Securing a Judgment by way of a Charging Order

A Charging Order is a popular step to be taken once Judgment has been granted to secure the Judgment against land or property owned solely or jointly by a debtor to protect a Creditor's interest and prevent the land or property being sold or re-mortgaged without payment being made.

An online search of the Land Registry can be carried out to identify ownership of land or property which will also detail any other Charging Orders, mortgages and loans secured against the land or property.  The search will not provide details of the value secured by those items but will provide information for a decision to be made as to whether it would be economic to apply for a Charging Order depending on the amount of items already secured against the land or property.

A Charging Order can also be granted against unregistered land providing ownership of the land or property can be established.

Once ownership has been confirmed an application to the Court can be made and the Court will make an "Interim" Order without notice to the debtor and list the matter for a hearing at which the Interim Order is made "Final".  The Interim Order can be immediately lodged with the Land Registry to provide security until the hearing to prohibit the debtor transferring ownership of the land or property to avoid the Final Order being made.

Once the Final Order is made and registered at the Land Registry the process is complete and the Creditor's interest is protected.  If the Judgment is over £5,000.00 interest will continue to accrue daily until the Judgment is paid in full and interest on a high value Judgment could be substantial.  Unlike a Judgment which is only valid for six years, a Charging Order will stand until paid or removed.

There are certain instances were recovery under a Charging Order may not be possible with the most common being re-possession by a mortgage company.  Also, any party who obtains a Charging Order can apply to the Court for an Order for Sale of the land or property.  If either of these occur recovery under a Charging Order would be dependent upon there being sufficient equity in the land or property.  I will cover an Order for Sale in my next article.

Whilst a Charging Order secures the Judgment debt, it does not directly recover the debt and enforcement action can be taken to do this apart from a Bankruptcy Petition or a Winding up Petition which are not available to a Creditor who has secured their Judgment.

If an individual is made bankrupt by an unsecured Creditor following the granting of a Charging Order the Charging Order is not encompassed within the Bankruptcy Petition and the debtor is still responsible for payment of the debt.  Unfortunately this does not apply when a company is wound up.

Posted on: 09/12/2015

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

Back to News articles
Back to News articles

Sign up to email news

Sign up to receive email updates and regular legal news from Rollits LLP.

Sign up