Guidance

Practice guide 76: charging orders

Updated 28 May 2024

Applies to England and Wales

Please note that HM Land Registry’s practice guides are aimed primarily at solicitors and other conveyancers. They often deal with complex matters and use legal terms.

1. Introduction

A charge imposed by a charging order takes effect as an equitable charge (section 3(4) of the Charging Orders Act 1979) either:

• on the legal estate
• on a beneficial interest under a trust of land

A charging order that charges the legal estate may be protected by the entry of a notice (section 32 of the Land Registration Act 2002). A charging order that charges a beneficial interest under a trust of land cannot be protected by way of notice but can be protected by the entry of a restriction (section 33(a)(i) of the Land Registration Act 2002 precludes the entry of a notice in respect of an interest under a trust of land). The entry of a notice will not guarantee the validity of the interest but will, as far as the interest is valid, protect its priority for the purpose of section 29 of the Land Registration Act 2002. The interim and final charging order may each be protected by the entry of a notice or restriction, as appropriate.

However, a person with the benefit of a charging order over a beneficial interest in registered land held under a trust of land may apply for the entry of a restriction in standard Form K (section 42(1)(c) of the Land Registration Act 2002 and rule 93(k) of the Land Registration Rules 2003)).

Determining whether or not a charging order imposed a charge on the legal estate may be complicated, as explained in the following detailed guidance. A number of factors need to be considered, including the form of the order made, whether the property is held in trust for persons other than for the registered proprietor(s) and whether the beneficial interests of joint proprietors are encumbered. The register will often not give a conclusive answer to these questions, but some entries, particularly restrictions, will give an indication. In most cases the position will be as illustrated in the 2 algorithms below, although any additional evidence available must also be considered.

Algorithm 1: sole proprietor registered

Algorithm 2: joint proprietors registered

For more information about the effect of an agreed or unilateral notice or a restriction and how to apply for their entry or their removal see practice guide 19: notices, restrictions and the protection of third party interests in the register. An application for an agreed or unilateral notice can be made electronically by HM Land Registry customers who have a network access agreement. Because applications to enter a restriction can only be made electronically where the applicant is, or has the consent of, the registered proprietor or a person entitled to be registered as proprietor, it will be unusual for an application for entry of a Form K restriction to be made electronically.

2. When a charging order imposes a charge on the legal estate

It is worth quoting the relevant words of section 2 of the Charging Orders Act 1979:

“2 Property which may be charged
(1) …………. a charge may be imposed by a charging order only on—
(a) any interest held by the debtor beneficially—
(i) in any asset of a kind mentioned in subsection(2) below, or
(ii) under any trust; or
(b) any interest held by a person as trustee of a trust (“the trust”), if the interest is in such an asset or is an interest under another trust and—
(i) the judgment or order in respect of which a charge is to be imposed was made against that person as trustee of the trust, or
(ii) the whole beneficial interest under the trust is held by the debtor unencumbered and for his own benefit, or
(iii) in a case where there are two or more debtors all of whom are liable to the creditor for the same debt, they together hold the whole beneficial interest under the trust unencumbered and for their own benefit.
(2) The assets referred to in subsection (1) above are—
(a) land,……………..”

Where there are joint proprietors of land, they will always be holding the legal estate as trustees of a trust of land, of which they may, or may not, also be the beneficiaries. It is also possible, though less common, for a sole proprietor to be a trustee.

2.1 Where land is held by a sole proprietor who is not a trustee

A charging order made against a sole proprietor who is not a trustee will charge the legal estate (section 2(1)(a)(i) of the Charging Orders Act 1979).

2.2 Where land is held by a trustee or trustees

In this situation a charging order cannot be made under section 2(1)(a)(i) of the Charging Orders Act 1979 (Clark v Chief Land Registrar [1993] 2 All ER 936 at 943). Rather the order may charge the beneficial interest of the debtor under section 2(1)(a)(ii) of the Charging Orders Act 1979, in which case a notice cannot be entered, or it may charge the legal estate held by the trustee(s) under section 2(1)(b) of the Charging Orders Act 1979.

Section 2(1)(b) provides for 3 situations in which a charging order against land held by a trustee or trustees will take effect as a charge on the legal estate.

