Charging Orders for Landlords UK — Enforcing a CCJ Against a Property-Owning Tenant

When a Charging Order Is Available — Prerequisites

A charging order can only be applied for where: (a) A judgment or order for payment of a sum of money exists — there must be a county court judgment (CCJ) or High Court judgment for a fixed sum (e.g. rent arrears; mesne profits; damages for dilapidations; service charge arrears); a charging order cannot be obtained before judgment; (b) The debtor owns an interest in land — the charging order charges the debtor's beneficial interest in land; if the property is jointly owned, the order charges the debtor's share of the joint beneficial interest; if the debtor has no beneficial interest in any land, a charging order is not available; (c) The judgment is not subject to a stay of execution — a CCJ may be subject to a stay of execution (e.g. where the debtor has appealed, or the judge has stayed execution pending a payment plan review); a charging order application cannot proceed while a stay is in force; (d) The correct court — a charging order is applied for in: the county court (for CCJs under £600,000); the High Court (for judgments over £600,000 or High Court judgments); claims under £5,000 that are in the county court's small claims track are typically enforced in the county court; (e) No time limit on CCJ — there is no formal time limit on applying for a charging order after a CCJ, but an application to enforce a judgment debt that is more than 6 years old requires permission of the court (Limitation Act 1980 s.24). The charging order procedure is governed by CPR Part 73 and Practice Direction 73.

• CCJ required first: a charging order can only be applied for after a county court (or High Court) judgment for a fixed sum has been obtained; there is no route to a charging order without a prior judgment
• Debtor must own land: the order charges the debtor's beneficial interest in property; if the property is jointly owned (e.g. with a spouse), the order charges only the debtor's share — not the other owner's share
• No stay of execution: a stay on the CCJ (e.g. pending appeal or a payment order) prevents a charging order application until the stay is lifted
• County court threshold (£600,000): CCJs under £600,000 are enforced by applying to the county court; High Court judgments and CCJs over £600,000 are enforced in the High Court
• 6-year enforcement rule: enforcing a CCJ more than 6 years after judgment requires the court's permission; do not delay enforcement unnecessarily

The Two-Stage Process — Interim and Final Charging Order

Obtaining a charging order is a two-stage process under CPR Part 73: (1) Interim charging order: the landlord (as judgment creditor) files an application for a charging order (Form N379 for land) in the county court, accompanied by a witness statement setting out the judgment details and the property to be charged; the court makes an interim charging order without notice to the debtor — on the papers, if the application is in order; the interim order restrains the debtor from disposing of the property until the application is heard; the interim order must be registered at the Land Registry as a notice (Form CN1 — unilateral notice) against the debtor's title before the final hearing to protect priority over subsequent dealings; the court then fixes a date for the final hearing and requires the applicant to serve the order on the debtor and any other interested persons (e.g. co-owners; a mortgage lender); (2) Final charging order hearing: at the final hearing (typically 4–8 weeks after the interim order), the court considers any objections from the debtor or interested persons; the court has a discretion whether to make the final order — it will consider: the debtor's personal and financial circumstances; whether other creditors would be prejudiced; whether a payment plan has been offered and refused; whether the order would cause hardship disproportionate to the sum owed; the court commonly makes the final charging order unless there are compelling reasons not to; once the final order is made, it must be registered at the Land Registry as a restriction on the debtor's title (Form K — by way of agreed restriction or Form N — notice, depending on the lender's position). After registration of the final order, the debtor cannot sell or remortgage the property without the judgment creditor's consent or without the debt being paid.

• Interim charging order (without notice): made by the court on the papers; must be registered at the Land Registry immediately as a unilateral notice (Form CN1) to protect priority — registration before the final hearing is critical
• Service on debtor and interested parties: after the interim order is made, the applicant must serve it on the debtor, any co-owners, and any mortgage lenders; served parties can object at the final hearing
• Final hearing discretion: the court has a discretion at the final hearing — it will consider the debtor's circumstances, other creditors, and proportionality; the final order is commonly made but is not automatic where the debtor raises substantial grounds
• Registration after final order: register the final charging order at the Land Registry (Form K restriction or Form N notice) to secure priority over future dealings with the property
• Effect on sale or remortgage: after the final charging order is registered, any buyer or lender must satisfy the charged debt before completing — in practice this forces payment on the next sale or remortgage

