When a judgment creditor is owed money under the terms of a court order and the debt remains unpaid, they can ask the court to grant them a charging order over the debtor’s property.
The charging order, as described in the Charging Orders Act 1979, will secure the debt as a charge against the property, meaning that if the property is sold or re-mortgaged, the debt will have to be paid so that the charge can be removed.
In some instances, the creditor can ask the court to order the sale of the property by issuing an order for sale.
How to put a charge on a property
If you have been granted a county court judgment in your favour or a similar order requiring someone to pay you and they fail to do so, you can apply to the county court or high court, depending on the amount owed, and request a charging order.
The court will usually grant an interim charging order straight away and list a hearing for full consideration of the matter.
As soon as the interim charging order is received, it must be registered with HM Land Registry who will record the information against the property. This means that if the property is sold, the buyer will receive a notice that there is a charge over the property and will usually require the seller to remove the charge, by paying the outstanding debt, so that the sale can be completed.
Registered land
Where the property in question is registered with HM Land Registry, it is straightforward to register the charge against the registered title. Once this has been done, anyone searching the property’s title, such as solicitors acting for a potential buyer, will be able to see that there is a charging order in place.
Unregistered land
A minority of properties remain unregistered at HM Land Registry. A pending action should be registered initially with the charging order registered as soon as the interim order is issued. A caution against first registration should also be registered.
How long does a charging order last?
A charging order lasts until the debt is paid in full.
Can someone with the benefit of a charging order force the sale of the property?
Where the debtor has been required to pay the debt off in instalments and has been paying these, the creditor cannot ask for the sale of the property where the country court judgment was dated on or after 1 October 2012.
If the debt is not being repaid, it is for more than £1,000 and it is not a Consumer Credit Act debt, then a creditor could apply to the court for an order for sale. This will force the sale of the property, with the sale proceeds being used to pay the debt.
An order for sale is only granted by the court as a last resort, however, if you receive notice that a creditor is trying to obtain an order for sale you should speak to a solicitor straight away.
What to do if a charging order is granted over your property
If a charging order is granted over your property, you should pay off the debt where possible, keeping up with any instalments that were ordered by the court when the initial judgment was made. If you do not make any payments and the debt is for £1,000 or more, there is a risk that the creditor could apply to the court for an order for sale.
If the debt is regulated by the Consumer Credit Act, for example, a debt in respect of a credit card, store card, personal loan, overdraft or payday loan, then interest stops when the county court judgment is issued.
If the debt is not regulated by the Consumer Credit Act and it is for more than £5,000 then the statutory interest of 8% is added.
How to remove a charge from a property
If you pay off the debt, to include interest, court fees and all associated costs, you can provide the court with evidence of this and ask for a certificate of satisfaction in respect of the original judgment against you.
The creditor should inform the Land Registry that the charge has been satisfied and that the charging order can be removed from the Land Register.
Contact us
At Witan Solicitors, we can advise you in respect of debt issues and obtaining a county court judgment or charging order against property including an order for sale. To speak to one of our expert civil dispute resolution solicitors, email us at info@witansolicitors.co.uk or fill in our contact form and we will be happy to help you. We have offices in Birmingham, London and Northampton.
