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Are we free from freehold woes?
We and our downstairs neighbour each own 50 per cent of the freehold and are all named on the Title Register. She has defaulted on a loan and the county court has given approval to one of her creditors to register a charge against the freehold. We have a short time to object. What further action can this creditor take and how might it affect us? Will our credit rating be affected by our address being linked (via Land Registry) to her debts?
When flat owners club together to buy the freehold, I invariably advise them to do so through a limited company because it can be inconvenient to have to involve your neighbours in transferring the title when you come to sell. Your problem shows another reason why it is best not to have your name on the freehold title.
You cannot properly object to the Land Registry putting a restriction on the title to reflect the court order. However, the creditor should also have served you with the charging order, because you have the right to argue that it should not be made absolute. I think the court would be sympathetic, especially as I imagine the freehold is of limited value and the creditor has presumably also obtained a charge against your co-owner's leasehold interest.
If the creditor did not notify you of the application, then you have the right to apply to set the charging order aside. But even if the court confirms the order or you do not challenge it, I suspect the creditor will do little as far as the freehold title is concerned. The Land Registry restriction will only require that the creditor is notified of the sale. He cannot do anything to prevent it.
I do not think you need be concerned about your credit rating. The credit agencies go by names as well as addresses.
on Fri, Apr 15, 2011