Charging Orders & Tenants in Common

[PlanB]

Re: Charging Orders & Tenants in Common

Seamus, why not read this thread by one of our members who has recently been dealing with creditors following the death of his wife - although there were no COs involved in this instance:

http://forums.all-about-debt.co.uk/s...ead.php?t=6806

[PlanB]

Re: Charging Orders & Tenants in Common

Regarding charging orders, what happens in the case where there are joint owners and one person with debt who has a restriction against his interest but then dies before the debt is paid off?
Normally, in the case of joint ownership the deceased's half automatically goes to the survivor, does this mean that the restriction is gone and they have to look for payment from the deceased's estate?

That would depend on who the deceased left their interest to in their Will wouldn't it? It's not automatically their other half who inherits or even the next of kin if the Will says different. It could be left to Battersea Dogs Home or a Discretionary Trust for any children (unless they die intestate without a Will). It's my understanding that all debts can be claimed from the deceased's estate at probate time with or without a CO (unless the sum left by the deceased is too low for the probate threshold) prior to the distribution of any money.

Messing with the legal interest balance in a property to minimise tax is one thing, but rearranging your finances to escape creditors is different because the downside can outweigh any advantages.

Any transfer of interest can attract Stamp Duty at the time of the 'gift' which may be greater than the credit card debt. Once gifted it can't be retrieved unless the other party wants to gift it back (with Stamp Duty on transfer again) which could be tricky in a divorce situation or a subsequent falling out with a family member. Also you have to consider the negative impact on inheritance tax when you alter the legal interest in a property. You don't want to believe all you read on other debt forums.

But you're asking legal questions which should be put to a qualified lawyer because these aren't housing issues they're divorce, death and tax planning issues which I don't think we can deal with comprehensively in this thread.

[Seamus]

Re: Charging Orders & Tenants in Common

Regarding charging orders, what happens in the case where there are joint owners and one person with debt who has a restriction against his interest but then dies before the debt is paid off?
Normally, in the case of joint ownership the deceased's half automatically goes to the survivor, does this mean that the restriction is gone and they have to look for payment from the deceased's estate?

S

[Seamus]

Re: Charging Orders & Tenants in Common

By someone you mean Plan B. I'm not going to comment on an unsubstantiated post on another debt website since none of the facts surrounding the circumstances of the poster's transaction are present. There are too many variables with property sales to be able to say that what may have worked for one person would definitely work for all.

That's not sour grapes it's a statement based on my experience as a Housing Advisor working with top barristers who have taught me the difference between giving hope and giving false hope. However I'm flattered that you should have taken the time to try to prove me wrong.

It was said in a light hearted jokey way, hence the emoticon and I wasnt trying to ''prove you wrong'', I'm doing lots of searching on this subject and came across that thread on my searches. Sorry if I offended you, it wasn't the intention.

S

[PlanB]

Re: Charging Orders & Tenants in Common

Someone said they were going to eat their hat if anyone could find someone who had been successful selling a house with a restriction and getting away with paying the creditor anything before the sale, so...... I found one!
Look at post number 14
Charging Orders

By someone you mean Plan B. I'm not going to comment on an unsubstantiated post on another debt website since none of the facts surrounding the circumstances of the poster's transaction are present. There are too many variables with property sales to be able to say that what may have worked for one person would definitely work for all.

That's not sour grapes it's a statement based on my experience as a Housing Advisor working with top barristers who have taught me the difference between giving hope and giving false hope. However I'm flattered that you should have taken the time to try to prove me wrong.

[kilasuit]

Re: Charging Orders & Tenants in Common

Someone said they were going to eat their hat if anyone could find someone who had been successful selling a house with a restriction and getting away with paying the creditor anything before the sale, so...... I found one!
Look at post number 14
Charging Orders

the difference in that being that you are unable to specifiy the % of each owner to the deeds.

Could you then in theory get say your wife to get a charging order (or 2 or 3) like if you were divorced etc

[Seamus]

Re: Charging Orders & Tenants in Common

Someone said they were going to eat their hat if anyone could find someone who had been successful selling a house with a restriction and getting away with paying the creditor anything before the sale, so...... I found one!
Look at post number 14
Charging Orders

[PriorityOne]

Re: Charging Orders & Tenants in Common

When people marry the wife or husband can add the other person to the deeds as joint owner. Or children can be added to the deeds as joint owners when a parent becomes old so that when they die the son/daughter remain the owner (this will also have positive inheritance tax advantages). But in most cases you will have to pay Stamp Duty on the gifted share at the time of the transfer.

Very useful to know.... as I only have one child.