• Where the judgment or order in respect of which a charge is to be imposed was made against the registered proprietor(s) as trustee(s) of the trust (section 2(1)(b)(i) of the Charging Orders Act 1979). (It is unusual for a charging order to be made against proprietor(s) “as trustee(s)”. The judgment that the charging order enforces will rarely expressly state that the judgment is against the debtors as trustees An applicant who wishes to rely on section 2(1)(b)(i) for entry of a notice should include sufficient supporting evidence to demonstrate that the judgment was made against the proprietor(s) as trustee(s).)

• Where the charging order is against a single debtor who is the sole beneficial owner under a trust and whose beneficial interest is unencumbered (section 2(1)(b)(ii) of the Charging Orders Act 1979). (An applicant for a notice who wishes to rely on section 2(1)(b)(ii) should provide additional supporting evidence that (a) the registered proprietor(s) holds on trust for the debtor, (b) the debtor is the sole beneficiary of the trust and (c) the debtor’s beneficial interest is unencumbered.)

• Where the charging order is against 2 or more debtors all of whom are liable to the creditor for the same debt and who together hold the whole beneficial interest under the trust unencumbered for their own benefit (section 2(1)(b)(iii) of the Charging Orders Act 1979). (Section 2(1)(b)(iii) applies to cases where land is held by co-owners who hold the land for their own benefit as well as cases where land is held on trust for 2 or more beneficiaries and a charging order has been made against those beneficiaries Where the debtors are not the registered proprietor(s) evidence should be supplied to show that (a) the registered proprietor(s) holds on trust for the debtors, (b) the debtors are the only beneficial owners and (c) that their interests are unencumbered.)

Note that an existing charge of the legal estate will not prevent a charging order taking effect as a charge of the legal estate as the requirement of section 2(1)(b)(ii) and (iii) is that the beneficial interest rather than the legal estate be unencumbered.

3. Applications for entry of a notice

An application to enter a notice in respect of a charging order that does not appear to charge the legal estate will be rejected. In deciding whether or not this is the case the registrar will consider:

• against whom the order has been made
• the capacity in which the registered proprietors appear to hold the land, as indicated by any restrictions and other register entries (For example, the registrar will also take into account any cautions against dealings entered under the Land Registration Act 1925. Consideration will be given to the interest claimed in the original application to enter the caution. Where the claimed interest is an interest under a trust the registrar will proceed as if that interest had been protected by a restriction.)
• any supporting evidence lodged with the application

The action the registrar will take if there is a restriction that is inconclusive as to whether there are interests that prevent the charging order creating a charge on the legal estate will depend on whether the application is for an agreed or a unilateral notice and is explained in the following sections.

We will need only certified copies of deeds or documents you send to us with HM Land Registry applications. Once we have made a scanned copy of the documents you send to us, they will be destroyed. This applies to both originals and certified copies.

3.1 Effect of existing restrictions

Subject to any other relevant register entries, if no restrictions are entered in the register and the charging order has been made against a sole registered proprietor, or all the registered proprietors, the registrar will usually proceed on the basis that the order charges the legal estate under section 2(1)(a)(i) or section 2(1)(b)(iii) of the Charging Orders Act 1979.

Various existing restrictions may indicate that the registered estate is or may be held in trust for a third party or that the debtor’s beneficial interest may be encumbered. But HM Land Registry is unlikely to be able to conclusively determine on an application to enter a notice to protect a charging order whether or not this is the case. This is because, even in the case of a restriction that strongly indicates that the land is held in trust for a third party, the trust may have come to an end or otherwise changed since the restriction was entered. Equally, the absence of any restriction in the register is not conclusive proof that the land is not held in trust for a third party – for example, it may simply be that the registered proprietor has failed to apply for the entry of a restriction when under an obligation to do so (such an obligation to apply for the entry of a restriction may have arisen under rule 94 of the Land Registration Rules 2003).

