Charging Orders - A useful guide
If you have obtained a judgment there are a number of ways in which you might want to secure or enforce it. One possibility is by way of a charging order. This article sets out the basic facts about charging orders and how they can be a useful tool in enforcing a judgment.
What is a charging order?
A charging order usually secures a judgment over a debtor's interest in land, although it is possible to secure a charging order over other assets such as government stock or funds in court.
The stages to obtaining a charging order can be a little slow but a charging order can provide effective future security. There are three main stages in applying for a charging order;
- The initial application to court for an interim charging order – this is a paper application;
- A hearing to decide whether a final charging order should be granted;
- The possible enforcement of the charging order by sale over the assets to which your charging order relates.
Is obtaining a charging order the right process for us to follow?
If the judgment debtor has a property with equity in this may be an ideal way of enforcing your judgment debt. In addition interest on the charging order will continue to accrue from the date of judgment to the final return of monies. Points to consider include:
- Is your judgment debt immediately enforceable?
- Who owns or lives in the property?
- Will any other party object to a charging order being granted?
Enforcing your charging order and obtaining an order for sale
In order to enforce your charging order the amount of the debt due and owing should be at least £1k. The court will take into account a number of factors when considering whether to grant an order for sale including:-
- Is it likely that the judgment debt will ever be satisfied?
- What is the value of the asset to be sold?
- Who lives in the property?
- The conduct of the judgment debtor
- The size of the judgment debt
- A charging order will rank lower than a prior charge on the property register. If there are a number of charges already on the property in question then it may be that there is no equity left to satisfy your charging order.
- A charging order does not necessarily mean you will be able to realise funds to satisfy that debt, it only provides in the first instance for some limited security
- A charging order does not necessarily prevent someone from selling the property over which you have a charging order. If the sale is by a mortgagee in possession there may not be sufficient equity to pay all of the charges registered against the property in full.
Posted on 02/03/2015 by Ortolan