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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 17181
Experience:  I have been practising for 30 years.
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I have a charging order in my house back from 2012 and need

Customer Question

Hi,
JA: Hello. How can I help?
Customer: I have a charging order in my house back from 2012 and need to pay to sale my house. The creditor has added 15% to the accrued interests according to what they said is their T&C. Is this legal? The interests added have been dealt with as a "Loanshark" The interest by law is of the 8% as far as I know.
JA: Have you talked to a lawyer about this? In which country do you live? If different, which country is your legal question related to?
Customer: UK, No I haven't talked to a lawyer.
JA: What steps have you taken so far?
Customer: asking you
JA: Anything else you want the Lawyer to know before I connect you?
Customer: We are just waiting to settle this dispute to exchange and complete the sale of my house. The buyers are now reconsidering as it has been a very significant delay so far in dealing with this Charging Order. Can the creditor's interest set aside and proceed with the sale of my house.?
Submitted: 5 days ago.
Category: Law
Expert:  F E Smith replied 5 days ago.

Welcome to Just Answer.

I will be happy to assist with your question today. I need some time to consider this and compose a response. There is NO need to wait online because you will get an email when I respond. Sometimes it will be minutes, sometimes longer.

I apologise for any unavoidable delay, but rest assured I have not forgotten your question.

for background -

who is the creditor please?

and have you got a copy of the T&C's that you can upload using the paperclip symbol above top left?

Customer: replied 5 days ago.
Dear Mr Smith, Thank you for your reply. Please find attached a copy of the original Charging Order. Best regards, Livier
Expert:  F E Smith replied 5 days ago.

Thank you. ***** is a firm of solicitors.

In the absence of special provision in the contract, a right to contractual interest will end at judgment as a result of the "merger" principle. This means that, post-judgment, the creditor is no longer entitled to contractual interest, but will generally be entitled to statutory interest on the judgment debt.

You are correct that the statutory rate of interest is 8%.

If the terms and conditions that you agreed to with the solicitors that the contractual rate of default interest is 15%, the Claimant is going to have to prove that it wasn’t a penalty and that it was a genuine estimate of what they would suffer from late payment and not a penalty.

As it is at present, if you were to argue that, the court proceedings could easily last 12 months and of course you want to get the house sold.

So the easiest way of dealing with this is to pay the interest and then argue later, taking them to the County Court if necessary for what you paid over and above on the basis that you paid under duress/pressure/mistake.. I don’t think you would get the creditor’s interest set aside to the extent where you could proceed with the house and in any event it still going to take weeks if not months to do that and even then, I am not convinced it would be successful.

I am glad to help.

Hopefully, I have answered your query in a way that is simple and easy to understand.

I would be more than happy to clarify anything else for you. In the meantime, thank you once again for using our services.

I am happy to answer any specific points arising from this.

Please be aware that my answer is based strictly upon the information you have given me.

If you still need any points clarifying, I will be happy to reply because the thread does not close. In fact, it remains open indefinitely.

I am always happy to answer any further questions you have on any new thread in which case, please start your question with, “ For FES only”.

You don’t need to do it on this thread, just a new thread. You have me exclusively on this one.

Thank you.

Best wishes.

FES

Customer: replied 5 days ago.
Dear Mr Smith,Thank you for your message.This firm of solicitors did represent me in a legal matter that I horribly lost. I was very, very disappointed with the result as I thought the final verdict was going to be in my favour. However, as I genuinely was not expected to lose that matter I ended up having a charging order from the other party and from this firm of solicitors SA Law.What I am trying to say is that I won't possibly remember what their interests were when I contracted their services of this solicitor's firm. Does it mean that whatever interests were in the initial contract I signed with them have been transferred directly to the Charging Order? I would be very surprised if that would be the case. The fact that the Charging Order doesn't state that it's assumable that this would only generate what the lawful interest are in this case at the 8%. As far as I know, any other higher interest are not allowed by law as they would be classified as profiteer, jobber, shark, speculator, usurer, market maker. This's international law, am I correct. Can I challenge this on those bases and can I state that their unfair charges are delaying and jeopardising the sale of my house.?
Expert:  F E Smith replied 5 days ago.

You are entitled to see the paperwork that you agreed and signed if that is any different than the statutory rate of interest.

It is a constant source of annoyance that solicitors encourage litigants to pursue litigation without fully explaining the ramifications of paying legal costs both to the successful party solicitors and their own solicitors.

Unfortunately the contractual interest is added to the charge against the property. It wasn’t, you wouldn’t be in this situation because they can only recover the principal debt.

