This page offers guidance on obtaining a charging order and in particular guidance on completing form N379.

What is a charging order?

It is an order of the court placing a ‘charge’ on the judgment debtor’s property, such as a house or a piece of land. The charge will be the amount you are owed. The charging order will not normally get you your money immediately, but it may safeguard your money for the future.

If the judgment debtor owns stocks or shares or has a fund or money in court, the court can also put a charge on these in much the same way as on property.

How does it do that?

A charge on a property means that if the property is sold, the charge has usually to be paid first before any of the proceeds of the sale can be given to the judgment debtor. You should note, however, that a charging order does not compel the judgment debtor to sell the property.

If there are already charges on the property when your charge is registered, for example, arising from a mortgage, then that charge will be paid first.

When can I apply for a charging order?

[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']You can apply at any time after you have obtained judgment. However, the judge who considers your application will not make an order unless the judgment debtor:

has failed to pay the amount of the judgment when it was due; or
has failed to pay one or more of the instalments due under the terms of the judgment.
What do I have to do to apply for a charging order?

You must complete Form N379 (Application for charging order on land or property). You can also get a copy free from any county court.

If you are seeking a charging order against stocks and shares, or money in court, you must complete Form N380 (Application for a charging order on securities).

What information will I need to complete the application form?

You will need:

• details of the judgment, that is, when it was made, at what court and under what claim number;
• the full name and address of the judgment debtor;
• the amount of the judgment, including any costs and interest; the amount owing at the time of your application, again including any interest, and the total amount of any instalments, if any, which have not been paid;
• the address of the property or land on which you want to impose a charge (and proof from the land registry);
• information as to whether the judgment debtor owns the property solely or jointly with someone else, and evidence to prove it;
• details of any other creditors you know the judgment debtor has, that is, their names and addresses and the nature of their debt;
• details of any other person who has an interest in the property;
• details of any additional reasons, apart from the fact you are owed the money, you want the court to take into account when deciding whether or not to grant your application; and,
• details of sources of information, that is, who within the organisation supplied the necessary information. But only if you are a company, corporation or firm.

The application contains a statement of truth. You will have to sign it to confirm that the facts stated in it are true. Remember that proceedings for contempt can be brought against you if you sign the statement without an honest belief in its truth.

You must also attach a copy of the details obtained from the land registry (see below).

A sample completed form N379 is available to download here.

Will I have to pay a fee?

Yes, £100.00 payable to HMCTS

How do I get the evidence about the property and ownership?

Some, but not all, land or property may be registered at HM Land Registry. If there is a registration you should obtain a copy of the entry and attach it to your application.

You can obtain information about how to do this by visiting their website www.landregistry.gov.uk.

What will the court do when it receives my application for a charging order?

Court staff will issue your application and refer it to a judge. If the judge is satisfied with the information you have provided, the judge will make an interim charging order. The order will be drawn on Form N86 (Interim charging order). A copy will be sent to you and the judgment debtor.

The order will include the date and time of a hearing at which the judge will decide whether or not to make a final charging order. You must attend that hearing, otherwise the judge may dismiss your application.

If the judge is not satisfied with the information you have given in your application the court will let you know.

Is there anything I should do when I receive the interim charging order?

Yes there is. To make sure the charge is effective immediately, you must register. Information about the procedures and fees charged by the Land Registry can be obtained by visiting their website www.landreg.gov.uk and viewing Practice Guide 19.

(Guidance coming soon …)

What will happen if the judgment debtor objects to the making of a final charging order?

If the judgment debtor (or anyone else who has been served with the interim charging order), wishes to object to the making of a final order that person must file written evidence and serve a copy on you not less than 7 days before the hearing.

You should note that the judgment debtor can make an application for the hearing to take place at another court nearer to his home or place of business.

What will happen at the hearing at which the judge considers whether or not to make a final charging order?

The judge will consider your application and any evidence the judgment debtor or any other person served with your application has filed. If objections have been raised, the judge can deal with them there and then, or give directions for a hearing later on. Directions tell you what you must do to prepare for that hearing. If the judge feels that the objections are justified, your application may be dismissed. If that happens you may not be able to recover the fee you paid to issue the application, and you may have to pay the costs of the party who raised the objections.

If your application is successful, any fees you paid are usually recoverable from the judgment debtor by being added to the judgment. An order will be drawn on Form N87 (Final charging order). You and any other party will be sent a copy.

Do I have to contact the Land Registry after the hearing?