When I was researching this sometime ago I came across a bankruptcy case where the husband (who was being made bankrupt) and wife had become tenants in common by informing the Land Registry and completing a form and had split it in the shares of 90% to the wife and 10% to the husband. It went in favour of the man being made bankrupt and he was only liable for the 10% of the house. I unfortunately never kept the link and cant find it now, but if this happened with bankruptcy I still believe there is some mileage in this regarding charging orders.

S

Well worth looking into and taking a chance on. My brother was involved in something similar many years ago and in order to avoid losing the house (his name only).... he transferred the whole lot to his girlfriend and in doing so, the authorities couldn't touch it. Some time later, they got married but at the time, I remember thinking that they must have had a great deal of trust to do that.... although in reality, his back was against the wall and he had nothing to lose.

If you feel that you also have nothing to lose, then go for it and see how it pans out. I have done many things in my life based upon that theory.....

[Seamus]

Re: Charging Orders & Tenants in Common

When I was researching this sometime ago I came across a bankruptcy case where the husband (who was being made bankrupt) and wife had become tenants in common by informing the Land Registry and completing a form and had split it in the shares of 90% to the wife and 10% to the husband. It went in favour of the man being made bankrupt and he was only liable for the 10% of the house. I unfortunately never kept the link and cant find it now, but if this happened with bankruptcy I still believe there is some mileage in this regarding charging orders.

S

[PlanB]

Re: Charging Orders & Tenants in Common

There are successes on the Moneysavingsexpert forum, there is a very long thread on the subject, but sadly nothing about tenancy in common (still scouring the internet for that one)

S

Can you PM me the link to that thread. I don't want to post any link on here from another source until it's been vetted. Many thanks.

There is probably nothing about Tenants In Common and charging orders on other forums because it's not relevant I'll keep digging, but I suspect it's similar to writing a Will. Just because I've left my property to my daughter when I die it doesn't mean that any outstanding charges on it won't need to be paid before she gets the leftovers. Tenants In Common like Wills are private deals between the parties involved which I doubt will impact on the payment of any legal charges.

[PlanB]

Re: Charging Orders & Tenants in Common

As far as I'm aware, you can't buy a property jointly and then morph into tenants in common somewhere down the track; it either has to be at the beginning or not at all.

You can change the ownership of a property by changing the name on the deeds at Land Registry any time. This is a completely different thing to Tenants in Common which is a private agreement for tax purposes (mostly). People who club together to buy property are all named on the deeds as owners (known as "proprietors" in LR vocabulary) not Tenants in Common (which they may be too but for different reasons).

When people marry the wife or husband can add the other person to the deeds as joint owner. Or children can be added to the deeds as joint owners when a parent becomes old so that when they die the son/daughter remain the owner (this will also have positive inheritance tax advantages). But in most cases you will have to pay Stamp Duty on the gifted share at the time of the transfer.

But you cannot have a sole mortgage on a jointly owned property because it will restrict the security available to the lender. If you default on the mortgage then the lender won't be able to take possession. Joint owners can have joint mortgages.

[PlanB]

Re: Charging Orders & Tenants in Common

Actually, you can ---> Joint property ownership: the two kinds explained (Public Guide 18) - Land Registry - UK Government Department
Joint property ownership: the two kinds explained (Public Guide 18) - Land Registry - UK Government Department

My parents did this retrospectively to avoid unfair care home fees

[PriorityOne]

Re: Charging Orders & Tenants in Common

Actually, you can ---> Joint property ownership: the two kinds explained (Public Guide 18) - Land Registry - UK Government Department
Joint property ownership: the two kinds explained (Public Guide 18) - Land Registry - UK Government Department

Yep.... you're right. Had my blinkers on there for a moment and was thinking of a couple buying jointly and then deciding they wanted more of a "tenants in common" type of division of assets.....

Life can change all the time, I s'pose....

[PriorityOne]

Re: Charging Orders & Tenants in Common

Many people bought properties as "Tenants in Common" in the late '80s when house prices went through the roof; meaning that several people could club together and get on the property ladder that way. Problems arose when they wanted to sell their share however, as the others either had to buy the person out or find another buyer for the part that was being sold.

As far as I'm aware, you can't buy a property jointly and then morph into tenants in common somewhere down the track; it either has to be at the beginning or not at all.

[PlanB]

Re: Charging Orders & Tenants in Common

planB - agreed. The way around this is YOU offer to pay their legal costs and use the same firm/different conveyancer.

Obviously a £1k legal bill is better than say a £10k CO

Or you offer the buyer cash upon completion to appoint a solicitor you nominate - a bribe if you will

That makes much more sense. I call that being proactive not bribery