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Nicola-mod, Moderator
Category: Property Law
Satisfied Customers: 21
Experience:  Moderator
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I'm a retired Chartered Accountant assisting a friend. Her

Customer Question

I'm a retired Chartered Accountant assisting a friend. Her husband had his own trade and developed cancer over a few years, the HMRC got difficult and obtained a court judgement on the jointly owned property, this is a standard K restriction not an equitable charge, husband died, house became hers but as disposition was not for value the restriction is still registered. She now wants to sell the house. My understanding is that all the lawyer needs to do is inform HMRC that the house is being sold, HMRC cannot claim payment or hinder the sale process as she was not the judgement debtor. Am I right in that on the third party sale, as the Creditor HMRC has been informed, the restriction will not be on the deeds now issued to the new owners. So far 2 lawyers have said they have no idea what I'm talking about, they look at it as an equitable charge the same as a mortgage
Submitted: 1 year ago.
Category: Property Law
Expert:  Ash replied 1 year ago.
Hello my name is ***** ***** I will help you with this.Almost. If the property is being sold the charges must follow in the order they appear on the Land Registry. For example mortgage etc discharged first.If there is a balance then it must be paid to HMRC. Then any balance to the debtor.But the charges must be paid in order they appear. If the amount paid does not clear the charges then they are not satisfied and HMRC need to consent to removal.All charges need to be removed prior to exchange and this is usually dealt with by undertakings.Can I clarify anything for you about this today please?Alex
Customer: replied 1 year ago.
Hi I'm not sure how to rate your response as two other lawyers and the HMRC themselves have confirmed that the restriction is not a charge on the title deeds only the judgement debtors beneficiary interest in the sale proceeds and that the debt does not have to be deducted from the sale proceeds of house sale. The standard K restriction only requires the convayancer to advise the HMRC of the sale of the house (for value) and issue a certificate stating that and pass that to the Land Registry along with the normal standard paperwork. The Land Registry will issue new deeds to the buyer and the restriction is automatically cancelled. The HMRC relies on the buying lawyer not being aware of the law and insisting on the restriction being cancelled before the sale goes ahead, but the sale itself cancels the restriction as the new buyers interests overeach the interest of the creditor. The creditor's only protection of their interest is that they are informed that the house has been sold so the judgement debtor now has the means to pay the debt but it's up to the creditor to chase the debtor not the lawyers handling the sale of the house. I was fairly sure about the restriction not being payable but was not sure about the cancellation of the restriction in the new deeds, this has now been confirmed by another lawyer.
Expert:  Nicola-mod replied 1 year ago.
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Customer: replied 1 year ago.
Please cancel question