Charging Orders & Tenants in Common

[Seamus]

I've just been reading the information about how Charging Orders are going to be easier to get after a CCJ is awarded and wondered if someone could confirm that if your house is owned or mortgaged jointly, but the debt is only in the name of one person, a charging order cant be awarded, only a Restriction?

Along with this, is anyone clued up on the details of ''Tenants in Common''? I'm pretty sure that a couple can become Tenants in Common with a simple form to the Land Registry declaring this and more importantly you can actually stipulate the shares that you own the house, for example Peter (who has all the debt), owns 10% and Mary (with no debt) owns 90%.

regards
Seamus

[PlanB]

Re: Charging Orders & Tenants in Common

I'm moving this to the Debt and Housing section where Plan B, our Housing Specialist, can take a look.

I had a sinking feeling you'd do that

I may have to look into this a bit more because I thought Tenants In Common was all about protecting yourselves against tax liabilities and not "ownership" of a property as such It's normally an arrangement with regard to Capital Gains Tax and Inheritance Tax avoidance (not the same thing as evasion!). I believe it's a tax planning instrument where the owners tell HMRC that they are not equal 50/50 owners I have no idea how that relates to creditors and charging orders but I'll find out.

I'll do some research and post again when I have the answer

[Never-In-Doubt]

Re: Charging Orders & Tenants in Common

Tenants in Common with regards to CO are not the same are they? Don't you need to add a restriction authorised by a judge, which is the a reason in itself for avoiding abuse or we'd all go and get our debt-free partner to sign up to our house.....

I'm sure you still need to add a restriction, signed by a judge and the example used wouldn't be authorised as the judge would no doubt see it as a system to avoiding the lender securing a charge against the house.

I dunno for sure but that's how I always seen it....

[PlanB]

Re: Charging Orders & Tenants in Common

Seamus. I see you looked into this issue a year ago in another thread

http://forums.all-about-debt.co.uk/s...6&postcount=10

Maybe you could tell me a little more about what has happenend to your situation since then so I can give you a full answer to the question

[PlanB]

Re: Charging Orders & Tenants in Common

Tenants in Common with regards to CO are not the same are they? Don't you need to add a restriction authorised by a judge, which is the a reason in itself for avoiding abuse or we'd all go and get our debt-free partner to sign up to our house.

.

Exactly. Otherwise we would all be making our debt-free partner, child, dog Tenants in Common if this prevented a CO. The legal owner of the property is the person or persons whose name is on the deeds registered at Land Registry regardless of any other deal you may have done seperately to divvy up the proceeds or tax due when sold, or to prevent the local authority from claiming the cost of care home fees (a major reason for Tenants in Common arrangements).

The are all sorts of restrictions you can put on a property at Land Registry such as in divorce proceedings, which prevents one spouse from selling the property even if it is in their sole name. It's the first thing any good divorce lawyer does when you instruct them

I don't see how it would affect a CO application but I will check because I'm curious and you asked the question

[Never-In-Doubt]

Re: Charging Orders & Tenants in Common

I thought that to release the 'share' as such, would result in a whole new mortgage application for the person looking to become sole owner. For example, if we jointly owned a home and I wanted to give my half to her to stop them getting a charge against me; this would result in her having to apply for a new mortgage for the full amount in her sole name - any restriction would be just that, a restriction - it would not stop the lender being able to restrict a charge against a percentage of my share (albeit her share would be safe as would any equity on her share).

if however the mortgage is in a sole name and the mortgage holder was worried of a charge, they cannot give their 'share' away to their spouse as this would also result in the spouse having to apply as a sole mortgagee.

Its complex but the way I see it is that this method would be seen by any judge the same as if any BR proceedings were brought against someone, ie they'd see it was a guise to relinquish any assets and overturn it.

Just my views, based on what I know.

[Seamus]

Re: Charging Orders & Tenants in Common

Hi PlanB, yes I've been looking into this for sometime now, but can find little about the subject, hence the question again on here.
In my case, my wife and I are joint owners and all the credit card debt is in my name. My wife has put more money into the buying of the house than me, she paid the deposit many years ago and also paid the mortgage while I was self employed and going through very lean times, though the mortgage has always come out of my bank account, with her giving me the cash to put in there every month.
I want to find out about this because I believe it would be unfair to put a charging order on a 50-50 basis when she has put more money into buying it.
I must add, I'm not looking at any charging orders yet as I dont have any ccj's and am going the UE route, but you never know what might happen in the future.