However, where a restriction provides a strong indication that the registered estate is or may be held on trust for a third party or that the debtor’s beneficial interest may be encumbered, an application for entry of a notice, either agreed or unilateral, will be rejected, unless evidence is lodged to the contrary, or to show that the order charges the legal estate by virtue of section 2(1)(b)(i) of the Charging Orders Act 1979. This is because in this situation the charging order cannot be a charge on the legal estate under sections 2(1)(a)(i) or 2(1)(b)(iii) of the Charging Orders Act 1979. If the restriction provides a more ambiguous indication, an application for entry of a unilateral notice will be accepted, but an application for entry of an agreed notice may be cancelled in the absence of further evidence to show that the charging order does charge the legal estate.

3.1.1 Sole proprietor

3.1.1.1 Examples of restrictions that will, in the absence of additional evidence, usually be taken as providing a strong indication that the land may held on trust for a third party

• restriction in standard Form A
• restriction in standard Form B
• restriction in standard Form C
• restriction in standard Form Q
• restriction in standard Form II

3.1.1.2 Examples of restrictions that will usually be treated as more ambiguous

• restriction in standard Form K

In the absence of any other restriction to indicate that the land may be held on trust, a restriction in standard Form K made in respect of an earlier charging order relating to a different debt, charging the interest of the sole proprietor in the property, will be taken as providing a more ambiguous indication. It may be that the creditor who applied for the earlier charging order knew that the sole proprietor held the land on trust for a third party and that the charging order did not therefore create a charge on the legal estate. Alternatively, it may be that the creditor applied for the restriction simply because they failed to appreciate that the charging order did charge the legal estate and could be protected by the entry of a notice. It should also be noted that the entry of a restriction in Form K in respect of an interim charging order will not prevent the entry of a notice in respect of the final charging order relating to the same debt, provided that the order is made against the sole proprietor and there is nothing else that indicates that the land may be held on trust for a third party.

3.1.2 Joint proprietors

3.1.2.1 Examples of restrictions that will, in the absence of additional evidence, usually be taken as providing a strong indication that the land may be held on trust for a third party or that the beneficial interests may be encumbered

• restriction in standard Form B
• restriction in standard Form C
• restriction in standard Form K

If entered in respect of an earlier charging order relating to a different debt where the order was made against only one of two or more joint proprietors. In contrast, where the earlier charging order was made against all of the joint proprietors, the entry of a restriction in Form K in respect of that order will be taken as providing a more ambiguous indication. It may be that the creditor who applied for the entry of the restriction knew that the joint proprietors held the land on trust for a third party or that the beneficial interests were encumbered, and that the charging order did not therefore create a charge on the legal estate. Alternatively, it may be that the creditor applied for the restriction simply because they failed to appreciate that the order did impose a charge on the legal estate and could be protected by the entry of a notice. It should also be noted that the entry of a restriction in Form K in respect of an interim charging order will not prevent the entry of a notice in respect of the final charging order relating to the same debt, provided that the order has been made against all the joint proprietors and there is nothing else that indicates or suggests that the land may be held on trust for a third party or that the beneficial interests may be encumbered.

• restriction in standard Form Q
• restriction in standard Form II

3.1.2.2 Examples of restrictions that will usually be treated as more ambiguous

• restriction in standard Form A

In the case of joint proprietors, a restriction in standard Form A may reflect that the registered proprietors are holding on trust for a third party. But it may simply signify that they hold the entire beneficial interest for themselves as tenants in common rather than as joint tenants in equity, or that no evidence was supplied to the registrar as to the beneficial interests.

It follows that when deciding how to protect a charging order in the register consideration must be given to entries in the register that may indicate that the charging order did not impose a charge on the legal estate and to the type of application that should therefore be made to protect the charging order.

3.2 Deciding between application for an agreed or unilateral notice

Neither an agreed notice nor a unilateral notice can be entered if the interest does not affect the legal estate. When entering an agreed notice the registrar must additionally be satisfied as to the validity of the applicant’s claim, unless the application is made by or with the consent of the registered proprietor or a person entitled to be registered as proprietor (section 34(3)(c) of the Land Registration Act 2002). This guide assumes that an application by a creditor is made without the proprietor’s consent. In the context of an application to protect a charging order by way of an agreed notice, the consent of the proprietor is not required in any event, because they are a party to the court proceedings in which the order was made, so the registrar can accept the charging order as sufficient evidence of the validity of the applicant creditor’s interest. However, the registrar must still be satisfied that the charging order charges the legal estate. Accordingly:

