party chargee with any more rights than that of a comparator mortgagee. In the alternative, were this court to Order a Sale it would defy the ancient but current jurisdiction of equity, which is a requirement in democratic countries holding democratic institutions ie courts in a fair society, in all common law systems: ie the USA, Canada, Australia, even Hong Kong.

I believe the new restriction means a joint tenancy was severed by registering a land Charge

[son]

Re: Widower being taken to court to obtain order to sell property!

Hi Openlaw,

I think I am with you... The equity that is in the property stops the court from granting this application?

[Openlaw15]

Re: Widower being taken to court to obtain order to sell property!

Hi Openlaw,

I think I am with you... The equity that is in the property stops the court from granting this application?

The claimant's security is still substantial in the property, ie the property has a good market value (ie not losing money). It's essentially £154,000 which protects the chargee (claimant's) interest and making it secure (ie security), versus the debt at best which is £32k. The debt is approximately a 1/5 (20%) of the property so it would be inequitable for the judge to order a sale.

[son]

Re: Widower being taken to court to obtain order to sell property!

Thanks OpenLaw

So is this a 'cut and dry' way to defend against this claim?
Is this admitting liability?
How does this effect further down the line?
Would it be better to defend from a point of view that there is a 14 year old living there?

Thanks again

- - - Updated - - -

Sorry, also would interest keep accruing given that he's passed? I was under the impression the Gazette notice limits this?
- If it does keep accruing, probate showed the total estate to be £50k give or take - what would happen if the figure exceeded this? When do all the clocks stop as such...

[Amethyst]

Re: Widower being taken to court to obtain order to sell property!

You should use the family situation, financial circumstances, the child living in the property etc as well as any legal points. I really think you should get some formal legal help with fighting this sale order, it really is too important to leave to fate. There are a number of firms who will help either on a fixed fee or a CFA ( they claim costs off the other side ). You will want someone who is experienced with charging orders/restrictions and probate.

[MENTION=7765]Joanna C[/MENTION]; [MENTION=551]pt2537[/MENTION]