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Alex J.
Alex J., Solicitor
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Experience:  Solicitors 2 years plus PQE
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My cousin owns a property and there is a charge on the property

Resolved Question:

My cousin owns a property and there is a charge on the property and I am going to buy this particular property soon, there is no equity in the property after mortgage has been paid off so what will happen to the charging order that is in place, now this charge is for something that I and cousin did together so I am happy for the charge to move over in my name when I have bought this property, is that possible?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for question and welcome.

My name is ***** ***** I will assist you.

How much is the charging order for?

Will you eventually pay it off?

Kind regards

AJ
Customer: replied 2 years ago.

The charge is for around £4000 the property value is 130,000 and mortgage is 132,000.


I can pay this later on after I have bought the property but I can't pay it at the time of sale.


Thanks


Adeel

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

Technically the charge holder is not obliged to authorise the sale unless he is repaid, however they cannot forcibly halt the sale if there is genuinely no funds in the pot to pay the charge. This is known as the maxim "you cannot fritter away the equity of redemption".

You have a few options really:
1. You could just complete the sale with our without the chargeholder's consent and then when you get the property there is a risk that the charge will still blight the property;
2. You ask the chargeholder to release you and sign a fortebearance deed, whereby you are given time to repay in return for giving them a new charge over the property;
3. You use this as an opportunity to remove the charge once and for all. If it is worth £4k and your cousin is selling the property it may be worth seeing if you can negotiate this figure down to £2k or £3k if you can raise the funds from elsewhere?

Can you tell me anything about how the debt arose?

Kind regards

AJ
Customer: replied 2 years ago.

The debt arose because we were in car accident and we claimed injury against third party and our solicitors took third party insurance to the court but in mean time our solicitor company got shutdown for some reason that we are not aware of and we had to appear in court but as we didn't know about the hearing no one from our side appeared and third party claimed against us for not showing or something along those lines and got the charging order, I and my cousin both were in my car at the time of accident and it was my car so technically it is my debt but because he was the property owner they charged his property at the time. Thanks for your answer but can please clarify what the following mean


"you cannot fritter away the equity of redemption".


there is a risk that the charge will still blight the property;


 


 

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

"you cannot fritter away the equity of redemption". - This phrase means that the charge holder cannot prevent you from selling the property if it is for a fair market price, just on the basis that there wont be enough equity to redeem the property. Basically if there is genuinely not enough equity to pay them, then there is not alot they can do about it.

"there is a risk that the charge will still blight the property;" - This means that if you sell the property without informing this charge holder, the charge will just remain on the property until you get their consent to have it removed.

Kind regards

AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3556
Experience: Solicitors 2 years plus PQE
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