• where a restriction provides a strong indication that the property may be held on trust for a third party or that the beneficial interest may be encumbered, the registrar will reject the application regardless of whether the entry is for an agreed notice or a unilateral notice, unless additional evidence accompanies the application to show that the charging order did impose a charge on the legal estate
• where a restriction in the register suggests, but does not provide a strong indication, that the property may be held in trust for a third party or that the beneficial interest may be encumbered, then, unless additional evidence is provided that the charging order did impose a charge on the legal estate, the registrar may approve an application to enter a unilateral notice in respect of that charging order but will cancel an application to enter an agreed notice

If a unilateral notice is applied for and entered in the register, the registered proprietor has a statutory right, by virtue of section 36 of the Land Registration Act 2002, to apply at any time to cancel the notice, without giving a reason for doing so. For more information about this, see practice guide 19: notices, restrictions and the protection of third party interests in the register.

Section 77(1)(b) of the Land Registration Act 2002 imposes a duty on an applicant not to exercise the right to apply for the entry of a notice without reasonable cause. An applicant should not therefore apply for the entry of a notice unless they reasonably believe that the charging order does impose a charge on the legal estate.

3.3 Where the debtor is not the registered proprietor

Where the debtor against whom the charging order has been made is not the registered proprietor and it is claimed that a charge of the legal estate has arisen under sections 2(1)(b)(ii) or (iii) of the Charging Orders Act 1979, an application for entry of a notice in respect of the charging order should be accompanied by the evidence referred to in Where land is held by a trustee or trustees. The registrar will take into account any existing register entries, such as restrictions, in considering whether or not the evidence adequately shows that the debtor(s) is or are the only beneficiary or beneficiaries of the trust on which the land is held and whether or not the beneficial interest is unencumbered. Thus if there is an existing restriction in the register which refers to the beneficial interest of someone other than the debtor, the evidence lodged should account for that beneficial interest.

3.4 Information required to accompany an application for the entry of a notice

An application for an agreed notice should be accompanied by a certified copy of the charging order. An application for a unilateral notice does not need to be accompanied by a copy of the charging order but if it does not, you must include particulars of the court (or that of the County Court Money Claims Centre), the date of the order, the full court reference and the parties in panel 11 or 12 of form UN1. Where a copy of the charging order is lodged it will be held by HM Land Registry as a public document. Practice guide 19: notices, restrictions and the protection of third party interests in the register contains general information about how to apply for entry of a notice.

4. Application for entry of a Form K restriction

An application using form RX1 for entry of a Form K restriction should be accompanied by a certified copy of the charging order. This will be retained by HM Land Registry as a public document. Practice guide 19: notices, restrictions and the protection of third party interests in the register contains general information about how to apply for entry of a restriction.

A person entitled to the benefit of a charging order relating to an interest under a trust is regarded as having a right or claim in relation to the trust property (section 42(4) of the Land Registration Act 2002). Rule 93(k) of the Land Registration Rules 2003 confirms that such a person has sufficient interest to apply under section 43(1)(c) of the Land Registration Act 2002 for entry of a restriction in Form K. Application should not be made to protect, by restriction, the priority of a charging order which is or could be the subject of a notice.

We will automatically cancel the Form K restriction once it has been complied with on registering a transfer of the registered estate for valuable consideration (except where the transfer is to one, or more, of the existing proprietors). We will assume that if the debt secured by the charging order has not been paid, your client’s interest will have come to an end with the postponement of the charged beneficial interest under section 29 of the Land Registration Act 2002.

If application is made in respect of a charging order that charges the interest of a person who is not one of the registered proprietors, evidence should be lodged that the person has a beneficial interest in the property.

Where separate orders have been made against joint registered proprietors in the same proceedings, the orders take effect as a charge on the beneficial interest of the individual proprietors rather than collectively amounting to a single charge over the legal estate. In this situation application may be made for entry of separate Form K restrictions in respect of each charging order.

5. Pending land actions

An application to the court (including one made to the County Court Money Claims Centre) for a charging order on the legal estate is a pending land action and is capable of protection by entry of a notice (section 87(1) of the Land Registration Act 2002 and rule 172 of the Land Registration Rules 2003).

