Title deeds restriction

markmh

Hi, 
I’m hoping someone will be able to offer some advice please.
we bought our house a year ago. We knew just before exchange of contracts that there were 2 people living in the house that were separating, person D who owned the house and was named on the mortgage and title deeds, and person C- who was not on the mortgage or deeds and had already moved out. Person C put the following restriction on as soon as they heard the house had had an offer accepted:

RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court. Our conveyancer discussed this with Person Ds solicitor who after a few weeks gave our conveyancer ‘an undertaking that the restriction would be removed’ and that both parties had come to an agreement of financial split so the sale could proceed.  6 months after we moved in, we enquired as to why we weren’t on the land registry yet and discovered that the restriction above that should have been removed still stands. After much discussion with our solicitor and a neighbour who is friends with person C, it turns out the restriction was never removed because Person C claims he never received any money from the sale.  Person Cs solicitor signed a form on his behalf to remove the restriction (when we purchased) under an agreement that the sale could proceed and money would be held in an account until they reached an agreement. According to person C he didn’t agree to this and when he found out (the day we moved in!) he tried to sue his solicitor.  For the last 6 months I have been back and fourth with my conveyancer who has sent 2 different forms both rejected by the land registry. Person C has been asked directly and refused to remove the restriction himself as he claims he hasn’t received money from the sale. For months my conveyancer has said ‘they’re negotiating a settlement’ or ‘I’m waiting to hear back’. The house sold a year ago. They have been ‘negotiating’ all this time. We have missed out on re mortgaging and had to go onto the standard variable rate, missed a cash back offer for a new mortgage, paid a set up fee for a new mortgage which we couldn’t take out (as we’re not on the land registry), made hundreds of phone calls and are quite out of pocket. We are also very stressed that we are not getting anywhere!  Please can anyone advise- where do we go from here? 6 months of nothing but stress and we are no further on. If it makes a difference, we paid a very similar amount to the previous buyers so there isn’t any profit for them to argue over. They have also both moved on and have new partners and new properties, they are quite well off. Would there be any reason that Person C would stay on? Eg to try and get money from us when we eventually sell? Would they have a valid claim? And who is at fault- should we get ourselves a new ‘no win no fee’ solicitor and try to unpick everything and perhaps sue our solicitor to recoup some losses? It seem a bitter separation and we are still caught in the middle of it a year on! Thank you

marcia_

 That text is far too small to read 

Land_Registry

The restriction you refer to is known as a form A restriction. If one has been registered, and there is only one registered owner, then it prevents that owner from acting alone on a sale for example.
The wording explains how a 'sole proprietor' is restricted in that way as a sale/purchase involves 'capital monies' (payment).
Person D can still sell the property as the form A restriction but for example would have to appoint someone else to act with them - PG 21 section 6 explains the options available - Using our forms for complex and more unusual transactions (PG21) - GOV.UK
Person C is not named directly so it is unclear as to why they are being asked to consent/remove the restriction - I wonder if they have some other entry on the register to protect them?
And to have spent all this time, when a solution appears to be available, seems odd and suggests there is more to this and worth asking the solicitor to confirm/clarify 
NOTE - a form A restriction is generally applied for to protect a 'trust' which in turn is often a 'split' in the beneficial ownership/shares of a property. The beneficial ownership relates to the value (£s and pence) of the property and that can be split. The value can also be realised after a sale/purchase completes so in this example IF Person D appoints someone else (doesn't have to be C) to act with them and transfer (sell) the property then the value is realised through the purchase monies and the issue re C's beneficial interest/claim can then be sorted by C and D. A form A restriction on it's own should not generally prevent a sale/purchase transfer from completing if PG 21 section 6 is considered and followed

markmh

Hi, 
apologies about the size of the text in the original post, I did it on my phone. 

Thank you for the reply, it seems Person D shouldn’t have been able to sell us the house without person C giving permission. I believe C gave a lump sum to D to pay the deposit for the house, which was then purchased in D’s name with D on the deeds and D taking out a mortgage in his name, that’s why C put the restriction on as he wanted his deposit money back when the house was sold by D. He thought the restriction would prevent the sale - which is probably should have done - until they agreed on a financial settlement. If it makes a difference, they lived here 7 years, unmarried, no children and no other financial ties. I would imagine the deposit C gave D would be seen as a ‘gift’. 

The problem is that we have exchanged contracts, paid monies and are living in the house that we have bought, but now cannot remove the restriction C put on the land registry. This means we cannot ever be on the deeds so cannot sell or remortgage. I don’t know if we even legally own it now?

