Paying off charging order/restriction & transfer of equity

[exa3z]

Hi,

The scenario.

Property - last valuation £118,000, (circa 2006). Jointly owned.
Mortgage - interest-only. Balance, -£109,000. Joint mortgage.
Debt - -£18,000 - CCJ, there is a restriction registered on the land registry. This is registered on my half of the property only.

I am planning to buy the other half of the property from the joint owner, i believe this is referred to as a transfer of equity. I will be staying in the property. There is £18,000 of debt secured on my half of the property which will need to be paid off and the land registry restriction lifted before I can continue. I am now in a whereby I can do this.

What is the best way of dealing with this? I hired a conveyancing solicitor about 3 years ago to carry out the transfer of equity. I did not tell them about the restriction hoping that they understood the rules that the creditor is to be notified of the sale and it would not prevent the transfer of equity going though. However the solicitor got in touch with me saying they had found this restriction and the debt would need to be paid off and the restriction lifted before I could continue.

However I am now in a position whereby I can sort this out, however I am unsure as to how to go about dealing with it. Should I just let a conveyancing solicitor deal with the whole lot as a single entity, or should I first ask for a settlement figure from the creditor and have the restriction lifted at the land registry before continuing with the transfer of equity?

Also, is the creditor likely to accept a full and final settlement offer? I understand that they do not have a charging order on the property, only a restriction, and I understand the differences. (They were not able to obtain a charging order due to the property being jointly held).

If i explain to the creditor that I am planning on buying the other party's half of the property, but in order to do so I need this restriction lifted, are they likely to accept a F&F offer?

Any help as to how to move this forwards would be greatly appreciated.

Thanks.

[atticus]

Welcome MagicMan71 - You will see numerous recent threads here explaining the position with Form K restrictions.

[MagicMan71]

Hi all,
Sorry for delay. In my opinion you need to see how much is owed now. The restriction won't be lifted until the sum is paid is the usual course of things.
If you are also indicating that you are buying the other co-owner's share I suspect they won't have much sympathy if you don't clear the debt with them too.
Have you had confirmation from the mortgage lender that they will agree to the mortgage being transferred into your sole name?
The debt is almost a separate issue as far as getting it negotiated to a settlement is concerned. In any event even though the debt is yours without the restriction being removed and the mortgage lender's agreement to transferring to a sole person you can't really move forward. The restriction won't be removed by the creditor until it is dealt with I would suspect.
Sorry may not be as positive a response as you wanted.

Im no lawyer but I have done extensive reasearch into this and you CAN sell your house with a restriction on it and your not obiged to give any of the money to the Creditor. Many Lawyers seem ot not know this is the case and try to make you pay the debt.

Once the property is sold the charging order just simply falls off

[islandgirl]

I had a charging order on someone's property and was receiving :£100 a month. I agreed to have it removed (at debtor's cost) if I was paid the outstanding debt in full. I was, and I did. I would not have settled for anything less than the full amount - I would have kept getting the £100 and knew a lump sum would come along eventually. A big firm may have a different view.

[geoxxxx]

Hello
im in a situation similar whereby the people i am buying from have this issue. How long did it take to receive a settlement figure? They’ve applied for one
thanks for your help

[exa3z]

As it's a restriction all the requirement is is that the creator/charge holder is informed so they can claim the debt from your share of the equity. However buyers don't like a charge being on the property and buyers conveyancers tend to hold things up until the restriction is cleared. Daft as the idea is it is paid out of the equity and any remaining debt you'd come to an arrangement to pay with the creditor, but conveyancers do prefer charges to be removed before completing a sale. If you decide to just let it be talk and go to a conveyancer first.

You can go back with a higher offer before selling and you should at least ask them for a settlement statement so you know your liability when/if you come to sell the house.

Amethyst I have already decided that the house is being sold, I have already told the estate agents to go ahead with the sale.

I am totally aware of what is required by the restriction, like I've mentioned elsewhere in this thread, I appointed a solicitor about 3 years ago to do a transfer of equity, when I decided to buy my ex out. I did not tell them about the restriction as I wanted to see what happened. Likewise, they said that the restriction needed to be removed in order to continue. At the time I did not have the funds available to do so, so it fell through.

I am hoping this time around that during conveyancing the same thing will happen again, and I will just inform the solicitor that I have the funds to pay the debt and have the restriction removed. I guess you are advising me to give the conveyancer the heads up on this first?

