A charge on a property, also known as a legal charge, is a form of security registered against a property at the Land Registry by a creditor. It gives the charge holder a legal right to recover the money owed to them from the proceeds of the property's sale. Mortgage lenders always place a charge on the property they are lending against.
Charges are ranked in order of priority. The first charge holder (usually your main mortgage lender) gets paid first if the property is sold or repossessed. Any subsequent charges, such as those from second charge lenders or secured loan providers, are paid in order of their ranking after the first charge is satisfied.
A charge can also be placed by other parties, such as HMRC for unpaid tax or a local authority for unpaid council tax. These types of charges can complicate a property sale and need to be resolved as part of the conveyancing process. All charges are visible on the property's title register at the Land Registry.
Your mortgage lender registers a legal charge against your property when you take out your mortgage. This charge appears on the Land Registry title register and gives the lender the right to claim against the property if you default on your repayments.
Key Points
- A legal claim registered at the Land Registry against a property
- Gives the charge holder the right to recover debt from the property's sale
- Charges are ranked in order of priority (first charge, second charge, etc.)
- Mortgage lenders always register a charge as security for the loan
- All charges are visible on the property's title register