Restriction on land registry title delaying sale

neilio

I originally purchased a 35% share in my property under the shared ownership scheme in January 2011. In August 2014, I staircased to 100% ownership of the property. During 2016, my property has been on the market for sale.

During the process to convey the sale, the purchaser solicitor’s searches returned a result that there was a “restriction” on the title with the Land Registry. This restriction pertained to my property being a former shared ownership property, retaining various clauses such as the housing association reserving certain rights of first refusal to sell the property and me as the leaseholder not being permitted to sub-let the property. This restriction no longer applies due to the fact that the property is no longer shared ownership, but the restriction on the title did not disappear as a result of my staircasing two years ago.

The purchaser solicitor requested that the restriction be removed from the title. My solicitor told me that such restrictions are not enforceable by housing associations. I enquired with the housing association who told me that something called a Certificate of Compliance would need to be raised by the housing association which formally informs the solicitors and the purchaser that the housing association consents to the restriction not being enforced, however this does not remove the restriction but rather relinquishes any rights the housing association may have had and essentially voids the restriction. My solicitor disagreed with this and said that the restriction would need to be removed completely from the title and that two forms, RX1 and RX4, would need to be raised to do this. The housing association insisted on telling me that the Certificate of Compliance would be sufficient, but this complicated matters as I lost trust in both the housing association and my solicitor because I didn’t know which process was the correct course of action, adding to already mounting stress.

The housing association accepted that we would be embarking on the RX1 and RX4 process which removes the restriction from the title, rather than just consenting to the restriction not being enforceable. My solicitor sent the draft RX1 and RX4 to the housing association. The housing association told me that they had a 20-working day lead time to respond to requests to raise these forms, and that they would sign them and return them to my solicitor, presumably for my solicitor to then issue to the Land Registry and have the restriction removed. This, apparently, is not the case, as the housing association eventually told my solicitor that they need to contact the solicitor who acted on the housing association’s behalf during the staircasing to 100% ownership process two years previously, although I have no idea. I had perhaps naively assumed that someone at the housing association would just agree to this and that would be that!

I complained to the housing association for not being clear or correct in informing me what the process is. They took the stance again that we should have raised the Certificate of Compliance instead, again complicating matters, especially as it is not their place to say this to me if my solicitors are telling me otherwise. So far, this process has taken six weeks and is still not resolved.

Meanwhile, my original purchaser withdrew their offer on my property. That purchaser solicitor had raised the question of the restriction on the title being removed, which is why we embarked on the process in the first place. When that purchaser withdrew their offer, a found a new purchaser, the new purchaser solicitor informed my solicitor that the mortgage lender would not progress with processing the mortgage application, including the survey, until the restriction is removed from the title. The original purchaser’s mortgage lender did not raise such an objection – whilst the question of the restriction was raised and I consented to having it removed, it did not affect their mortgage application, but the new lender has taken a different stance. It’s fortunate that we have at least commenced the process to remove the restriction, because I wonder how long it would have delayed the entire process for the new purchaser had we not started it six weeks ago.

This is such an annoyance and I am no closer to exchanging contracts on the sale of my property. It is obvious to me that neither housing associations nor conveyancing solicitors know how to adequately deal with this restriction after someone has staircased from shared ownership to 100% ownership of a property, which causes confusion in how to deal with the issue, and impacts even on lenders considering mortgages in some cases.

Has anybody ever experienced anything like this before, and how did you eventually get it resolved?

Land_Registry

Neilio - which shared ownership scheme was involved here as that can have an impact?

And is the restriction worded as follows?

No [disposition or specify type of disposition] of the registered estate [(other than a charge)] by the proprietor of the registered estate [, or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction,] is to be registered without a certificate signed by the proprietor for the time being of the estate registered under title number [specify title number] [or [their conveyancer or specify appropriate details]] that the provisions of [specify clause, paragraph or other particulars] of [specify details] have been complied with [or that they do not apply to the disposition].


Form RX1 is used to apply for a restriction to be registered so would not be applicable here
Form RX4 is used by the Restrictioner to withdraw their restriction, whilst
Form RX3 is used by the registered owner, you, to apply to cancel the restriction
With some schemes and final staircasing the restriction can be removed using form RX3 providing the required evidence re the final staircasing is supplied.

I appreciate that you have already started the process to remove the restriction so may not be looking for any comments re the process itself. However it may enable others to identify whether they have faced similar issues before?

neilio

I wasn't aware that there were different types of shared ownership schemes, that's new to me. I don't know which scheme I was on, I thought there was only one!

Yes, that is the wording of the restriction.

Despite being "in process" I would still like to know what is supposed to happen next in this turn of events and how long it's supposed to take. At the moment, my solicitor has an RX1 and an RX4 form drafted (there has never been any mention by anybody of an RX3 form being required) and has been told by the housing association that they need to liaise with the solicitor who acted on behalf of the housing association during the staircasing process for reasons that nobody has explained to me. I am currently waiting for someone involved in this horrendous process to contact me with an update. I have no idea what to expect.

I would also like to know why this has become such a mess from a clearly broken legal process which different stakeholders and different legal entities approach differently to each other. It makes no sense to me and is an absolute disgrace that this is experienced by former shared ownership leaseholders like myself!

neilio

My solicitor told me that the RX3 process can take 4-6 weeks, but that for a restriction to be removed by the party who has the benefit it is an RX4 which is quicker. My solicitor goes on to say that they were intending to remove the restriction in the form it is now with a different worded version to apply to another clause in the lease, hence the reason for an RX1 form. I don’t understand any of this legal jargon!

