What Is A Charging Order?

If you're a homeowner, you'll be fully aware that some kinds of debt can, if unpaid, result in you losing your home. If you don't keep up with your mortgage or secured loan repayments, then the lender has the option of going to court and forcing repossession of your property in order to clear the debt.

What's less well known is that homeowners with large amounts of unsecured debt could also see their homes targeted by lenders using what's known as a charging order.

Court Orders

Charging orders are a type of court order which effectively turn unsecured debt into a secured loan, where the lender gains an interest in your property and can seize part of the proceeds of any sale in order to clear the debt.

These orders can only be granted once the lender has gone through the process of obtaining a county court judgement on an unpaid debt, and the judgement still remains unsatisfied after a period of time.

Once the charging order has been granted by the courts, the lender will inform the Land Registry so that in the event of a sale, standard land searches done as part of the conveyancing procedure will show up the debt linked to the property.

Will Your Home Be Repossessed?

It's important to note that in almost all cases, the issuing of a charging order cannot lead to repossession - the order just means that whenever the property is sold, the lender has the right to use the proceeds to clear the debt before passing the remaining funds to the seller.