With regards to a settlement figure, I already know my liability.

Is it worth me writing back to the creditors solicitors advising that the house is being put up for sale imminently, advising of the target sale price (£125,000) and the outstanding mortgage (£109,000), and advising of the remaining equity that will be available on my half of the property (£8000), also advising that they will be entitled to this equity, but that it will not cover the outstanding amount (which is £18,000) and asking for a settlement figure?

Also is it worth me stating to them explicitly that I am not interested in their monthly payment plan and that I want to an agreement on a full and final settlement figure?

Many thanks.

[Amethyst]

As it's a restriction all the requirement is is that the creator/charge holder is informed so they can claim the debt from your share of the equity. However buyers don't like a charge being on the property and buyers conveyancers tend to hold things up until the restriction is cleared. Daft as the idea is it is paid out of the equity and any remaining debt you'd come to an arrangement to pay with the creditor, but conveyancers do prefer charges to be removed before completing a sale. If you decide to just let it be talk and go to a conveyancer first.

You can go back with a higher offer of course before selling and you should at least ask them for a settlement statement so you know your liability when/if you come to sell the house.

[exa3z]

You COULD go back to them and say exactly that - I have not made you an offer of £50 a month, I am already paying £50 a month as ordered by the court in xxxx, which I have paid religiously monthly for the past X years. My letter made you an offer in full and final settlement of the debt due to a lump sum having become available which I intend to use to try and settle my debts on a pro-rata basis. Should you chose not to accept then my payments of £50 per month will continue for the foreseeable future. ( You could add something about them telling you what might be acceptable as a full and final settlement so you can look at your options etc )

Be aware though that they can apply to court to increase the monthly payment if they decide to be narky. Obviously I don't know what your income /expenditure would show now, but if it would show pretty much the same £50 available ( or even less ), then could be worth doing the IE sheet so they can see you aren't fibbing and they will actually have to wait the next 100 years till the debt is paid off.

Amethyst Okay, time for some honesty. I COULD just pay the £18,000 I owe them and be done with it, because I'm getting really sick of this just hovering above my head now, but in all honesty I probably COULD come up with the cash to just get rid of it. Although this would be difficult. This however may be the easiest move. Although that is a little odd now that I've offered them just over £6000!!

I have also decided now, instead of buying the other half of the property from my ex, I am just going to sell the property and move. I work 53 miles away and it's just not feasible for me to stay here any more, I am looking for something closer to work where I can start over.

I have had my property valued today and as it stands (and as I thought) there is very little equity in the property. Valued at £125,000. Mortgage outstanding is £109,000, so there is equity of £16,000. Split this as is shared ownership with my ex, my equity would be £8000, still not enough to pay off the creditor.

I am thinking now of just putting the property on the market, and letting the conveyancing deal with the restriction, they can then use the £8000 equity on my half and I will pay the remainder £10,000 to clear it. I will just have to take a slightly larger mortgage out than I would have liked on the new property as my deposit would be less due to the fact that I have used some of it to pay off this debt.

Any advice on this approach would be helpful.

Many thanks,

[Amethyst]

You COULD go back to them and say exactly that - I have not made you an offer of £50 a month, I am already paying £50 a month as ordered by the court in xxxx, which I have paid religiously monthly for the past X years. My letter made you an offer in full and final settlement of the debt due to a lump sum having become available which I intend to use to try and settle my debts on a pro-rata basis. Should you chose not to accept then my payments of £50 per month will continue for the foreseeable future. ( You could add something about them telling you what might be acceptable as a full and final settlement so you can look at your options etc )

Be aware though that they can apply to court to increase the monthly payment if they decide to be narky. Obviously I don't know what your income /expenditure would show now, but if it would show pretty much the same £50 available ( or even less ), then could be worth doing the IE sheet so they can see you aren't fibbing and they will actually have to wait the next 100 years till the debt is paid off.

[exa3z]

Yes Good luck - nothing is guaranteed of course but first step, see what the response is and go from there xx

Amethyst Okay, I have had a reply from the creditors solicitors. They have rejected my offer. They are offering to agree an affordable repayment plan and state that before they can consider my offer of £50 per month (which I am already paying and have been paying for the last 8 years plus, and which was also set by the court) they want a full breakdown of my income and expenditure.

They have been asking for a breakdown of my income and expenditure for some time now, every 6 months or so when they conduct a "review", which I have never given to them, partly because the court ordered I pay £50 a month and they should already have it because that's why the court ordered I pay that much.

