What Is a Charging Order and Can They Take My House?
A charging order secures a debt against your property. While it does not automatically mean your property will be sold, it is a serious step that needs to be addressed urgently.
Quick Answer
A charging order is a court order that registers a debt against your property, similar to a mortgage. It means the creditor may be able to force a sale to recover the debt, though courts are reluctant to order sale of a family home. A charging order does not automatically mean you will lose your home — the creditor must apply for a separate 'order for sale'.
Full Explanation
A charging order is a court order obtained under the Charging Orders Act 1979 that secures a judgment debt against a property owned by the debtor. Once a charging order is made, the creditor has an interest in the property and the debt must be repaid when the property is sold or remortgaged. The creditor is registered as a secured creditor and ranks after any mortgages already on the property.
The process has two stages. First, the court makes an interim charging order; notice is given to the debtor and any other interested parties (such as a mortgage lender or a joint owner). The court then holds a final hearing to decide whether to make the charging order absolute. At the final hearing, the debtor can raise objections — for example, that the debt is disputed, or that making the order absolute would be harsh given the circumstances. The court has discretion to make, modify, or refuse the order.
Importantly, a charging order alone does not permit the creditor to force the sale of the property. They must bring a separate application for an 'order for sale' under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). Courts are historically reluctant to make orders for sale where the property is the debtor's home, particularly where a spouse or children live there and where the debt is relatively small compared to the property's equity. The court must balance the interests of the creditor against those of the occupants.
If a charging order is registered against your property, you should seek immediate legal advice. Options include: negotiating to pay the debt in instalments (the charging order may be discharged once paid); selling the property voluntarily and paying the debt from the proceeds; or objecting to the final charging order at the court hearing. Legal aid may be available if you are at risk of losing your home.
Legal Basis
- §Charging Orders Act 1979
- §Trusts of Land and Appointment of Trustees Act 1996 (order for sale)
- §Civil Procedure Rules, Part 73
What To Do
Respond to the Interim Charging Order
When you receive notice of an interim charging order, you have the right to attend the final hearing and raise objections. If you have grounds to dispute the original judgment, act immediately. Seek legal advice.
Attend the Final Charging Order Hearing
Attend the final hearing and ask the court to exercise its discretion not to make the order absolute, or to make it subject to conditions (e.g., suspended pending payment by instalments). Bring evidence of your financial circumstances and any dependants.
Propose a Repayment Plan
Many creditors will accept a payment arrangement rather than pursue an order for sale — which is expensive, uncertain, and takes time. Contact the creditor's solicitors and propose a realistic repayment plan.
Apply to Vary or Discharge the Order
Once a charging order has been made absolute, you can apply to vary or discharge it if your circumstances change significantly, or once the debt is repaid. Apply using Form N244.
Resist Any Order for Sale
If the creditor applies for an order for sale, defend the application vigorously. The court will consider the welfare of all occupants, proportionality, and whether the debt justifies the extreme step of forcing sale of a family home. Legal aid may be available.
Important Warnings
Do not ignore the interim charging order notice — failure to respond may result in the order being made absolute without consideration of your circumstances.
A charging order will appear on the Land Registry title for your property and will prevent any remortgage or sale proceeding until the debt is paid.
Joint owners have separate interests — a charging order on one owner's share affects the whole property but protects the other owner's equitable interest.