Securing a Judgment by way of a Charging Order
A Charging Order is a popularstep to be taken once Judgment has been granted to secure theJudgment against land or property owned solely or jointly by adebtor to protect a Creditor's interest and prevent the land orproperty being sold or re-mortgaged without payment beingmade.
An online search of the LandRegistry can be carried out to identify ownership of land orproperty which will also detail any other Charging Orders,mortgages and loans secured against the land or property. Thesearch will not provide details of the value secured by those itemsbut will provide information for a decision to be made as towhether it would be economic to apply for a Charging Orderdepending on the amount of items already secured against the landor property.
A Charging Order can also begranted against unregistered land providing ownership of the landor property can be established.
Once ownership has beenconfirmed an application to the Court can be made and the Courtwill make an "Interim" Order without notice to the debtor and listthe matter for a hearing at which the Interim Order is made"Final". The Interim Order can be immediately lodged with theLand Registry to provide security until the hearing to prohibit thedebtor transferring ownership of the land or property to avoid theFinal Order being made.
Once the Final Order is madeand registered at the Land Registry the process is complete and theCreditor's interest is protected. If the Judgment is over£5,000.00 interest will continue to accrue daily until the Judgmentis paid in full and interest on a high value Judgment could besubstantial. Unlike a Judgment which is only valid for sixyears, a Charging Order will stand until paid orremoved.
There are certain instanceswere recovery under a Charging Order may not be possible with themost common being re-possession by a mortgage company. Also,any party who obtains a Charging Order can apply to the Court foran Order for Sale of the land or property. If either of theseoccur recovery under a Charging Order would be dependent upon therebeing sufficient equity in the land or property. I will coveran Order for Sale in my next article.
Whilst a Charging Ordersecures the Judgment debt, it does not directly recover the debtand enforcement action can be taken to do this apart from aBankruptcy Petition or a Winding up Petition which are notavailable to a Creditor who has secured their Judgment.
If an individual is madebankrupt by an unsecured Creditor following the granting of aCharging Order the Charging Order is not encompassed within theBankruptcy Petition and the debtor is still responsible for paymentof the debt. Unfortunately this does not apply when a companyis wound up.
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.