Things have moved on a bit this afternoon. The housing association’s solicitor contacted the housing association to ask them to confirm that they do not object to a Deed of Variation being raised. It seems that it is the Deed of Variation that will satisfy the purchaser’s solicitor that there is effectively no restriction anymore (I think). Fortunately, I was on the phone to the lady as she received the email and she replied whilst on the phone to me, so I know their solicitor has now been instructed, and I’ve told my solicitor it is in hand and they should be contacted imminently.

Fingers crossed this now progresses smoothly. But we shall see. It never ceases to amaze me, and this would not be the first time I’ve come off the phone from the housing association feeling like it is all fine regarding this title restriction, only to find out later it is not. Watch this space.

neilio

This thread has been viewed nearly 250 times, despite no other replies, so I'll keep posting updates in case this continues to be helpful for people.

My solicitor told me on 07 Sept that the housing association's solicitor will need to raise an RX4 form and a Deed of Variation, and that it would cost me £180 for them to do so. This means that the (coincidental same amount?) £180 I had paid the housing association four weeks ago for them to process this removal of the restriction (allegedly involving my solicitor drafting an RX1 and RX4 to send to the housing association for them to sign off) was not required. My solicitor suggested that I seek a refund from the housing association. I paid my solicitor the £180, but I'll wait until closer to exchanging of contracts before going for my refund, in case something changes again and that charge does still apply for some reason.

This basically means that both my solicitor and the housing association gave me incorrect information which incurred me a cost, for no reason at all.

Yesterday, the solicitor confirmed receipt of my payment and they've instructed the housing association's solicitor to raise the RX4 and Deed of Variation. Today I asked how long this would take and what the process going forward would be. My solicitor told me that next Tuesday - so that's 4 working days - the housing association's solicitor is due to send the documents to them, and they will send to the purchaser's solicitor for approval, then it will need to go back to the housing association's solicitor for agreement. At that point, the housing association will need to sign it!

I have no idea of timescales beyond next Tuesday, but that process is highly convoluted and as clear as mud. And then, that is when my buyer will instruct their mortgage lender to do the survey of the property, if they haven't gotten fed up and withdrawn their offer by then!!

I'll come back in due course with further updates.

Absolutely ridiculous process. It makes me sick.

Richard_Webster

This is all about the fact that Housing Assocaitions don't really understand some of these issues and do not have their legal staff - so rely on their often expnsive specialist solicitors.

Solicitors will look at it and send docs back to HA for sealing but the people in HA who can sign prbably only get togathere once a month or something like that, hence the delay.

Really this should have been removed when staircasing was completed - assuming that this was sloething that went with staircasing - but this might not necessarily be the case. Sometimes a HA might want to keep control - e,g, over who occupies the flat and itis not used a ss a buy to let.

neilio

I agree with you. The fact that multiple solicitors are involved also frustrates the whole thing, though. My solicitor understands the urgency with which I want to exchange contracts and complete (a story for another thread) and has tended to expedite my case when appropriate. However, despite the HA solicitor now producing this Deed as a result of the money that I have paid (despite it going via my solicitor), I am effectively the client, yet I know full well that the HA solicitor will not want to talk with me directly to get things moving faster because it was my solicitor who acted as the middle man. It's outrageous that this is how it works. Such is the frustration of these conveyance processes. I am left wondering if my buyer eventually gets fed up and withdraws, just because there are too many cooks, through no fault of my own.

Hoploz

What a nightmare. Feel for you. Glad I had no problems like this when I sold mine having staircased.

Do keep updating.

neilio

So my solicitor informed me yesterday that they had received the draft RX4 and Deed of Variation forms from the HA solicitor and passed them over to the purchaser solicitor for them to review and confirm that they are acceptable. Nobody seems to know how long the purchaser solicitor will take to do this. I've taken some comfort in the fact that as this is now in the hands of the purchaser, they'll see that my side has spent the past 9 days pushing this through so they can finally get their mortgage lender to instruct the survey at the very least and get on with conveying the purchase. But, I have no idea if they will accept this draft and get on with it, or if they will only get on with things when the drafts have gone back via my solicitor to the HA solicitor and then to the HA for final sign-off which, again, would take an unknown amount of time. Nobody has told me anything about what happens next!

I've tried to contact my estate agent but he hasn't responded to any of my emails or calls since I spoke to him last week when he told me the purchaser's mortgage application had halted until this restriction is lifted. I sent him an email today asking to speak to him, I called the agency and left a message with the switchboard (the entire agency office was engaged), and his colleague phoned me back to say that he'd call me. He hasn't called me so I think it's safe to say that he is ignoring me, which can't be a good sign.

I just want to know that I still have the buyer, that's all I want the EA to tell me. Instead, I am in the dark over the whole thing.

neilio

The purchaser solicitor confirmed their approval of the Deed of Variation two days ago. My solicitor told me they had informed the HA solicitor that it is approved so they can pass it back to the HA to sign. At some point I am also supposed to sign it, and then the Varied Deed is produced and the restriction can be removed from the title.

I am chasing the HA to do this quickly, to which they have said that this should no longer delay the purchaser solicitor if they have agreed to the Deed. I reminded the HA that it's not for them to say, as I've requested via my solicitor and EA to find out from the purchaser solicitor if their approval of the Deed is sufficient for them to proceed, or if they require the Varied Lease itself. No response to this query yet, which means I'll continue pushing the HA.

So, I still don't know if this is being held up or not.

neilio

There is now some activity since the purchaser agreed to the content of the Deed, so the brakes are off, finally. I have signed the Deed and a copy is on its way to the HA to sign. I'm hoping that's it, now. Should there be any more developments, I'll come back. I hope this is of some help to others on here.