CLC Enforcement Series: Charging Orders

18 February 2025

In this series I will explore the circumstances in which each enforcement mechanism may be used and why a judgment creditor may want to use a particular mechanism and set out some of the advantages and disadvantages of each of these methods.

Preliminary B: Charging Orders

The second preliminary step that a judgment creditor ought to consider is a charging order under Part 73 of the CPR, which gives the judgment creditor a charge over assets of the judgment debtor, most often property.

This procedure is not technically “enforcement” as such. It does not directly result in the debt or part of it being paid to the judgment debtor, nor in the transfer of any property, but it does provide security and establishes the judgment debtor’s place in the queue of creditors, ahead of any unsecured creditors.

When to use this method?

You may discover the judgment debtor’s interest in various assets such as property or stocks via the Part 71 process or your own investigations. If so, an application for a charging order is often worth doing straight away because unlike other enforcement mechanisms, a charging order can be sought where there is no default in payment by the judgment debtor and it provides the judgment creditor with immediate security. The only precondition to apply is that a judgment debt is due and enforceable, or a judgment debtor is required to pay the debt by instalments.

It is also worth remembering that this method can be used in conjunction with other methods, so if it is appropriate to obtain a charging order it is often worth doing so for security, even when you prefer another enforcement mechanism.

However, a number of things must be considered before applying for a charging order over property, specifically: any charging order will be subject to prior charges, and it may not be worth pursuing if there is too little or no equity in the land held by the judgment debtor, or where it is jointly owned, and may not be as effective where there are other residents at the property who may frustrate the judgment creditor’s ability to obtain an order for sale.

Advantages and disadvantages

A charging order provides security for the judgment debt and can be obtained without default by the debtor.

A charging order over residential property can also be especially potent as it carries the threat that an individual judgment debtor’s home may be taken from them.

The disadvantage is that if it becomes necessary to get an order for sale, the entire process may be very slow and potentially expensive, though the costs are recoverable from the sale proceeds. Not only is gaining the order for sale time-consuming, but you will be largely at the mercy of the property market (and sometimes the stock market) and a variety of factors beyond your control can cause further delay and expense.

Timescales

As noted, the entire process from application to sale and realisation of secured funds is slow. However, obtaining an interim charging order can take around three weeks at the time of writing, and a final charging order can be granted from between 4 and 7 weeks thereafter, depending on service. From a tactical standpoint one can even obtain a priority search protecting the priority of the charge you anticipate receiving before the interim order is granted.

Given the potential benefits and the fact that you might use other methods to realise the judgment debt, an application for a charging order is often worth considering.

This series provides a general overview of options for judgment creditors. For detailed advice and assistance with enforcing your money judgments contact Seamus Smyth at seamussmyth@cartercamerons.com, Head of Litigation and Arbitration, or Julian Smith at juliansmith@cartercamerons.com.