The Restriction, part 2.

MartinW6

I posted over the weekend about a restriction on the title deeds of the house my mother and I are selling.  I got some very useful replies, but after today I'm still stuck.  Files on both sides have been signed off and we're ready to exchange, all for two restrictions on the property.  I don't know whether my solicitor is telling the truth, or being actively obstructive and am at my wit's end.

The Buyer's solicitor has asked that...

4. Please provide your undertaking to remove Entry B3 of the Title on or before completion.

(07.08.2014) RESTRICTION: No disposition by the proprietors of the registered estate is to be registered unless one or more of them makes a statutory declaration or statement of truth, or their conveyancer gives a certificate, that the disposition is in accordance with the Lawrence Davis Houston Wright Will Trust or some variation thereof referred to in the declaration, statement or certificate.

The buyer's solicitor has stated that all they need is a Statutory Declaration or Statement of Truth from my end.  They don't understand the hold-up and think this should have all been sorted out at the beginning of the month.

My solicitor has stated (not as a direct response to the above, but separately)...

"We cannot provide an undertaking to the buyers solicitor until the Land Registry can confirm that it can be removed.  The property is in the names of yourself and your mother, not in the name of the trust. The trust has a restriction over the title which is being complied with, with the sale.

I will contact the buyers solicitor to confirm if they wish to remove this upon completion themselves with their application."

Firstly, does my solicitor's comment basically say "I've had enough; they can deal with it"?

Secondly, my solicitor states we can't provide an undertaking until the Land Registry confirms it can be removed.  I was told that the Land Registry aren't trust experts, so why are we having to get their permission (as such)?  I've spoken to the Will Writers who drew up the trust and they've stated mum and I are perfectly entitled to sell the property and it doesn't go against the conditions of the trust.  Also, my solicitor has sent an RX3 (application to cancel a restriction).  To me that doesn't sound like asking the Land Registry to confirm the restriction can be removed... it's actually asking them to remove it.

I really don't know what to do.  It feels like the process has stalled, but my solicitor is barely getting back to me.  This has been going on since early February, and in that time I've had two very short phone conversations and a half-dozen emails.  She seems disinterested in the whole thing.  As such I'm trying to understand the process myself, so I might be able to get things over the line.

I would really welcome some advice here.  I truly would.

RiskAverse100

I hate to say this when both sides are ready to exchange, but I think this restriction is a real problem.

I can certainly understand why the buyer's solicitor wants the restriction to be removed on or before completion.  Even if either your mother or you is able to make a statutory declaration or statement of truth as provided for in the wording of the restriction to enable the buyer to be registered as the owner of the property, I cannot see that this would also result in the restriction being removed and so there is a very good chance that it would remain in place.

Would your buyer know anything about the Will Trust referred to so that they could provide the required statutory declaration or statement of truth when they came to sell?

This kind of restriction is very clearly a non-standard restriction and an application to the Land Registry would have been needed to get them to agree to it being entered on the register in the first place.  This is because it does not refer to a specific clause in a specific document but rather to a document as a whole and even to other unidentified documents which might vary it.

It might be helpful to know why the restriction was registered in the first place.  What was it designed to achieve and who had an interest in making sure that the provisions of the Will Trust were complied with?  I think that it is crucial to find out who has the benefit of the restriction as they are the ones who are going to need to consent to it being removed at the same time as the buyer is registered as the new owner.

Standard restrictions will often need a named person or someone who can be easily identified (ie the owner for the time being of another registered title) to consent to a transaction or to give a certificate to confirm that some requirement has been complied with.

A restriction could protect a debt owed to a third party and so unless they were paid the sum owing then they could refuse to provide their consent to a sale.  If they were going to be repaid the sum owed on completion then as well as giving the required consent you would often get them to complete the required form that will cancel the restriction so that it does not stay on the title.

Other kinds of restrictions are supposed to remain in place.  They may refer to a clause in a lease (if the property is a flat for example) or to an obligation in a earlier transfer that requires something to be done or a document to be signed and this applies to whoever owns the property.  So the required consent or certificate is produced to enable the purchase to be registered, but the restriction remains in place.

Some restrictions are automatically cancelled by the Land Registry without the need for the person with the benefit of it needing to complete any cancellation form.  Many mortgages are protected by a restriction but these would always be cancelled by the Land Registry once they receive evidence that the mortgage has been paid off.