Any advice of where to go from here on would be very much appreciated.

Many thanks!

[Amethyst]

Yes Good luck - nothing is guaranteed of course but first step, see what the response is and go from there xx

[exa3z]

Yes but you don't care about the others for the moment.... if you get a good settlement on the CO one you can look at trying to settle the others - you are literally just using the others at the moment to back up / justify the offer.

You'll probably want to have a look at the others anyway as they're not secured or under judgment you might be able to use any issues with the debts when you come to negotiation - but I wouldn't poke them until you've sorted the restriction.

Okay understood. I will proceed with this advice then and your suggested letter and see what happens. The figures I've quoted are not bang on, but I presume what you have done is split the money I have available evenly over all 3 creditors? So by my calculations it works out like below.

CO	£18,042.46	64%	£6396.04
MBNA	£2,575.00	9%	£912.84
Car Thing	£7,591.35	27%	£2691.13
	£28,208.81	100%	£10,000

I will get the letter written up and sent off and I will keep this thread up to date as to what happens.

Many many thanks for your assistance with this Amethyst

Regards,

[Amethyst]

Yes but you don't care about the others for the moment.... if you get a good settlement on the CO one you can look at trying to settle the others - you are literally just using the others at the moment to back up / justify the offer.

You'll probably want to have a look at the others anyway as they're not secured or under judgment you might be able to use any issues with the debts when you come to negotiation - but I wouldn't poke them until you've sorted the restriction.

[exa3z]

So if you have circa £10k to 'play with' you could ''offer'' 35.7% ish for each debt.

MBNA £3000 - £1071
CAR THING £7000 - £2499
NATWEST £18000 - £6426

So you know you could offer ( and justify pro-rata'ly) £6426 to the Natwest CCJ initially.

You then know you have a bit more to play with if they aren't budging.... and of course if you did want to then ( after the important thing is sorted, confirmed in writing, paid and the restriction removed ) you could look to settle the others lower ( IF you wanted ).... the main thing being you have a calculated, fair, pro-rata figure..that you can back up/justify if needed .....and which ( in my opinion ) is more persuasive than sounding simply desperate to get the charging order removed because they will use that.

Don't worry I completely understand where you are coming from and that you only want to sort/settle the CO - it's just trying to give you the best chance of doing that. As it is still directly owned by the original creditor then it is less likely an offer that low would be accepted, but if you think 'normally' they sell these debts on to DCA's for a fraction ( around 10% ) they'd make more out of you this way than passing it on, so start there and see what response you get.

( by the way, I'm by no means a debt expert/adviser or any such thing so it is just my thoughts )

Hi Amethyst, once again, many thanks for your reply.

Ok the figures are not that far off, so MBNA is £2575, Car thing is £7591, so pretty much the same. It's not the case that I only want to settle the CO, my intentions was to always try and settle all of them if possible, but as you understand, my main priority is the CO as that is restricting me from remortgaging the property. I have wasted nearly 10 years of not paying off the capital due to this so I'm sure you understand my intentions.

So as I understand, I would write to the creditor of the CO first, and then upon success, would write to the others? Not all 3 at the same time? What happens if they reject my first offer? If I increase the offer, does it not become unfair on the other creditors then?

Many thanks,

[Amethyst]

So if you have circa £10k to 'play with' you could ''offer'' 35.7% ish for each debt.

MBNA £3000 - £1071
CAR THING £7000 - £2499
NATWEST £18000 - £6426

So you know you could offer ( and justify pro-rata'ly) £6426 to the Natwest CCJ initially.

You then know you have a bit more to play with if they aren't budging.... and of course if you did want to then ( after the important thing is sorted, confirmed in writing, paid and the restriction removed ) you could look to settle the others lower ( IF you wanted ).... the main thing being you have a calculated, fair, pro-rata figure..that you can back up/justify if needed .....and which ( in my opinion ) is more persuasive than sounding simply desperate to get the charging order removed because they will use that.

Don't worry I completely understand where you are coming from and that you only want to sort/settle the CO - it's just trying to give you the best chance of doing that. As it is still directly owned by the original creditor then it is less likely an offer that low would be accepted, but if you think 'normally' they sell these debts on to DCA's for a fraction ( around 10% ) they'd make more out of you this way than passing it on, so start there and see what response you get.

( by the way, I'm by no means a debt expert/adviser or any such thing so it is just my thoughts )