Charging orders

Procedure for getting and opposing court orders that secure debts against the home, their enforcement and effects.

This content applies to England

Overview of charging orders

Debts subject to a court judgment or liability order can be secured by a charging order on the debtor's property. In some cases, the charging order may be enforced by an application for an order for sale. A trustee in the homeowner's bankruptcy can make an application for a charging order as an alternative to forcing the sale of a bankrupt's home.

A charging order is a court order which imposes a charge on the freehold or leasehold property of a debtor in order to secure payment of a debt. The charge is registered with the Land Registry.

If the court grants a charging order the unsecured debt becomes secured. This means the debt is converted from a non-priority debt into a priority debt, because the home is at risk if the debt is not paid. The creditor may use another enforcement method (for example an attachment of earnings) at the same time.

Charging orders may be obtained to secure a number of different debts, for example:

  • County Court judgments for unpaid utilities or credit debts

  • tribunal awards and benefit overpayments that have been registered as a judgment for enforcement purposes

  • liability orders for council tax arrears or unpaid child maintenance

  • Legal Aid Agency capital contribution orders for criminal legal aid

The statutory charge for civil legal aid can be secured on property using a separate process.

The information here does not apply to statutory charge debts.

The court cannot grant a charging order unless the creditor has first obtained a money judgment or a liability order for an unpaid debt.[1]

Applying for a charging order

A creditor who has obtained a money judgment or a liability order can apply for a charging order on Court Form N379 following the procedure in Civil Procedure Rule (CPR) Part 73 and Practice Direction (PD) 73. The application should be made to the County Court money claims centre.[2]

The application may be made without notice. This means the debtor may not receive any notification of the creditor's intention to apply for a charging order. The first notification may come in the form of a restriction notice from the Land Registry.

The creditor's application must contain the following information:[3]

  • the name and address of the judgment debtor

  • details of the judgment or order, including the outstanding balance

  • names and addresses of other creditors (If known)

  • details of the debtor's interest in the property and the title number

If the judgment debt is to be payable by instalments, the application must also contain the following:

  • whether the order was made before 1 October 2012

  • whether there has been a default in payment

The court can make a charging order if the judgment is payable by instalments and the payments are up to date, unless the judgment was made before 1 October 2012.[4]

Interim and final charging orders

The charging order application will initially be dealt with by a court officer without a hearing. If the court is satisfied with the application, it issues an interim charging order on Form N86.

The interim charging order is visible as a restriction on the Land Registry to warn potential purchasers that there may be another party with an interest in the land.

If no objections are filed at this stage the court makes a final charging order.

Applying for reconsideration of the interim charging order

The debtor can apply for a reconsideration within 14 days of the date of service of the interim order. In the County Court money claims centre the deemed date of service is 5 days from the date of posting.[5] The reconsideration request is made in writing, there is no form to complete and no fee is payable. The request is considered without a hearing.

Objecting to the final charging order

The court has discretion whether or not to make a final charging order. However, the burden of proof is on the debtor to show good reasons for not making the order.

If the debtor intends to dispute liability for the debt they should make an application to set aside the underlying judgment debt or liability order. The court may be willing to grant an adjournment of the charging order proceedings if the debtor has a reasonable prospect of success.

Objections

If the debtor (or anyone else who has been served with the interim charging order) wishes to object to the making of a final order, they must file written evidence and serve a copy on the creditor within 28 days of service of the interim order.[6]

If a hearing is required the court transfers the application to the judgment debtor's home court to consider whether to make a final charging order.[7] The court must serve notice of the hearing on the judgment creditor and everyone served with the interim charging order.[8]

Circumstances the court must consider

When considering whether to grant the charging order, the court must consider all relevant circumstances, in particular:[9]

  • the personal circumstances of the debtor, including their household composition, income

  • details and any change of circumstances, and

  • whether any other creditor would be prejudiced by the making of the order

Offers of payment

The debtor must follow the procedure for objecting to the charging order to make an offer of payment. This prevents enforcement by order for sale.

A financial statement should be attached to the written evidence to demonstrate the debtor's ability to make the payments. A court order setting payments also prevents any statutory interest being added to the debt, if applicable.[10]

Divorce/dissolution of civil partnership proceedings

If the debtor is involved in divorce/dissolution of civil partnership proceedings, they should follow the objection procedure. The case could then be transferred to the family court where the charging order application can be heard together with any claim for a property adjustment order.[11]

Alternatively, the proceedings may be adjourned, and a decision made once the family court has determined shares of the beneficial interest in the property.