I’m not sure whether one sides solicitors have lied, not done the proper checks or been mis led but the sale has gone through, even though the restriction was there. we’ve lived here for a year and for 6months have been asking our solicitor to fix it. He says the land registry won’t accept the form he sent and now the other parties are still in dispute over how to split the money (over a year later!) so C will not remove the restriction. We have tried to talk to both C and Ds separate solicitors about this to get a clearer answer but they refuse and say to speak through our solicitor. 

Should we be putting more pressure on our solicitor? Or could he be at fault, with the lack of progress and clear answers. Would we be better finding a new solicitor to take this on? 

sheramber

Person  Cs solicitor signed a form on his behalf to remove the restriction (when we purchased) under an agreement that the sale could proceed and money would be held in an account until they reached an agreement.

That seems to be the course of action that land registry described in their post. 

Section62

markmh said:

...

I’m not sure whether one sides solicitors have lied, not done the proper checks or been mis led but the sale has gone through, even though the restriction was there. we’ve lived here for a year and for 6months have been asking our solicitor to fix it. He says the land registry won’t accept the form he sent and now the other parties are still in dispute over how to split the money (over a year later!) so C will not remove the restriction. We have tried to talk to both C and Ds separate solicitors about this to get a clearer answer but they refuse and say to speak through our solicitor. 

Should we be putting more pressure on our solicitor? Or could he be at fault, with the lack of progress and clear answers. Would we be better finding a new solicitor to take this on? 

If the solicitor for D gave a formal undertaking that 'the restriction would be removed' then they have a professional obligation to make sure this happens.  Your solicitor should be pushing D's solicitor to do this.

If the funds from the sale went to D's solicitor then they should also have ensured that C was given whatever share of the proceeds that had been agreed in order for C to give their agreement for the restriction to be removed.

Although you could act for yourself, the solicitors for C and D are probably correct to refuse to deal with you and refer you back to your own solicitor.  Your solicitor should have ensured those for C and D did the things they had promised to do - you could now get another solicitor to represent you, but it would probably be better (likely cheaper) to get the original one to complete the job.  Perhaps with the threat that you will start a formal complaint against them if they don't pull their finger out.

Yorkie1

Section62 said:

markmh said:

...

I’m not sure whether one sides solicitors have lied, not done the proper checks or been mis led but the sale has gone through, even though the restriction was there. we’ve lived here for a year and for 6months have been asking our solicitor to fix it. He says the land registry won’t accept the form he sent and now the other parties are still in dispute over how to split the money (over a year later!) so C will not remove the restriction. We have tried to talk to both C and Ds separate solicitors about this to get a clearer answer but they refuse and say to speak through our solicitor. 

Should we be putting more pressure on our solicitor? Or could he be at fault, with the lack of progress and clear answers. Would we be better finding a new solicitor to take this on? 

If the solicitor for D gave a formal undertaking that 'the restriction would be removed' then they have a professional obligation to make sure this happens.  Your solicitor should be pushing D's solicitor to do this.

If the funds from the sale went to D's solicitor then they should also have ensured that C was given whatever share of the proceeds that had been agreed in order for C to give their agreement for the restriction to be removed.

Although you could act for yourself, the solicitors for C and D are probably correct to refuse to deal with you and refer you back to your own solicitor.  Your solicitor should have ensured those for C and D did the things they had promised to do - you could now get another solicitor to represent you, but it would probably be better (likely cheaper) to get the original one to complete the job.  Perhaps with the threat that you will start a formal complaint against them if they don't pull their finger out.

I agree with all of your post. I suspect the issue is that no agreement had been reached about what C was to receive, hence the delay.

Section62

Yorkie1 said:

Section62 said:

I agree with all of your post. I suspect the issue is that no agreement had been reached about what C was to receive, hence the delay.

It sounds like that was allowed for, from the OP's comment "...that the sale could proceed and money would be held in an account until they reached an agreement".

Which sounds like C and D agreed the price, but not how the proceeds should be split.  If C agreed to D's solicitor holding the funds pending agreement on the split then I think C (and C's solicitor) shouldn't be refusing to provide the agreement to the restriction being removed.  Their argument is with D and D's solicitor, not with the OP.

It is outside my area of knowledge, but I suspect the OP might have a valid claim against D's solicitor for failing to carry out what they undertook to do (assuming the undertaking was a formal one, and the timescale for acting on it has passed)

Land_Registry

Whilst I understand what you have shared it doesn’t quite add up as I intimated as the form A restriction doesn’t name an individual from whom a consent would be required - if you want to DM me the title number I can try to square things re own understanding 
I suspect there’s a second restriction naming C. You got their consent but nothing to also remove the restriction hence it’s still on the register and hampering future sale/mortgage 
You refer to the undertaking given re time of exchange so it’s that you need to pursue with your conveyancer. Undertakings are a standard part of conveyancing and it’s important that any consent obtained not only covers the transaction but also removes the restriction that protects C’s interest