S

[Never-In-Doubt]

Re: Charging Orders & Tenants in Common

I know of a recent case, mortgage was in HER sole name even though HE paid £50k deposit and paid every mortgage payment to date from HIS account. SHE got a CCJ and a charge and even though they fought based on the fact HE was technically the majority owner, in all but name, it was thrown out - because the fact was, SHE was the mortgage holder not HIM.

I know about this case in extreme depth, as those that know me will confirm...

[Seamus]

Re: Charging Orders & Tenants in Common

I know of a recent case, mortgage was in HER sole name even though HE paid £50k deposit and paid every mortgage payment to date from HIS account. SHE got a CCJ and a charge and even though they fought based on the fact HE was technically the majority owner, in all but name, it was thrown out - because the fact was, SHE was the mortgage holder not HIM.

I know about this case in extreme depth, as those that know me will confirm...

Exactly. Hence the reason I want to see about the possibility of changing things to represent ownership in a fairer light, dependant on the amounts both of us have paid in.

S

[Never-In-Doubt]

Re: Charging Orders & Tenants in Common

Exactly. Hence the reason I want to see about the possibility of changing things to represent ownership in a fairer light, dependant on the amounts both of us have paid in.

S

Then see my last post(s) - you have no legal recourse to take that action.

Sorry but you just don't. It's a wasted theory, in essence

[SXGuy]

Re: Charging Orders & Tenants in Common

Tennants in Common, as far as i understand it from a Tax point of view, is merely as Plan B has said.

In its most basic sense, its just a way to adopt the rights of a married couple, whilst not techically being married. Think of it as a long term partnership.

[Seamus]

Re: Charging Orders & Tenants in Common

Well, if it can't be done, at the very least all they can do is put on a restriction and as I've read elsewhere, its still actually possible to sell a property with a restriction before any money is paid to the creditor.

S

[PlanB]

Re: Charging Orders & Tenants in Common

Exactly. Hence the reason I want to see about the possibility of changing things to represent ownership in a fairer light, dependant on the amounts both of us have paid in.

S

Ownership isn't about the amount of money you've paid towards the property is about whose name is on the deeds and I don't think Tenants in Common changes anything with COs or Restrictions. When a couple divorce the wife may still be entitled to a 50/50 split of the house even if she's never paid a penny towards the purchase but instead spent 25 years doing the school run and entertaining her husband's boring corporate clients. It's all seen as a contribution Her name needn't be on the deeds.

Surely a Charging Order is what it says. A charge placed on the property which was ordered by the court and logged with Land Registry. I presume a Restriction is also ordered by the court against an asset with no regard to who paid the mortgage or the deposit (or did the school run). The only difference is that the creditor can't touch the non-debtor's interest - which is why your Tenants in Common question is interesting

There are plenty of other charges which can be placed on your property without the court ordering them such as the mortgage lender (no court order for that), and Legal Aid statutory charge (no order for that).

I see charges as markers at LR so when the property is sold the people owed their money can claim it. They are added in chronological order so that when a property is sold those with any charge get paid from the proceeds in the order of which they were placed, so if there isn't enough money left the ones with a 3rd or 4th charge may get nothing. Perhaps this is one reason why a defence to a CO is that it would be unfair to your other creditors who would be further down the queue for payout.

[PlanB]

Re: Charging Orders & Tenants in Common

Tennants in Common, as far as i understand it from a Tax point of view, is merely as Plan B has said.

In its most basic sense, its just a way to adopt the rights of a married couple, whilst not techically being married. Think of it as a long term partnership.

You often get Tenants in Common when a property is bought by siblings or friends. It's not unusual at the moment for four people to join together to purchase a property in order to qualify for a bigger mortgage which their own income wouldn't sustain as individuals. It then becomes a business deal and the % interest (not ownership because they all own that collectively) is identified at the start, and sensibly an exist strategy is established too - such as if one wants to sell up they have to offer their share to the others first and not sell it to another party.

Goodness knows what a DJ would make of that if asked for a CO on a property owned by six unconnected people where only one hasn't paid their MBNA bill

[PlanB]

Re: Charging Orders & Tenants in Common

Well, if it can't be done, at the very least all they can do is put on a restriction and as I've read elsewhere, its still actually possible to sell a property with a restriction before any money is paid to the creditor.

S

Well Yes and No. We've had quite a bit of debate on the site about whether that is true or not The law is clear but solicitors aren't willing to co-operate in practice seems to be the verdict

Perhaps I'll start a seperate thread on the subject so as not to confuse the Tenants In Common issue on this thread