£100k debt and charge on house

[9005rpm]

Hi all,

We have agreed with a debtor to a charge on their house for the c.£100k that we are owed. We have said that there is 12 months to pay else we will enforce the charge and ask for an order for sale. My question is how easy will it be to secure an order for sale and get our hands on the cash assuming it is not paid in the next 12 months. The charge would be a second charge, and there is plenty of equity in the house. The house is owned outright by the debtor who lives in the house alone and no-one else has an interest in the house. As well as agreeing the charge now and interest, what else can I do to maximise our chances of getting paid back at the end of the 12 months?

Any guidance appreciated.

Thanks!

[Simpo Two]

Can you force him to sell his house? You can't make people homeless.

Does he have any other assets? Did you consider and rule out the High Court bailiff option?

[Sarnie]

Who is the first charge?

[hajaba123]

Who is the “we” that agreed this charge and what’s the background and jurisdiction? The full story and circumstances will help here

[9005rpm]

Thanks for the answers so far. There are no assets aside from the house, and I understand it is possible to force a sale of the house in much the same way that a mortgage company would if the mortgage is not paid.

First charge is a regular homeowners mortgage.

The “we” are the people that are owed the debt. I won’t go into the detail here as that’s not really appropriate, but it is a simple High Court judgment debt that is to be secured over the debtors house.

[9005rpm]

Thanks. Can you point me to an authority on not being able to enforce the second charge? Not that I don’t believe you, but would like the detail. Thank you.

[Starjet99]

How can the debtor own his house outright, but there is a first charge homeowner mortgage on it?

Second charge doesn't give you the same options as a first charge. Are you sure the house is owned outright?

[9005rpm]

Sorry, you are quite right. When I said the house was owned outright, I meant that there are no co-owners or others with an interest in the house, aside from the mortgage company that has the first charge.

[Simpo Two]

Looking at the practicalities, what will happen if he decides he doesn't want to put his house on the market? What if he lists it at a silly high price to deter buyers?

[Wilmslowboy]

"My question is how easy will it be to secure an order for sale and get our hands on the cash assuming it is not paid in the next 12 months. "


I lent someone a similar amount and put a charge on the house, I was advised that the owner could not sell the house and receive the funds without the loan being settled. However I was told categorically (perhaps wrongly) that I could not force a sale - without a long legal process.

I was also 'warned' getting a contract drawn up that insistsed any such obligation to the borrower, as this could constitute a regulated mortgage - and as I was not FCA accredited - this was illegal, not saying it could not be done but sounded like a minefield.

[hajaba123]

Not having the full story doesn't help but what do the solicitors who set it up on your behalf have to say? (presuming you've done this as an individual), although the use of the word 'we' doesn't explain things well. Would the debtor have needed independent legal advice as part fo this or is it a charging order that a County Court have slapped on the property? The remedies available appear to be very different

If you've provided a second charge loan then you sit behind the 1st mortgagee as Sarnie says. Charging order then you've potentially got a chance. Your OP where you say 'we agreed' sounds to me more like the first scenario. If your loan documents have an end date then maybe you can convince debtor to refinance to repay you

I'm tired, I may have missed an important point

[AyBee]

I think the biggest issue is that this seems to be the only way you'll get your money back at all if the debtor has no other assets and isn't willing/able to set up a payment plan. You may not get it back in 12 months, but is getting it back in 5 years' time better than not getting it back at all?

[67Dino]

Is the Debtor over 55? If so and they are serious about giving you the money, they could use Equity Release to provide you your cash. They may not need to sell.

[sociopath]

If there's enough equity in the property to cover the mortgage and your charge then wouldn't it be easier for the debtor to remortgage and pay you off?

[9005rpm]

Thanks chaps. I don’t think equity release or a bigger mortgage will work, as I think the debtor will struggle to service the larger debt. In reality I think the only option will be a sale to release the funds, hence why I’m interested in the ability to force a sale.

[BlackTails]

When you say the this is a judgment debtor and they are agreeing to a charge, do you mean they are consenting to a charging order under CPR Pt73, or is this a consensual second charge outside that regime?

[sbk1972]

12 months to repay £100K ? Really ? If his / her earnings were at the level where they could save £100K, as well as live, then I doubt they would be in debt. Looks to me that in 12 months you have a sticky legal battle on your hands.

[DocJock]

OP you will need to apply for an 'Order For Sale'

https://england.shelter.org.uk/legal/home_ownershi...