An application to the court (including one made to the County Court Money Claims Centre) for a charging order in respect only of a beneficial interest under a trust cannot be protected by notice because it does not appear to be a pending land action, as the applicant is seeking a charging order over an interest in a trust not in land (within section 17(1) of the Land Charges Act 1972). As an application to the court (including one made to the County Court Money Claims Centre) does not give the applicant a beneficial interest such an application cannot be protected by a restriction.

The usual evidence necessary to support an application for an agreed notice will be a certified copy of the application form and any covering letter to the court or the County Court Money Claims Centre together with an assurance in writing that the application has been made.

An applicant for entry of a unilateral notice should confirm, in the form UN1, brief details about the making of the application for the charging order to the court or the County Court Money Claims Centre, and the date on which the application was made.

6. Cancel and remove notices from the register

See section 2.7 of practice guide 19: notices, restrictions and the protection of third-party interests in the register.

In the context of cancellation of agreed notices, the suitable evidence to enclose with form CN1 is one of the following.

• A court order discharging the charging order.

• A receipt for payment of the money secured. This can be endorsed on a copy of the charging order. The status of the signatory must be clear.

• A discharge – this may be in form DS1 suitably amended.

• Where the applicant is the original creditor, a statement signed by the applicant or their solicitor:

  • identifying clearly the agreed notice in respect of the charging order, and

  • stating that all the money secured by the order has been paid to the applicant.

• If a receipt or discharge has not been signed by the original creditor, you must submit appropriate evidence of assignment of the debt. This could be, for example:

  • a certified copy of the assignment document

  • a certified copy of the notice of the assignment which has been given to the registered proprietor who is the debtor.

7. Cancel and remove restrictions from the register

See section 3.7 of practice guide 19: notices, restrictions and the protection of third-party interests in the register.

For applications to cancel a restriction, you will need to enclose the evidence set out above for cancellation of an agreed notice.

We will normally cancel a Form K restriction on a transfer for value without application, once the requirement for the certificate is complied with (see section 3.7.5 of practice guide 19: notices, restrictions and the protection of third-party interests in the register). However we will not do this if it appears that money may have been paid for a beneficial share in the property.

8. Assignment of a judgment

The beneficiary of a money judgment may assign the benefit of that judgment to a third party. If they do, the assignment will also transfer the benefit of any:

• pending application for a charging order, and/or

• existing charging order securing the sums due

The applications necessary to reflect this on the register will depend on the circumstances.

8.1 Agreed notice on the register

An agreed notice entry does not identify the beneficiary of the interest protected by the notice. The entry only records details of the document or action which gave rise to the noted interest. Consequently, we cannot accept an application to update the notice should the beneficiary change.

8.2 Unilateral notice on the register

See section 2.8.2 of practice guide 19: notices, restrictions and the protection of third-party interests in the register.

The evidence that the claimed interest has vested in the applicant may be:

• a certificate by a conveyancer in panel 11 of form UN3 giving details of the assignment

• certified copies of the documents effecting the assignment, or

• a statement of truth or statutory declaration giving details of the alleged assignment and annexing any supporting evidence

Where the unilateral notice relates to a pending land action, the conveyancer’s certificate or other evidence should also show that the assignee has taken any steps necessary under the Civil Procedure Rules to be substituted for the assignor or joined as a party to the proceedings (as the case may be).

8.3 Form K restriction

The applicant should make an application for alteration to update the restriction on the basis that the right or interest protected by the restriction has been transferred.

If no application for alteration has been made, then when the debt has been repaid, only the beneficiary named in the restriction can apply to withdraw the Form K restriction, using form RX4.

Therefore, where a judgment debt has been assigned to a third party, (that is, not the beneficiary named in the Form K restriction), and the restriction has not been updated following the assignment, the appropriate application by the assignee would be to apply to cancel the restriction using form RX3. Alongside the form RX3, they should submit the appropriate evidence of the assignment of the benefit of any pending or existing charging orders.

8.4 Other updates

For guidance on keeping entries up-to-date other than following an assignment, see sections 2.8.2 and 3.8 of practice guide 19: notices, restrictions and the protection of third-party interests in the register.

9. Things to remember

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