The terms that you use are not the legal ones and legally it is the difference between whether it is a genuine pre-estimate of the loss they suffer as a result of your default or whether it’s a penalty.

Some credit cards do charge over 30% interest.

You can indeed challenge it on all the various bases you mention but it’s not going to jeopardise the sale of your house, it’s going to shoot it down in flames because it could easily be 12 months before it gets to court.

Customer: replied 5 days ago.
Dear Mr Smith, Thank you very much for your reply. I am sorry but I am confused.
This's what they sent to me
This was as set out in the my email dated 4 September 2020 (attached), the breakdown of figures is as follow:Judgement Debt = £32,775.87
Costs = £269.00
Interest = £36,945.09 (as at 4 September 2020)The interest has been calculated by multiplying the calculated daily rate of interest, £11.83 (15% per annum as per our T&C’s), with the number of days since the final charging order, from the 15 February 2012 until 4 September 2020 (3123 days).
_________________________________________________________________________
I have obtained the final charging order (attached). As indicated by the Order, the sums which are payable are as follows:Judgement Debt = £32,775.87
Costs = £269.00
Interest = £36,945.09The interest has been calculated as per paragraph 2 of the Final Charging Order at the Daily rate of £11.83 from 15 February 2012 (3123 days).The redemption figure as of today (4 September 2020) is calculated to be £69,989.98. For accuracy as to the final figure, please let me know what the completion will be taking place as interest at the daily rate of £11.83 will continue to accrue in line with the Final Charging Order until this time.________________________________________________________________________
Once again, this rate of 15% they are charging is not stated in the Charging Order. Will I be wasting my time if I challenge it? I will end up with non-equity left for me. I am 60 years old and I was not expecting these sorts of high rate interests charges.
Expert:  F E Smith replied 5 days ago.

Even at 8%, the interest is still going to be GBP18,000.

The 2 problems you have if you challenge it is that it’s more litigation which could be expensive and it’s going to be a protracted timescale.

I assume that these costs are the costs of your solicitor not the cost of the other sides solicitor because if they are the costs of the other sides solicitor, they are not entitled to charge anything other than the statutory rate

Customer: replied 5 days ago.
Dear Mr Smith, These are the costs of the solicitor's firm that represented me.
Judgement Debt = £32,775.87
Costs = £269.00
Interest = £36,945.09 (as at 4 September 2020)
(As you can see they are not charging £18,000 interests but much more)Please can you clarify if the rate of 15% they are charging is Not stated in the charging order can they do charge whatever was signed by me when I engaged their services?Should this be stated and specified in the Final Charging Order?
Expert:  F E Smith replied 5 days ago.

Yes they can charge contractual interest on the judgement debt of which the charging order is subject but that contractual interest has to be reasonable otherwise it’s not enforceable.

I’m going to make a suggestion to you and that is to work it out 8% and tell them that they can have their money at 8% because you are selling the house and you will pay them that but if they insist on having the full amount of money, then it’s not worth you selling you are going to stay put.

They may prefer to have the principal debt plus the 8% rather than not have the principal debt and not have 15%.

There is the possibility that they could apply for an order for sale to compel you to sell the property so it is something that you need to be aware of.

Customer: replied 5 days ago.
Dear Mr Smith, Many thanks for your amazing help. Just one more final question, please. If there's not any document signed & agreed by me allowing to charge their rate of 15% can I be quite confident that the 8% may be agreed?
Please advise about the message I am about to send to them
Many thanks from the bottom of my heartThank you for your message.Can you please provide me with any paperwork that was agreed and signed if that is any different than the statutory rate of 8% interest? The amount below is the one according to my calculationsJudgement Debt = £32,775.87
Costs = £269.00
Interest = £18,000 (as at 14 October 2020)As you are aware, I am in the process of selling my house and this has to be agreed to exchange and complete the sale.I look forward to hearing from you as a matter of urgency.
Expert:  F E Smith replied 5 days ago.

If there is no document where you agreed to the charging rate of 15% then I am quite confident that they cannot charge anything other than the statutory rate. Ask them for a copy of the terms of business/client care which you signed agreeing to this punitive charge of interest at 15%.

Remember to tell them that you can afford to give them the interest 8% provided they agree but not at 15% and if they wanted at 15%, then you cannot sell the house and the matter will remain outstanding

Customer: replied 5 days ago.
Dear Mr Smith,
Thank you very much for your help. You have no idea how much it meant to me. Best regards, Livier
Expert:  F E Smith replied 5 days ago.

No problem at all. I am really glad to help. Come back to me at any time if anything else needs clarification. Kind regards