What is a charging order on your home in Scotland?

Find out what an inhibition order is and how it can affect you

A charging order in England and Wales is a legal order that secures an unpaid debt against your property. In simple terms, it allows someone you owe money to (a creditor) to recover the money you owe from the proceeds made when you sell or remortgage your home.

In Scotland, we have our own version of the charging order, which is known as an inhibition order. An inhibition order is similar in many ways to a charging order but there are also a few differences between the two processes.

Here, we’ll discuss what those differences are and explain everything you need to know about charging orders in Scotland. 

What is an inhibition order?

An inhibition order is a legal debt recovery tool in Scotland that a creditor can use to prevent you from selling or remortgaging your home until you have paid them what you owe. Unlike a charging order, an inhibition order does not give your creditor the power to force you to sell your home. Instead, it places restrictions on what you can do with your property.

If you have an inhibition order registered against you, you cannot sell or transfer your home or take out any other loans that are secured against the property, including a remortgage. These restrictions prevent you from disposing of a valuable asset or reducing the equity you have in your property without paying the creditor first.

What does an inhibition order prevent you from doing?

Once a creditor has registered an inhibition against you, you will not be able to:

• Sell your home
• Secure more debt against the property (including a remortgage)
• Gift your property to anyone else

However, unlike a charging order, an inhibition does not give the creditor the power to force you to sell your home.

If you want to sell your property and you have an inhibition order, you will have to sign a mandate before the sale goes through, allowing your solicitor to deduct the debt amount from the proceeds of the sale. Once that’s in place, the creditor will lift the inhibition so the sale can go ahead.  

If you have an Inhibtion registered against you and jointly own a property with another party, the inhibition will only affect you. When you sell the property, your co-owner will receive their full share of the proceeds and the debt will be paid to the creditor solely from your share of the equity. 

What are my options if I have an inhibition?

There are several ways you can get an inhibition order removed:

• Pay the debt in full - You may not be able to do this, but if you are, it’s the quickest and easiest way to remove an inhibition.
• Ask the court to side aside the order - You can apply to the court to set aside an inhibition if it has been issued in error or you want more time to negotiate a repayment agreement.   
• Sequestration - The Scottish alternative to bankruptcy is a serious step and not something to take lightly. You must seek professional advice first and apply for sequestration within 60 days of the inhibition order being granted.

Need advice?

If you have been threatened with an inhibition order and a decree or document of debt has been issued against you, you need to act fast. Getting professional advice quickly can help to prevent an order from being granted. Contact our team of advisers for free help and guidance on the best route forward.