Enforcing a Judgement
If a judgement has been made in favour of the freeholder and there has still been no payment it then becomes necessary to enforce the judgement through one of the courts, the principle enforcement methods being as follows:
1: Warrant of Execution
When a Warrant of Execution is submitted to the court they will then instruct Bailiffs to visit the property. Where the property is a leasehold flat then the bailiffs will send a report to the freeholder or the managing agent, advising on how many times they visit and what happens, such as who’s at home (or not). It may be possible that the leaseholder has assets that could be seized to pay the debt but this could only work if the assets were owned outright, not on any credit agreement. They will also recommend any sub-tenant they speak to, to contact their landlord to tell them they have had a bailiff visit. The bailiffs will not at this stage force entry and will report that the property is a rental. This is when the freeholder/managing agent will be able to go ahead with a third-party order to clear the arrears direct from the tenants rent or the landlords bank account. The latter however may not work if there is insufficient credit in the account.
At present if there is a debt of more than £5,000 (which was increased from £750.00 as of 1st October 2015) the lessee can be petitioned for bankruptcy. The difficulty here is that a Statutory Demand will need to be personally served on the lessee before issuing a Bankruptcy Petition. The Bankruptcy Petition will also need personally serving.
If a Bankruptcy Order is made, a Trustee in Bankruptcy will be appointed who will then deal with the assets and liabilities of the bankrupt lessee and make payments, (assuming there are funds in the bankruptcy estate), to creditors in a particular order. As the Petitioning Creditor, whilst some costs may be recovered, debts are paid off in priority to other creditors so the main element of the debt will rank lower down the order as an unsecured creditor. This is a very heavy-handed option and it comes with a high level of costs and risk. There is always the risk that whilst time and money will be undoubtedly spent petitioning for the lessee’s bankruptcy, if there are no funds to pay anyone, or if there are funds available, they may well not be enough to pay the unsecured creditors.
3: Attachment of Earnings Order
An employed debtor could have regular payments deducted from their salary to pay the debt.
4: Charging Orders
This is the option we chose to go ahead with after a judgement was made in our favour from the court. We sent it to the leaseholders’ lender and when we did not get any response we got an interim charging order registered against the property. We then got a full charging order levied against the property which would stay until the property was sold or re-mortgaged. However the lender paid in full so we instructed the order be removed.