Yes, you do. The Land Registry or (the Land Charges Registry) must be made aware of the making of a final charging order. You must also contact them if your application is dismissed to make sure that the interim charging order is removed from the register.
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But it has been suggested that the landlord may refuse to accept a tender by a third party such as a surety where he would be prejudiced by accepting the tender. [Richards v De Freitas (1974) 29 P. & C.R. 1. See also Smith v Co [1940] 2 K.B. 558; Bessa Plus Ltd v Lancaster (1998) 30 H.L.R. 48, CA.] The benefit of a covenant of suretyship runs with the reversion, and is enforceable by the landlord from time to time [Swift (P. & A.) Investments v Combined English Stores Group [1989] A.C. 643; approving Kumar v Dunning [1989] Q.B. 193; Pinemain v Welbeck Engineering [1984] 2 E.G.L.R. 91 and Re Distributors & Warehousing [1986] 1 E.G.L.R. 90 must now be treated as having been overruled. See also Coastplace v Hartley [1987] 2 E.G.L.R. 43]
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For now, please use this Guidance

https://www.moneyclaim.gov.uk

Customer Help Desk Money Claim Online

The Customer Help Desk can be contacted for support between 9:00am to 5:00pm, Monday to Friday on:
Tel : 0845-601 5935
Fax : 0845-601 5889

If you prefer to write your query instead, please contact:

Money Claim Online
Northampton County Court
21-27 St. Katharine’s Street
Northampton
NN1 2LH

Notes:

Data Protection Act

Permission to serve at work

Tracing Service

Since April 2009, landlords or agents should serve a letter before claim when planning court proceedings.

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Suggested letter

Word version

Or, copy and paste below

[Insert landlord name]
[insert landlord address]
[insert landlord telephone & email]

[insert tenants names]
[insert tenancy address]

[insert date]

Dear [tenant names]

Reference Rent Arrears – Practice Direction Pre Action Conduct, Letter before claim

I write regarding the rent outstanding of £[insert rent owing] and previous requests for payment.

Attached is a rent statement showing how the rent outstanding has been calculated.

To avoid court action, I require you to pay the rent outstanding within 14 days from this letter.

If there is any reason why you are not paying the rent, we ask that you provide this information. If you are having difficulties paying the rent, please contact us as we may be able to agree how the rent should be paid. If you are not already claiming housing benefit, we might be able to assist you with a claim.

Payment can be made to my address shown at the top of this letter.

We confirm that depending on time-scales, we may consider alternative dispute resolution. A suggested body would be the ADR Group http://www.adrgroup.co.uk 0117 946 7180.

If court action is required by us, we would rely on the following documents (but not limited to):

This letter before claim
Tenancy agreement
Section 21 or section 8 notices that have been or maybe served
Rent schedule

I require a full response to this letter within 14 days, therefore on or before [insert date 14 days].

Important:
Your attention is drawn to the practice direction for pre action conduct which can be obtained from http://www.justice.gov.uk/civil/procrules_fin/contents/practice_directions/pd_pre-action_conduct.htm

In particular, your attention is drawn to the court’s powers to impose sanctions for failure to comply with the practice direction and if you ignore this letter before claim, this may lead to me starting proceedings and increase your liability for costs.

Free and independent advice is available from any of the following

I look forward to hearing from you.

Yours sincerely

[landlord name]

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Landlords may issue a default summons to claim rent arrears and / or damages or any other amount of money the landlord may be entitled to when it is not appropriate to incorporate the claim in a possession action, or the tenant has vacated. If there is a guarantor, the guarantor may be added as a defendant to the claim.

Can I claim rent arrears regardless of the type of tenancy?

Yes. Essentially this is a straightforward action for debt, therefore, it does not matter what type of residential tenancy is in existence.

Must I send a letter to the tenant and / or guarantor before commencing proceedings?

Yes, all claims require a letter before action. The letter normally [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']allow 14 days for the defendant to respond. If there is no response or you can’t come to an agreement you may then commence proceedings. Follow this series of articles to find standard templates of a letter before action.

In the past, we have had great success with completing a claim form N1 (see below) and prepared all the documents into a bundle and sending this with the letter before action. When a tenant or guarantor sees all you need do is post the papers to the court, they are more likely to respond as they know that you have done all the hard work.

Can I make a claim on-line?

Yes. Money Claim On-line is a simple, convenient and secure way of making a claim on the internet. With Money Claim On-line you can keep an eye on the status of your Claim, Judgment and/or Warrant. You will be asked to pay the fees to issue Claims and Warrants on-line by Debit or Credit Card. It is cheaper to use this service than the court form method.

Money Claim On-line has been designed to be easy to use from a computer and is supported by a Customer Help Desk. The internet address is www.moneyclaim.gov.uk

Can I make a claim using a court form?

Yes, claim form N1 is available here and form N1a offer guidance on completing the claim form.

How should I complete the form?

Follow the articles in this series for guidance on how to complete the form.

Should I keep a copy of the claim form?

Yes. You should keep a copy of all documents.

Can I claim interest on the debt?