Order for Sale — Forcing the Sale of the Charged Property

A charging order alone does not force the debtor to sell. To compel a sale, the judgment creditor must make a separate application for an order for sale under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996) s.14. The court has a wide discretion on an order for sale application and will consider: (a) The size of the debt relative to the value of the property: where the debt is small compared to the equity in the property, the court is likely to order sale; where the debt is very small and the property is the debtor's family home, the court may decline to order an immediate sale; (b) Whether the property is jointly owned (co-ownership): TOLATA 1996 s.15 requires the court to consider the intentions of the person who created the trust (usually both owners), the welfare of minor children occupying the property, and the interests of the secured creditor; in cases involving jointly-owned family homes and minor children, the court routinely postpones the order for sale until the children are 18 or until the children leave the home; (c) Insolvency: if the debtor is bankrupt, the Insolvency Act 1986 s.335A gives the trustee in bankruptcy priority to seek an order for sale — for a non-bankrupt debtor, the TOLATA 1996 discretion applies; (d) The value of the charging order relative to other charges: where the property carries a substantial mortgage, the landlord's charging order may be in a junior priority position — it is only paid after the first mortgage is cleared from sale proceeds; the charging order is only useful where there is sufficient equity above senior charges; (e) Rental income from the charged property: a charging order is a security interest — the landlord cannot receive rental income from the charged property (a receiver would need to be appointed for that); the charging order secures the capital sum. Best practice: register the charging order at the Land Registry promptly and wait for the property to be sold by the debtor in the ordinary course — most debtors pay off charging orders on sale. An order for sale is typically used only where the debt is large, the property has substantial equity, and there is no indication the debtor will sell voluntarily.

• Order for sale (TOLATA 1996 s.14): a separate application to the court after the charging order is obtained; the court has a discretion and will weigh the size of the debt, the nature of the property, co-ownership, and the welfare of minor children
• Family home with children: courts routinely postpone orders for sale of a family home where minor children are in occupation — the sale may be deferred until the youngest child is 18 or leaves the property
• Priority over other charges: the charging order takes priority from the date of registration at the Land Registry; existing mortgages rank ahead — the landlord only recovers from equity above the senior charge; check the Land Register for prior charges before applying
• Rental income from charged property: a charging order does not entitle the creditor to rental income from the property — a separately appointed receiver is required for income; the charging order secures the capital debt on sale
• Practical strategy: register the charging order at the Land Registry and wait — most debtors repay on the next sale or remortgage; pursue an order for sale only where the debt is large and the debtor shows no intention to sell

Charging Orders on Jointly Owned Property and Alternative Enforcement

Where a property is jointly owned (e.g. a tenant and their partner own the property together), the charging order charges only the debtor's beneficial share — not the other owner's share: (a) Beneficial interest: the court charges the debtor's equitable share of the property; where joint tenants hold equal shares, the debtor's 50% interest is charged; where beneficial interests are unequal (evidenced by a declaration of trust or Form 17), the charged share reflects the debtor's actual interest; (b) Effect on the other owner: the co-owner who is not a debtor cannot be compelled to sell by the charging order alone; they are entitled to raise objections at the final hearing and at any subsequent order for sale application; the TOLATA 1996 s.15 factors apply; (c) Practical effect: even where the debtor's share is small, the registration of the charging order on the title as a whole means the property cannot be sold without resolving the charge — both co-owners must cooperate to sell and the debtor's share must be used to pay the charged debt; (d) Alternative enforcement — High Court Enforcement Officers (HCEOs): a CCJ for more than £600 can be transferred to the High Court for enforcement by a High Court Enforcement Officer (HCEO — formerly Sheriff's Officer); HCEOs can take control of goods under the Taking Control of Goods Regulations 2013; this is a separate enforcement route from a charging order and may produce faster payment where the debtor has assets but owns no land; (e) Attachment of earnings: where the debtor is employed, an attachment of earnings order (AEO) requires the debtor's employer to deduct the judgment debt from salary and pay it directly to the court; AEOs cannot be made against the self-employed; (f) Third party debt orders (formerly garnishee orders): a third party debt order requires a bank holding the debtor's funds to pay those funds to the judgment creditor — useful where the debtor has known bank accounts with significant balances.

• Charging order on joint property: the order charges only the debtor's beneficial share; the co-owner's interest is not charged; both parties must cooperate to sell, but the non-debtor co-owner can resist an order for sale at the TOLATA 1996 s.14 hearing
• High Court transfer for HCEO enforcement: CCJs over £600 can be transferred to the High Court to allow HCEOs to take control of goods; faster than a charging order for debtors with moveable assets but no land
• Attachment of earnings: available for employed debtors; deductions are made from salary at source by the employer; not available against self-employed or company-director debtors who are not PAYE employees
• Third party debt order: freezes and pays over funds held by the debtor's bank to the creditor; requires knowledge of the debtor's bank account details; highly effective where a balance is confirmed but rarely the first choice for landlords seeking long-term security
• Combined enforcement: a charging order and attachment of earnings (or third party debt order) can be used simultaneously for the same judgment debt — the landlord can pursue multiple enforcement routes concurrently until the debt is paid

Frequently asked questions