When is an Order for Sale Necessary?
An order for sale of property is used to enforce a charging order. It is a court order forcing the sale of the debtor’s property affected by the charging order. It allows the creditor (chargeholder) the right to take possession of the property and sell it to pay off the debt owed.
In practice, the courts rarely make orders for sale if the property is the judgment debtor’s home and it is occupied by children or other dependents.
Is it worthwhile applying for an Order for Sale?
Before a creditor makes an application for an order for sale, it is worth investigating whether there is likely to be sufficient equity in the property to pay off the judgment sum if an order is made. If there is insufficient equity, obtaining an order for sale may be a pointless and expensive exercise and any alternative options should be first considered.
You can find out basic information from HM Land Registry by obtaining Office Copies of the legal title to the property which will confirm the price paid for the property (if purchased after December 1994). It will also tell you whether there are any mortgages, charges or other charging orders affecting the property – but not how much is owed.
Office Copies will not, however, state the amount owing under any mortgage or charge so you will be unlikely to determine exactly how much equity is in the property. That said, if the property was purchased some years ago, and any charges have not been registered recently, it may be safe to assume that there will be some equity in the property – particularly in a climate where property prices have risen.
However, if property prices have plummeted since the property was purchased, there is likely to be less equity available. It is possible to find out information as to the prices of similar properties recently sold in the same area from the Land Registry’s website which may give a rough idea of how much the property in question may be worth, and whether there is likely to be any equity available.
How is an Order for Sale obtained?
Applications for an order for sale should be made to the court which made the charging order. The application should be made in accordance with the Civil Procedure Rules. A copy of the charging order should accompany the Claim Form, together with a witness statement setting out the following:
- Identify the charging order and the property to which the application for an order for sale relates
- The amount owed by the judgment debtor when the charging order was made, and the amount owed at the date of issue of the claim
- Confirm, so far as is known, that the judgment debtor owns the property (usually with up-to-date Office Copies from the Land Registry
- Confirm the names and addresses of any other creditors who the judgment creditor knows have prior charges or other security over the property
- An estimate of the price which is likely be obtained on the sale of the property (this will generally involve obtaining a ‘drive by’valuation from an estate agent)
- Details of every person who, to the best of the judgment creditor’s knowledge, is in possession of the property
In the case of residential property, there must also be a statement as to whether a Class F land charge or notice under section 31(10) of the Family Law Act 1996 (or under any other statutory provisions) has been registered. If so, it should be stated on whose behalf the charge or notice has been registered and confirm that the judgment creditor will serve notice on that person.
A court fee must be paid on application. Once issued, the judgment creditor must send the claim form with supporting documents to the debtor, and any other interested party.
How will the court makes its decision?
On an application for an order for sale, the court has an unfettered discretion, whatever the circumstances, to make an order. Various factors will be taken into account, including the size of the debt owed, the likelihood of the debt being satisfied by the proceeds of sale, any property valuation, and evidence of sums owed to charges that have priority.
Note that the judgment creditor must take all reasonable steps to obtain the information set out above before making an application for an order for sale. If a judge takes the view that the judgment creditor has not taken all reasonable steps, an order for sale is unlikely to be granted.