Charging Orders: When a Creditor Puts a Debt Against Your Home

A charging order under the Charging Orders Act 1979 converts an unsecured judgment debt into a secured one. Once made, the charge is registered with the Land Registry (or, for unregistered land, by a caution). The effect:

• You cannot sell the property without paying off the charging order — the buyer's solicitor will see the charge during conveyancing and the proceeds must clear it.
• The charge accrues 8% interest under the Judgments Act 1838 unless the underlying judgment is below £5,000.
• The creditor can apply for an Order for Sale to force the property to be sold, but this is a separate application and rarely granted.
• The charge sits behind any prior mortgage in priority — the mortgage is paid first from sale proceeds, then the charging order, then later debts.

Charging orders are most often used by: judgment creditors (after CCJ); HMRC for tax debts; mortgage lenders pursuing shortfall debts after repossession; and child maintenance enforcement under the Child Maintenance Service.

The creditor:

1. Obtains a County Court Judgment for the debt (or has another enforceable judgment).
2. Applies for an Interim Charging Order on Form N379, paying £119 court fee, with a draft Final Order.
3. The court makes the Interim Charging Order ex parte (without notice to you) if satisfied the debt is owed and the property is in your name.
4. The Interim Order is registered against the property and notice is served on you, your spouse/civil partner (if joint owner), and any prior chargees.
5. A hearing is listed — usually 4-8 weeks after the Interim Order — for the court to decide whether to make the order Final.
6. At the hearing, the court considers your circumstances, the debtor's circumstances, and any defence. If satisfied, the Final Charging Order is made and registered.

You should attend the hearing or send written representations. The hearing is your one chance to challenge the order.

Grounds the court will consider at the Final Charging Order hearing:

• Already paying instalments — if a court order or written agreement specifies monthly payments and you are keeping them up, the court usually declines to make a Final Charging Order. The judgment debt is being repaid; no charge is needed.
• Hardship — particular financial hardship that would result from the charging order being made (rare, because the charge itself does not force a sale).
• Joint property and spouse's interest — if the property is jointly owned and the spouse/civil partner is not the debtor, the charge can only attach to your share. A separate application is needed to enforce against the joint share.
• Disputed debt — if the underlying judgment was defective or was obtained without proper notice, apply to set the judgment aside (Form N244) before the charging order hearing.
• Already secured — the property has a mortgage that effectively means there is no equity. A charging order on a property in negative equity is technically valid but has no practical value to the creditor.

Having a Final Charging Order does not give the creditor the power to force a sale. They must make a separate application for an Order for Sale. The court considers:

• The amount of the debt — under £5,000 they almost never grant; £5,000-£15,000 rarely; over £15,000 sometimes.
• Whether the debt could be repaid by other means (instalments, voluntary sale).
• The impact on the debtor's family — children, vulnerable household members, disabled occupants.
• The proportionality under Article 8 of the European Convention on Human Rights (right to respect for home and family life). Manchester Ship Canal v Vauxhall Motors [2019] reaffirmed proportionality applies.
• Whether the joint owner consents (if jointly owned).

Orders for Sale on small judgment debts are rare. Most creditors hold the charging order and wait — the debt earns 8% interest and is paid when you eventually sell.

To remove a charging order:

• Pay it off — settle the debt and any accrued interest. Get a written confirmation and apply to the Land Registry on Form CN1 to cancel the charge.
• Apply to vary or discharge — Form N244, if circumstances have changed materially. Rarely granted but available.
• Apply to set aside the underlying judgment — Form N244, if the judgment was defective. If the judgment falls, the charging order falls with it.
• Sell the property — at sale, the charging order is paid from the proceeds (in priority order, after any prior mortgage). Once paid, the charge is removed.
• Insolvency — bankruptcy or an IVA will usually deal with the charging order as part of the global insolvency arrangement. The trustee in bankruptcy may sell the property in the worst case.