Declaration of Trust mistake made by solicitor 7 years ago?

It might come as a surprise but it is no business of the Land Registry to record beneficial interests, though they may incidentally be recorded in some document noted on the register for another purpose. Records of trusts should be kept separately.
The Land Registration Act 2002 expressly provides that interests under trusts cannot be noted on the register. See sectionhttps://www.legislation.gov.uk/ukpga/2002/9/section/33
and this explanatory note https://www.legislation.gov.uk/ukpga/2002/9/notes/division/4/4/1/2#:~:text=Section%2033%3A%20Excluded%20interests&te.
I only know about this due to personal experience in that we thought we had a Trust but it turns out it was a Deed of Trust in our case which is totally different and as a result our life was far easier because HMRC were not involved. The average person has no idea that these things a different entities.

Reply to the comment left by Troubled landlord at 23/12/2022 - 11:43
It will be 6 years as it's a contractual matter not a tortious one. The clock will start when you actually incur a loss, (you probably won't) and is subject to the 15 year backstop. There was a trust deed signed, the purpose of the registration is to ensure correct ownership is recorded and enforceable. So I would not worry about the HMRC too much.

I suggest you do some research (that means don't ask an estate agent!) to locate a decent professional indemnity firm (where are you located?).
This not a matter for the bog-standard family conveyancer down the the road.
Ask them to notify your original solicitors of a claim against them for the costs of putting the situation right (rectification) if possible from the time of the mistake? Your first solicitors will refer the matter to their professional indemnity (PI) Insurers who will liaise with your new (claiming) solicitors to agree the best outcome.
You are fortified by the initial admission of liability, however much the PI Insurers may hate it.. They are not really prejudiced?
Remember, you want matters rectified, you won't buy a swish holiday with compensation!

Hi, to be honest what the land registry believe the position to be is neither here nor there to be honest.

In practice, as your previous solicitor mentioned, once a declaration of trust has been entered into the solicitor should enter a form A restriction on the legal title to the property to show that there is a trust in place affecting the property - there are other reasons but I will not bore you with them.

So far as I am aware, provided that the declaration of trust was completed by your solicitor then the property is held by the registered owner in accordance with that declaration of trust. The fact that the solicitor failed to register the Form A restriction means that potentially the parties to the trust have less protection for their interest in the property (eg if there was one registered owner who had entered into a declaration of trust saying they hold the property for themselves and one other person. Without the Form A restriction the registered owner could dispose the property without appointing a second trustee or without the solicitor acting realising that someone else was entitled to part of the sale proceeds).

I honestly don't think you have to worry about the Form A restriction not having been registered in this situation. Provided the declaration of trust was completed, which you should check immediately, then I think the legal position is exactly how you intended it to be at the time the declaration of trust was completed.

Turning to the worst case scenario, if the declaration of trust was not completed, i think that you will still have a very strong case to show to the HMRC that the property was, from the time the signed declaration of trust was returned to the solicitor, that the property was held 99%/1%. Accounts showing the rental income split etc supported by stat dec's signed by you and a letter from the solicitor explaining how the error came about should satisfy them.

Check if the declaration was actually completed by the solicitor before you panic. Hope it works out ok. Best, Charles

Reply to the comment left by CMS at 23/12/2022 - 22:35
Agree with the advice given. The property register reflects the legal owners- the trustees ( which HAS to be a joint tenancy). A restriction is to offer some protection for the beneficial owners ( if they are not also the trustees). The land register is not intended to reflect the beneficial ownership . The fact that no restriction is registered does not affect the beneficial ownership which is in the trust deed. If the declaration of trust is in writing and signed by you both it is valid and enforceable. The trust starts from the date in the declaration. You have evidence of the declaration of trust and have been dealing with the property correctly in accordance with the declaration. Nothing to be concerned about. The solicitors dealing with the sale do not have to advise you on the CGT position. That is the role of an accountant.