Yes. Section 69 of the County Courts Act 1984 specifically allows you to claim interest. Guidance is provided later in this series of articles on how precisely to claim interest.

Do I have to pay a fee to the Court?

Yes. This is known as an issue fee. The amount of the fee is calculated on a sliding scale and a copy of the scale can be found here

How should I pay the issue fee?

If making an on-line claim, you will be asked to pay by card. Otherwise, send a cheque to the Court together with the completed form. The cheque should be made payable to “Her Majesty’s Court Service”.

How will the summons be served on the tenant?

The Court will send the summons to the tenant by post. The Court will send you a note confirming that proceedings have been issued.

Applying for Judgment

If the tenant does not file a defence with the Court within 14 days of the service of  the summons – you may apply to the Court for Judgment by completing the tear off slip from the note sent to you and forwarding it to the Court. If using Money Claim On-line, follow the instructions given.

After Judgment

You may need to obtain payment from the tenant by using some form of enforcement procedure. See articles further in this series for more information.

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Why have a guarantee?

If the tenant defaults in paying the rent or breaches some other obligation of the tenancy, the guarantor can be required to pay. This gives the landlord an alternative means of enforcement of the agreement terms. A large percentage have little possessions or income and are often viewed as a bad risk. However, they have a much better chance of being viewed as a “good risk” if they can provide a suitable guarantor.

Can all residential tenancies be subject to a guarantee?

Yes. A landlord may require a prospective tenant to provide a guarantor for any type of tenancy.

What type of person should be accepted as a suitable guarantor?

It would be wise for the landlord to accept someone [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']who owns a property and has a good income.  Home ownership can be checked on-line for a fee of £4.00 at www.landregistery.gov.uk

You would also be wise carrying out a credit check using our facility available here (Guild members only)

Evidence of identity

The landlord should obtain evidence of identity from a prospective guarantor including a recent utility bill and photo-id.

Can a member of the prospective tenant’s family be a guarantor?

Yes. There is no reason why not. In most cases, assuming they are a homeowner, this would be a preferred guarantor.

Can the landlord send the guarantee form to the guarantor to be signed?

It is always best to have the guarantor sign in your prescence because otherwise a tenant could pretend to have a guarantor sign the form. Also, you can ensure it is correctly witnessed when done in your prescence.

It has been suggested (including by us in the past) that a guarntee agreement may fall under the The Consumer Protection (Distance Selling) Regulations 2000 (which would allow the guarantor to have a right to cancel the agreement). However, we are now of the opinion that these regulations do not apply.

We have noted that many people assume that the Regulations apply to Guarantor Agreements however given that the Guarantor receives no service for entering into the agreement, this is inaccurate.

Incidentally, contrary to some advice we have seen, the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Etc Regulations 2008 also does not apply to guarantee agreements as no service is provided and it does not cover tenancy agreement but do cover agent’s terms of business.

[Painsmith Landlord and Tenant Blog - Distance Selling Article 20/11/09]

Must the guarantee be made in writing?

Yes. Under legislation which dates back to 1677, a contract of guarantee (e.g. a rent guarantee agreement) is a type of legal agreement to which special rules apply. It is not enforceable unless it is made as a deed, in writing and signed by the guarantor or his authorised agent and it must be witnessed. A verbal or unsigned guarantee is therefore void.

Form of guarantee

Members of the Guild may download for free a suitable guarantee form or use the one built in on the back page of the tenancy agreements. [/amember_protect]

Abstract:  B and S entered into a commercial lease whereby premises were let to S’s company with S acting as guarantor of the company’s obligations under the lease. Following S’s death and a subsequent decision by the liquidators of the company to disclaim the lease, B served a notice requiring the executors of S’s estate, R, to take a new lease pursuant to a covenant whereby S, as guarantor, agreed to take a new lease for the residual contractual term if required to do so. R refused and B commenced proceedings seeking specific performance of the obligations under the lease and payment of rent up to the date that the premises were relet to a third party.

The judge held that there was no evidence that the term “guarantor” had been intended to extend to personal representatives and, further, that by serving the notice B had elected to determine the existing lease as a result of which R had no ongoing liability for rent. B appealed.

Held, [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']allowing the appeal, that (1) the judge had posed the wrong question. He should have enquired whether there was evidence that the presumption contained within the general law, namely that personal representatives are bound to perform all contractual obligations of the deceased so far as the assets of the estate will permit, had been displaced, Youngmin v Heath [1974] 1 W.L.R. 135 applied. There was no such evidence and in consequence R were bound by S’s contractual obligations under the lease, and (2) service of the notice did not amount to an act of possession and neither did it run counter to B’s expressed intention to enforce the covenants in the lease against R, Hindcastle Ltd v Barbara Attenborough Associates Ltd [1997] A.C. 70 considered.[/amember_protect]