Debt recovery – the problem of enforcement where the debtor co-owns a property

by Kate Jack

Where a creditor (who is owed money) has a county court judgment (CCJ) against a debtor (who owes money), obtaining a charge (like a mortgage) against the debtor’s property is often an attractive method of enforcement. Once the creditor has a charge over the debtor’s property, the creditor can force the sale of that property and recover their debts from the proceeds of the sale (assuming there is sufficient equity in the property). 

Where the debtor co-owns a property with others (who do not owe the creditor money), the situation is not so straightforward. Although it is possible to obtain a charging order (once the creditor has a CCJ against the debtor), it is not possible to register it as a charge with the land registry. This means the property can be sold without the creditor having to be repaid. A creditor with a CCJ can still apply to a court for an “order for sale” of the debtor’s property. However, it is likely that the court will be less inclined to grant it where the debt is only owed by one of the co-owners. 

It is also not possible to enter a formal “notice” against the title of such a co-owned property so the best that can be hoped for is a “restriction” registered against the title  which requires a purchaser to give notice of the sale to the creditor. Unfortunately this will still not mean that the creditor is automatically repaid. 

Given these problems, it may be worthwhile considering other methods of enforcement where the debtor is not the sole owner of their property.

For assistance with debt recovery and enforcement matters please contact Eric Holt on 01202 673011.