Advice Needed - Application for restriction on title put on property

ab1512

Hello,

I was hoping I could get some advice on the forums. I recently exchanged on a first time purchase of a leasehold flat in London and on pre completion checks my solicitor found an entry on the land registry as per the below.

"An application to register a restriction in form N was lodged for registration on 20 April 2021 at 16:04:56 but HM Land Registry is not yet in a position to approve it and complete the registration by entry in the register. Nevertheless the pending application has priority over the disposition protected by this result."

My solicitor has told me we cannot complete on the purchase until this application has been removed. The seller seems to have been involved in a number of legal issue with a business partner and is non responsive on removing the restriction/application, it is has been confirmed it is the business partner that has put the application for a restriction on the property. The sellers solicitor has been unable to provide any updates, which suggests progress could be very slow.

I am worried until the seller's legal problems are resolved I can never complete on the purchase and very worried that I could lose the deposit at some point if I am for whatever reason not able to complete/mortgage offer expires.

Does anyone have any advice or prior experience they have that could me aid me in how to proceed? Is there a way I can force through the completion in the event the seller cannot get the restriction removed?

What type of timescale could I be looking at?

I have read through the forums and there seems to be a few instances of this type of thing happening but not in this specific circumstance.

user1977

Why would you lose your deposit if it's the vendor who's in breach of contract?

GDB2222

I suggest that you do not exchange contracts until the restriction has been removed.

This is an impossible position to be in. The business dispute could take years to resolve. Just find another property to buy.

Slithery

GDB2222 said:

I suggest that you do not exchange contracts until the restriction has been removed.

This is an impossible position to be in. The business dispute could take years to resolve. Just find another property to buy.

According to the OP they've already exchanged...

SDLT_Geek

A Form N restriction is a "heavy" one, requiring the written consent of the restrictioner before a disposition can be registered.  https://www.gov.uk/government/publications/notices-restrictions-and-the-protection-of-third-party-interests-in-the-register/practice-guide-19-notices-restrictions-and-the-protection-of-third-party-interests-in-the-register

If the seller is not able to remove the restriction or secure the consent in time for completion then OP might be in the position of having to serve a "notice to complete" so as to bring the matter to a head.  OP would need to be in a position to complete because a notice to complete is a two edged sword.

ab1512

We have already exchanged as the check with the land registry didn't take place until minutes before completion unfortunately. 

I have read that I could serve a notice to complete, but I think the issue there is that the Form N application is still on the land registry and my solicitor still cannot complete in these circumstances. This is to protect myself and the interests of the bank who the mortgage will be with. 

If I had known about this before exchange I would not have proceeded!

davilown

How did the check not happen earlier? This was added in April so surely the solicitor has messed up pretty badly?

ab1512

I have been told this type of check only happens before completion, but yes I am of the same opinion, if this was put in place in April what is the point in paying for the solicitor. 

Slithery

When was the priority search carried out? This should have either picked up the restriction or stopped it being applied.

ab1512

The OS2R form which contains the restriction on it was only found on the date of completion, I think this is from doing the priority search.

If it had been done prior to exchange there wouldn't have been a problem.

Land_Registry

ab1512 said:

The OS2R form which contains the restriction on it was only found on the date of completion, I think this is from doing the priority search.

If it had been done prior to exchange there wouldn't have been a problem.

The recommended approach is to leave 5 days or more between the OS1 being submitted and completion. It’s rare to do it before exchange as whilst an important stage you are really only putting things in place ready for next stages. 

The key here is will the application be successful. It’s key to remember that the application is pending and was lodged back in April. That suggests there’s maybe an issue in completing it which may be relevant re timescales