Getting a charging order on your property is never a good thing. However, there are methods to fix the issue. If you’re facing a charging order you might be wondering how to remove a charging order from a property, or maybe you just would like to know for future reference.
Here we’ll take a look at what a charging order is and how to remove a charging order from a property.
How To Remove A Charging Order From A Property?
Charging Orders: What are They?
An application for a charging order over a property can be made under the terms of a court order by a judgement creditor who is owed money.
The debt can be secured by a charging order, as defined by The Charging Orders Act of 1979, which means that if the property is sold or refinanced, the debt must be settled in order for the charge to be released.
In some cases, the creditor might approach the court to issue an ‘order for sale’ requesting that the property be sold. If you are being sued by a creditor for a debt, you may already be subject to a county court judgement (CCJ) or another court order.
Say you receive a court order. You must make timely payments to your creditor and pay off the entire balance by the deadline.
If you already have a court order against you, your creditor may apply for another so that it can be secured against your house or another property belonging to you. This is referred to as a ‘charging order’. If you and another person jointly own a property, but the debt is only in your name, the creditor can only obtain a charging order for your ‘interest’ in that property.
A charging order is very serious, and if you don’t pay what you owe, you risk losing your home. Normally, after your creditor obtains a charging order, they can ask the court for another order forcing you to sell your house. This is referred to as an ‘order for sale’.
When A Creditor Applies For A Charging Order
Only when your creditor has already obtained a county court judgement against you can they file for a charging order. From the 1st October 2012, new guidelines regarding when a creditor may request a charging order came into effect. You should confirm the following: the date your creditor submitted the initial CCJ; the date it was issued; and the details about repayment.
A Two-Stage Process
There are always two stages to a charging order application. Your creditor must first obtain an ‘interim order’ before requesting a ‘final order’.
Before the final order is made, the court typically grants an interim charging order to prevent you from selling your property without telling your creditor. If a court issues a final charging order, you will be required to repay your creditor from the proceeds of any sale of your property.
An interim charging order
Usually, a court officer will issue an interim charging order without holding a hearing. A hearing before a judge will only take place if the applicant is up to date with an instalment order that was issued before the 1st October 2012 or the court officer believes there is a good reason the application should be reviewed by a judge.
When your creditor requests an interim charging order, a charge on your property will be registered at the Land Registry. This means that you will be unable to sell your property without your creditor being aware of it.
A final charging order
You have 28 days to object to a final charging order after being issued with an interim charging order. You must notify the court and the creditor (in writing) of your objection.
If you submit an objection, your county court will hold a hearing where a judge will decide whether or not to issue the final charging order. You must send your objection to the court and the creditor at least seven days before the hearing. In the event that no objections are raised, the judge will determine whether the charging order can be made final without a hearing.
The court will review the supporting documentation you provide. The arguments put forward by your creditor will also be considered. After hearing both sides, they will weigh up the evidence and decide whether or not to issue a final charging order.
Preventing a Final Charging Order
If the court issues a final charging order, your creditor may either wait until you sell your home. Or they can ask the court to issue an order for sale if they want you to sell it immediately.
You might be able to persuade the judge to deny your creditor a final charging order. It is important to note, however, that a final charging order will be made in most instances.
Keeping up to date with instalments
Before making a decision, the judge will take into account your payment history. They are more likely to issue a charging order against you if you have fallen behind on payments.
Your property has little to no equity
Your home’s equity is the amount of money you would make if you sold it and paid off your mortgage. If the property is sold with little to no equity, your creditor would not recover their money.
The impact on other residents living with you
You might be able to make the case that other occupants would suffer if you had to sell your house. Consider, for instance, how it would affect any children, elderly people, or individuals with disabilities you share your home with.
If the property is jointly owned, you can claim that selling the property would be unfair to the joint owner if the debt happens to be in your name only.
It would be unfair to other creditors
You could ask any of your other creditors to object to a final charging order since it might be unfair to them. You could claim that a charging order would give the creditor an unfair advantage over other ‘unsecured’ creditors if you are likely to be declared bankrupt. These are other people to whom you owe money but who lack a robust process of recovering it. For instance, unsecured creditors cannot force you to sell your home in order to make repayments.
How To Remove A Charging Order From A Property – Your Options
If you’re trying to remove a charging order from a property, you’ve got a few options to try:
Apply to defer the charging order
You might be able to ask the court to set aside a final charging order if one has been issued. If your creditor wants to pursue further action, they will need to reapply to the court, and the debt will return to the judgement stage. You may have extra time to pay back your debt as a result.
After the final charging order is made, you must submit this application as soon as possible. The N244 court application form is available for download at GOV.UK.
Ask the judge to attach conditions
You might be able to petition the judge to halt your creditor from forcing you to immediately sell your property. This is referred to as ‘attaching conditions’. For instance, your home shouldn’t be sold while your children are still attending school.
Changes to the final charging order
If there are any conditions attached to the charging order, you may be able to ask the court to modify them if your financial situation changes. The charging order can specify, for instance, that you must pay back your creditor in instalments.
An Order for Sale
Your creditor may request an order for sale once they have been granted a final charging order. This is a court order requiring you to sell your property and use the proceeds of the sale to settle your debt from the charging order. They are able to do this even if the amount of money you owe them is small in comparison to the value of your house.
Attending Court
You will be required to appear in court if your creditor decides to request an order for sale. It is essential that you attend the court hearing so you can explain your circumstances.
You can ask the court to ‘suspend’ the order or postpone the selling process. A suspended order indicates that the sale will be put off, perhaps until your children have grown up. Have a legal representative accompany you in court if you can.
When an Order for Sale is Decided
You will typically have 28 days to make a payment on the debt or vacate the property if the order for sale is made and not suspended. Your creditor may request an order forcing you to vacate the property if you fail to pay within 28 days. The legal term for this is ‘warrant of possession’.
Settling a Charging Order
If you pay off the debt specified in the charging order, you can ask the court to ‘discharge’ the order. This essentially means it is no longer in effect. Request a ‘certificate of satisfaction’ from the court, and be sure to enclose proof of payment.
The certificate can be used to change the Register of Judgments, Orders and Fines. As a result, this will make it easier for you to obtain credit. Creditors often notify the Land Registry of the discharge of both interim and final charging orders.
Final Thoughts
Getting a charging order on your property can be very frustrating and sometimes incredibly scary. Therefore knowing your different options and where you stand legally is important.
This article will hopefully give you a better understanding of what’s involved and how to deal with it if it happens to you.
Of course, if you ever find yourself in this situation it’s best to get proper legal advice on the subject.
Learn more about property with helpful articles such as ‘What Is A Deed Of Variation?‘.