Turning a County Court Judgement Into a Possession Order

If a company or individual obtains a county court judgment for a debt, there are several ways they can enforce the judgment if the debt is not paid.

One method is to apply for a charging order. If successful, a charge will be placed on the debtor’s property. A judgment creditor has an almost automatic right to a charging order unless the debtor, or anyone else who has in interest in the property, can convince the court that a charge should not be granted.

The Effect of a Charging Order

Where a property is jointly owned, but the debt was incurred by only one of the owners, the charge will only be in relation to the debtor’s interest in the property. The charge is like a mortgage and the debtor will not be able to sell or re-mortgage his home without paying the debt.

The charge will remain on the property until the debt is paid or the property is sold. However, the creditor could apply to the court for an order forcing the sale of the property so that the debt can be repaid out of the debtor’s share of the sale proceeds. An increasing number of creditors are now applying to the courts for such an order - usually referred to as an order for sale.

A Creditor’s Application for a Possession Order

If a creditor wishes to enforce a charging order through a sale of the property, he will have to start a new case. Unlike an application for a charging order, the creditor will now have to convince the court that it is reasonable to force a sale of the property.

In an application for an order forcing the sale of a debtor’s property the creditor has to provide evidence containing specific items of information. These include details of the original charging order, the amount of the debt that remains unpaid, details of any others who have an interest in the property, an estimated value of the property and the value of any existing mortgages already registered against it.

If the debt exceeds £30,000 the application will be started in the High Court.

Jointly Owned Properties

Where a property is jointly owned, both the debtor and any co-owners will be named as defendants, giving joint owners a greater involvement in the case. The claim form and evidence in support will be served on all defendants who will have the opportunity to respond to the application.

The Courts’ Approach to Applications to Force a Sale

Whilst a charging order may be obtained almost as of right, the courts take a far more serious view of applications to force a sale. Forcing someone to sell the property is a serious step and the court will take a number of factors into account. Including:

• The size of the debt
• The debtor’s approach to the debt – an order is more likely to be made if the debtor has failed to make any attempt to re-pay or settle the debt
• Whether the debt will be re-paid from the sale proceeds – if there is little or no equity in the property the court may conclude that to order its sale would be pointless
• Whether the property is the debtor’s home – the court may be more willing to grant an order for sale in respect of an investment property than of the debtor’s main residence
• If the property is jointly owned with someone who is not a debtor under the original judgment, the court has a wide power to consider the welfare of the joint owner and any children living in the property

The Possible Outcomes of an Application to Force the Sale of a Property

A creditor will usually ask for an order that obliges the debtor to leave the property within 28 days so that it can be sold by the creditor. The order would also state that, from the sale proceeds, the creditor must first re-pay any other interested parties – such as those with a mortgage on the property and any joint owners - before the creditor is re-paid from the debtor’s share of the sale proceeds.

The court may consider it appropriate to make a suspended order allowing the debtor to stay in the property provided that regular payments are made towards the debt. Alternatively the court could give the debtor longer than 28 days to vacate the property, giving him the opportunity to sell or re-mortgage.

If the court is not satisfied that a possession order should be made it could dismiss the application or simply adjourn it indefinitely, perhaps on condition that certain monthly payments are made towards the judgment debt.