The problem with this restriction is that, although it appears to be easy to comply with, it is much harder to work out from the wording who is supposed to have the benefit of it as it is they who would have to consent to it being removed.  Is it the trustees of the Will Trust, assuming that you and your mother are not the trustees, the beneficiaries or someone else?

It looks like the Will Writers need to be asked relevant questions.  Although they say that your mother or you can provide the required statutory declaration or statement of truth, are they able to say who has the benefit of the restriction so that you can get them to sign a cancellation form - if indeed the restriction becomes irrelevant once you and your mother are no longer the owners of the property.

My advice would be to get on to the Will Writers to see if they can explain why the restriction was registered, what purpose it serves, who has the benefit of it and will this person or persons agree to complete the required cancellation form.  With this information I would hope that the two solicitors acting will be better placed to say what can be done to make sure that it can be removed so that the buyer doesn't inherit it!

user1977

I would have thought it implicit that if there's a disposition of the property with a declaration etc in the form suggested, then the restriction would fly off - has anybody actually bothered to ask the Land Registry to confirm that point, and what form of declaration would be acceptable to them?

I can understand the OP's solicitors' reluctance to undertake that the restriction will be removed - I would say they can undertake to deliver a declaration, and it's up to the buyers to figure out whether the form of that is going to be good enough for the Land Registry.

Or we could just page @Land_Registry and see if they can offer an opinion?

MartinW6

@RiskAverse100 "explain why the restriction was registered, what purpose it serves, who has the benefit of it and will this person or persons agree to complete the required cancellation form."

I have the sole benefit of the trust and it's associated restriction, and yes, I would agree to complete the required cancellation form.

propertyrental

best to stick to one thread......

https://forums.moneysavingexpert.com/discussion/6431757/removing-a-restriction#latest

Land_Registry

The restriction is actually a standard one in form B. It is used in this way to protect a trust 
Our PG 24 explains its purpose and when it is used. It also, importantly it seems, explains in section 6.6 how it can be automatically cancelled in specific cases provided it’s been complied with of course 
https://www.gov.uk/government/publications/private-trusts-of-land
Compliance is ‘simple’ really as the wording is clear as to what’s required - see section 5.12 if you need to
If the buyer’s conveyancer insists on it being removed first then section 6.2 explains how to apply to cancel it. It can’t be withdrawn. 

SDLT_Geek

Land_Registry said:

The restriction is actually a standard one in form B. It is used in this way to protect a trust 
Our PG 24 explains its purpose and when it is used. It also, importantly it seems, explains in section 6.6 how it can be automatically cancelled in specific cases provided it’s been complied with of course 
https://www.gov.uk/government/publications/private-trusts-of-land
Compliance is ‘simple’ really as the wording is clear as to what’s required - see section 5.12 if you need to
If the buyer’s conveyancer insists on it being removed first then section 6.2 explains how to apply to cancel it. It can’t be withdrawn. 

Excellent reply from Land_Registry   So long as the terms of the restriction are complied with at the point of sale, the restriction will be automatically cancelled as part of the buyers' application to register their title.

SDLT_Geek

user1977 said:

I would have thought it implicit that if there's a disposition of the property with a declaration etc in the form suggested, then the restriction would fly off - has anybody actually bothered to ask the Land Registry to confirm that point, and what form of declaration would be acceptable to them?

I can understand the OP's solicitors' reluctance to undertake that the restriction will be removed - I would say they can undertake to deliver a declaration, and it's up to the buyers to figure out whether the form of that is going to be good enough for the Land Registry.

Or we could just page @Land_Registry and see if they can offer an opinion?

Good call!

RiskAverse100

Thank goodness we have the Land Registry representative on board!  The crucial parts of my response were clearly not correct and, as the Practice Guide dealing with private trusts makes clear, the restriction is a standard one and will be automatically removed provided that the required statutory declaration or statement of truth accompanies the application for registration.

However, restrictions are often far from straightforward and so I can understand why both conveyancers, particularly the buyer's, want to be clear on what needs to be done prior to exchange taking place.

SDLT_Geek

MartinW6 said:

I posted over the weekend about a restriction on the title deeds of the house my mother and I are selling.  I got some very useful replies, but after today I'm still stuck.  Files on both sides have been signed off and we're ready to exchange, all for two restrictions on the property.  I don't know whether my solicitor is telling the truth, or being actively obstructive and am at my wit's end.

