If a Charging Order has been issued against your property you can sell at any time if there is sufficient equity in the property to pay the charge in full.
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- Sufficient equity in your property to pay the charge
- What if there is insufficient equity?
- What of the charge holder refuses to lift the charge?
- Can you be forced to sell your home?
Sufficient Equity in your property to pay the charge
Your solicitor will arrange for the outstanding balance on the Charging Order debt to be paid from the equity realised by the sale. The creditor holding the charge will then agree for it to be lifted and the sale can be completed. Any equity left over is then transferred to you.
You will only have problems selling your property if there is not sufficient equity to cover the outstanding Charging Order debt. Where this is the case the creditor who holds the charge (the Charge Holder) can effectively block the sale by refusing to lift their Charge.
What if there is insufficient equity to pay the Charge?
If you want to sell your property but there is not sufficient equity to cover the outstanding Charging Order debt then the only way you will be able to sell is to agree with the Charge Holder that they will left their charge before the sale process is completed.
They might agree to do this if you are able to agree a sensible plan to repay their debt after the sale has gone through or offer a lump sum payment that the creditor will accept in full settlement of their debt.
You may think that there will be little hope of making such an agreement. However one of the arguments you can put to the creditor is that if they do not agree to lift their charge you will simply stop paying your mortgage and allow the property to be repossessed by the primary mortgage lender.
The result of this will normally be a forced sale by the mortgage holder which will often generate a far lower sale price than a private sale. As such the charge holder is likely to receive even less of their money. Faced with this argument they may agree to lift their charge.
What if the Charge Holder refuses to lift the Charging Order?
If you want to sell your property but the equity in it is not sufficient to cover the outstanding Charging Order debt and you cannot make an agreement with the Charge Holder to lift their charge then you really only have two options.
The first is to simply put your plans to sell on hold until property prices increase and the equity in the property becomes sufficient to pay the Charge. However if you need to move out of the property more urgently perhaps because you need to relocate or you are simply no longer in a position to be able to pay the mortgage then waiting for house prices to increase is not an option.
In this situation you could consider Voluntary Repossession. This is the process of handing back the keys to the property to the primary mortgage lender and walking away. If your home is repossessed in this way the mortgage lender can force the sale to raise funds to repay their debt without the permission of any other Charge Holder.
After allowing your property to be repossessed the Charging Order debt (and very possibly some of the outstanding mortgage) is likely to remain unpaid. You will still be personally liable to pay these debts. However they will no longer be secured. As such you could write them off by going Bankrupt.
Can you be forced to sell your home if you get a Charging Order?
If a Charging Order has been issued against your property this does not mean that you can then be forced to sell your home. In order to force you to sell the person who holds the charging order would have to apply to the court for an Order of Sale.
If this happened the court will be extremely reluctant to grant the Order particularly if the property is your primary residence. If you can make at least some payment towards the debt and are not ignoring your creditors it is very unlikely that an Order of Sale will be granted.
BMD Tip: If a Charging Order has been issued against a second home or an investment property that you rent out it may be more likely that an Order of Sale would be granted as the sale of the property would not result in you becoming homeless.