Additional defences

In addition to the defences considered above, the court may refuse to grant a final charging order where:

  • the size of the debt is small compared with the value of the property[12]

  • the debtor has not broken the terms of the money judgment, or

  • there is evidence before the court that other creditors would be unfairly prejudiced by the making of the order[13]

Court's powers when considering a claim for a charging order

The court can:

  • dismiss the application for a final charging order

  • discharge the interim charging order

  • make an order for costs against either the debtor or the creditor

The court can also adjourn the hearing, for example where the debtor is in a position to repay the debt in a short period, or where the debtor's spouse or civil partner asserts that they have a beneficial interest in the property.

The court may attach conditions to the order to prevent or postpone an order for sale. Conditions can be set for the payment of the debt, or that enforcement must not take place before the youngest child reaches 18.[14]

If the charging order is made final, any fees paid by the creditor are usually recoverable from the debtor by adding them to the judgment debt.

A final charging order is issued on Form N87 and a copy is sent to all parties to the proceedings.

A charging order remains in place until the debt is satisfied, or the order is discharged or enforced by way of an order for sale.

Variation or discharge of a charging order

Usually, it is the debtor who applies to vary the order, but the application can be made by other people with an interest in the property to which the order relates, for example someone with a financial investment or a right of occupation.[15] The application is made to the court that made the charging order.[16]

If the debtor has paid the judgment debt in full, they can make an application for a certificate of satisfaction on form N443. The application should include evidence of payment where it is available.[17] If the creditor objects to the issue of the certificate, a hearing takes place in the debtor's home court.

Registration of a charging order

The creditor is responsible for registering any charging order, whether interim or final, at the Land Registry. Information about the procedures and fees charged are set out in the Land Registry Practice Guide 19.

In most circumstances the charge remains on the register until the debtor sells the property. Some mortgage lenders require charging orders to be satisfied before they agree to a remortgage, and they may provide additional funds for this purpose.

Effect of a final charging order

The charging order imposes a legal or equitable charge on the property. A legal charge is created where the judgment debt and charging order are made in the name of a sole owner, or all joint owners. A legal charge must be paid upon sale of the property.[18] An equitable charge is created where the judgment debt and charging order are made in the name of one joint owner. An equitable charge takes the form of a restriction over the property and the holder of the charge has the right to be notified of any sale.[19]

The creditor must apply to court for an order for sale if they want to force the sale of the property.

Effect of a charging order on jointly owned property

A charging order made against one joint owner of a property has the effect of severing a beneficial joint tenancy between owners. This means that the property is held as tenants in common with a presumption that the shares will be equal unless there is evidence to the contrary.

The effect of this severance means that if one joint owner dies, the deceased's share does not pass automatically to the surviving joint owner on death according to the usual principle of survivorship. Instead, it remains part of the deceased homeowner's estate. This means that the deceased's interest in the property must be administered according to the rules of probate.

More information about probate and intestacy rules is available through the gov.uk probate helpline.

Last updated: 22 March 2021

Footnotes

  • [1]

    s.1 Charging Orders Act 1979.

  • [2]

    CPR 73.3(2).

  • [3]

    CPR PD 73 1.2.

  • [4]

    s.1(6)-(8) Charging Orders Act 1979, as amended by s.93(2) Tribunals, Courts and Enforcement Act 2007; s.3 Tribunals, Courts and Enforcement Act 2007 (Commencement No. 8) Order 2012 SI 2012/1312.

  • [5]

    CPR PD 7E 5.7.

  • [6]

    CPR 73.10.

  • [7]

    CPR 73.4(6).

  • [8]

    CPR 73.4(7).

  • [9]

    s.1(5) Charging Orders Act 1979.

  • [10]

    Article 3, County Court (Interest on Judgment Debts) Order 1991.

  • [11]

    Harman v Glencross (1986) Fam 81, 1 All ER 498.

  • [12]

    Robinson v Bailey [1942] 1 All ER 498.

  • [13]

    Mercantile Credit Co Ltd v Ellis (1987) The Times 2 April, CA.

  • [14]

    Austin-Fell v Austin-Fell and Midland Bank plc [1990] 2 All ER 455.

  • [15]

    s.3(5) Charging Orders Act 1979.

  • [16]

    CPR 73.10B.

  • [17]

    CPR PD 4 Annex A.

  • [18]

    s.32 Land Registration Act 2002.

  • [19]

    s.2(1)(a) Charging Orders Act 1979, s.33(a)(1) Land Registration Act 2002.