The Buyer's solicitor has asked that...

4. Please provide your undertaking to remove Entry B3 of the Title on or before completion.

I would not expect your solicitors, in the normal course of events to give such an undertaking.  It is not appropriate if the right certificate is given, because the restriction will be automatically removed as part of the registration of the buyers' title.

(07.08.2014) RESTRICTION: No disposition by the proprietors of the registered estate is to be registered unless one or more of them makes a statutory declaration or statement of truth, or their conveyancer gives a certificate, that the disposition is in accordance with the Lawrence Davis Houston Wright Will Trust or some variation thereof referred to in the declaration, statement or certificate.

The buyer's solicitor has stated that all they need is a Statutory Declaration or Statement of Truth from my end.  They don't understand the hold-up and think this should have all been sorted out at the beginning of the month.

Rather than having the restriction removed first, the buyers' solicitors could be given a certificate complying with the terms of the restriction.

My solicitor has stated (not as a direct response to the above, but separately)...

"We cannot provide an undertaking to the buyers solicitor until the Land Registry can confirm that it can be removed.  The property is in the names of yourself and your mother, not in the name of the trust. The trust has a restriction over the title which is being complied with, with the sale.

I do not think they should be giving an undertaking to remove the restriction.  Usually in such a case one supplies the right form of certificate so that the restriction will be removed automatically when the buyers register their own title.

I will contact the buyers solicitor to confirm if they wish to remove this upon completion themselves with their application."

I suggest your solicitors should say they will supply the form of certificate so the restriction will be removed automatically as part of the buyers' application.

Firstly, does my solicitor's comment basically say "I've had enough; they can deal with it"?

No, they are just struggling with a difficult technical area.

Secondly, my solicitor states we can't provide an undertaking until the Land Registry confirms it can be removed.  I was told that the Land Registry aren't trust experts, so why are we having to get their permission (as such)?  I've spoken to the Will Writers who drew up the trust and they've stated mum and I are perfectly entitled to sell the property and it doesn't go against the conditions of the trust.  Also, my solicitor has sent an RX3 (application to cancel a restriction).  To me that doesn't sound like asking the Land Registry to confirm the restriction can be removed... it's actually asking them to remove it.

Yes, the application to cancel is a different approach to complying with the restriction.  Land_Registry  confirms it is another way of going about it.

I really don't know what to do.  It feels like the process has stalled, but my solicitor is barely getting back to me.  This has been going on since early February, and in that time I've had two very short phone conversations and a half-dozen emails.  She seems disinterested in the whole thing.  As such I'm trying to understand the process myself, so I might be able to get things over the line.

You could check 6.2 of https://www.gov.uk/government/publications/private-trusts-of-land to see if the application to cancel the restriction has been properly made.  You could find out whether such an application can be expedited so that it does not hold things up more than the usual route of complying with the restriction.

Or you could try to persuade your solicitor to change tack and provide the certificate so as to comply with the restriction.

I would really welcome some advice here.  I truly would.

Comments in bold above.  Fingers crossed for you.

Land_Registry

RiskAverse100 said:

Thank goodness we have the Land Registry representative on board!  The crucial parts of my response were clearly not correct and, as the Practice Guide dealing with private trusts makes clear, the restriction is a standard one and will be automatically removed provided that the required statutory declaration or statement of truth accompanies the application for registration.

However, restrictions are often far from straightforward and so I can understand why both conveyancers, particularly the buyer's, want to be clear on what needs to be done prior to exchange taking place.

Restrictions (and Notices) that protect third party interests are a complex area to follow at times. The LR Act 2002 sought to simplify the way such interests could be protected and introduced prescriptive forms for adding them to the register and also to remove them through cancellation/withdrawal. 

I suspect, but have very little way of knowing for sure, that the default position for many conveyancers can be we need both compliance and removal as a result. Or, as in this case, if we know the trust is being followed in this sale let’s get it removed first. 

And often crucially, the buyer’s mortgage product, has a risk profile that the lender triggers re a restriction on the title and that needs to be removed before the mortgage offer can be activated. 

The key, in most cases, is that the guidance is there in PGs 24 for trusts and PG19 for ‘more’. But it’s the buyer’s conveyancer here that should be able to clarify their approach