SDAS consultancy case study
Our client had a charging order made against their property for council tax arrears. They weren't aware of the court proceedings until much later. Our client is worried that the local authority will force them to sell their home.
Is there anything they could do to prevent that happening? For example, by applying to vary the charging order to include monthly payments?
Advice and options
The court has the power to attach conditions to a charging order for council tax.
As long as your client keeps to the conditions set by the court, the local authority will not be able to apply for an order for the sale of your client's home.
Your client missed the chance to take part in the court proceedings, so they will need advice about how to apply to court to vary an order.
A successful application to vary the charging order has the effect of suspending it on terms, like a suspended possession order.
Regulations that allow charging orders
The Local Government Finance Act 1992 (the Act) allows local authorities to enforce council tax arrears by securing a charging order against your client's home. Paragraph 11 in Schedule 4 of the Act sets out the power to make regulations.
The Council Tax (Administration and Enforcement) Regulations 1992 (the Regulations) contain the details about council tax enforcement, including charging orders.
Regulation 50 permits the local authority to apply to the County Court for a charging order if the debt is over £1,000. It also states that a charging order can only be made against the property to which the debt relates. The property must be owned, or jointly owned, by your client.
The process for objecting to a charging order
Your client had 28 days after the County Court made the interim charging order to object to it being made final.
If the taxpayer objects in time, a hearing date is set for a judge to consider whether to make the charging order. The charging order is made final without a hearing if there is no objection.
Had your client been aware of the interim charging order, they could have filed an objection. That would have allowed them to attend court and dispute the order, or request an order to pay the debt by instalments.
The court's power to set payments
Civil Procedure Rule 73.10A(3)(a) states that at the hearing, the court may 'make a final charging order confirming that the charge imposed by the interim charging order continues, with or without modification'.
Regulation 51(2)(b) states:
'A charging order...may, as the court thinks fit, be made absolutely or subject to conditions as to the time when the charge is to become enforceable or as to other matters.'
So, your client could apply to vary the charging order to include a condition stating something like:
'...provided the defendant [your client] maintains instalments of £x each month, the charge cannot be enforced unless, at the time of enforcement, the whole or part of an instalment which has become due under the conditions remains unpaid.'
The court's power to vary an order
Section 71(2) County Courts Act 1984 allows the court to use its discretion to suspend an order 'on such terms as the court thinks fit' where a debtor is unable to pay a sum recovered against them.
Regulation 51(4) confirms that a court may vary a charging order upon a debtor's application.
We understand this means your client can apply for a suspension or variation of the charging order. Maintaining instalments where an application is successful provides a defence in the event the local authority applies to enforce the charging order via an order for sale.
How your client can apply to vary
Your client must apply on form N244 to the County Court that made the final charging order. The fee to apply is £15 unless your client qualifies for a fee remission.
Your client must also submit a witness statement and a financial statement.
Where to find more information
You can find more information about charging orders and court processes on Shelter Legal.
Charging orders and orders for sale explains how to oppose a charging order.
Witness statements contains the rules for submitting witness evidence to court.