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The best protection for a charging order is for it to be noted as a notice in the Register.
This is because when a transfer for valuable consideration or a legal charge is registered, the transferee or chargee will usually only be bound by a charging order that has been noted. In practice, they will not complete the deal without the notice being cancelled, and that will then force the proprietor to pay off the judgment debt.
But, only a charging order that burdens the legal estate can be protected by a notice. The charging order will generally only charge the legal estate if the debtor is the sole legal and beneficial owner of the property. If the debtor’s beneficial interest is held under a trust, then only that interest (rather than the legal estate) will be charged. It follows that most applications to note orders to charge the interest of one of two joint proprietors will be rejected. Applying for a notice is straightforward. Application is made for an agreed notice with form AN1, as well as the appropriate fee and a copy of the order. It is wrong to think that the proprietor’s consent is needed for the entry of an agreed notice. If the LR is satisfied that a valid order exists (which will normally be the case if a certified copy of the order is lodged) then the LR will proceed without the proprietor’s consent. The alternative is to apply for a unilateral notice (form UN1) but this is a less secure form of protection than an agreed notice since the proprietor may apply to cancel a unilateral notice at any time without giving reasons.
The key points, therefore, are (i) you need to be charging the legal estate (in practice, a sole owner), and (ii) you can apply for an agreed notice without the consent of the proprietor.
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April 2009 |
