Land Registry restriction – No disposition by a sole proprietor?

Hi Marie,

I found this on the Land Registry Services website

"Most jointly owned properties in England and Wales, by default, are owned as a beneficial joint tenancy. The main legal affect of this is that the joint owners each own 100% of the property and so if one owner dies the other owns the entire property without any further transactions or dispositions. This means that for Inheritance tax purposes the property does not form part of the deceased's estate and does not therefore attract payment of tax.

One major disadvantage, however, is that the respective joint owners cannot Will their share of the property to someone else in the event of their death. To overcome this problem the beneficial joint tenancy needs to be severed and the Land Registry notified. This will change it to a Tenancy in Common.

You will know if your current mode of ownership is a tenancy in common as the following wording will be present in the B section of the Title Register:

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 Registrar or the court.

If the above wording is not present the mode of joint ownership is a beneficial joint tenancy.

Converting a joint tenancy involves preparation and service of a Notice of Severance of Joint Tenancy and then the registration of a Restriction at HM Land Registry. The consent of the other joint owners is not necessary (but they should countersign it as an acknowledgement), so that you can convert even if the other joint owners disagree.

You will find our Tenancy in Common conversion search on our main Land Registry Searches page for England and Wales, by scrolling to LR21."

Also see our tab Ownership restructuring for tax purposes >> http://www.property118.com/conveyancing/

You say that the property is now registered in your name alone, but was it previously in joint ownership? I ask this as such restrictions are usually encountered when property is owned jointly by two or more people as 'tenants in common' – that basically means that when one joint owner dies their share does not automatically pass to the survivor(s).

The other circumstance when such a restriction is entered is when a sole proprietor holds as the property as a trustee for someone else.

If a sole owner wishes to sell the property and such a restriction is registered a second trustee must be appointed for the purpose of giving the buyer a valid receipt for the purchase price. So if a buyer's solicitor sees such a restriction registered they will require the seller to appoint a second trustee.

The Land Registry will remove such a restriction on application provided that you can show that you are now solely and beneficially entitled to the property and that no-one else is entitled to a share in any proceeds of sale. For more information see Land Registry Pratice Guide 24 para 6.2 https://www.gov.uk/government/publications/private-trusts-of-land/practice-guide-24-private-trusts-of-land#applications-cancel

(The Land Registry used to have their own web-site which was very user-friendly and easy to navigate. Regrettably you now have to info on the Land Registry via the main gov.uk site which is totally non-user-friendly and a nightmare to navigate. That's progress?!)

Reply to the comment left by "Tony Lilleystone" at "13/02/2015 - 17:23":

Thank you for your reply , the property has only ever been mortgaged in my name and only my name appears on the registry , I bought it as an investment with an ex partner although he didn't contribute and the relationship broke down within months - I'm looking to sell it now so am a little worried about the restriction

Reply to the comment left by "Neil Patterson" at "13/02/2015 - 12:25":

Hi thank you for your comment - the property has only ever been mortgaged in my name and only my name appears on the register , I put the restriction on at the time as buying the house was going to be an investment for me and an ex partner - this never happened and he never had any involvement , I'm looking to sell now but am worried it may be difficult

Reply to the comment left by "Neil Patterson" at "13/02/2015 - 12:25":

Neil, please direct me to this page on the Land Registry site. It's not clear where their information ends and yours begins. I have recently dealt with estates and am 100% certain that joint ownership does not put the property outside inheritance tax, although it does put it outside a will. Otherwise we would all put everything in joint names and no-one would ever have to pay IHT!

Hi Marie
You (or your solicitor) could apply for the restriction to be removed now but the Land Registry can be awkward about doing that.

But if you are selling the property the easiest thing is to leave the restriction and then in the transfer deed to the seller a second 'trustee' is appointed just for the purpose of iving a receipt for the money. Your solicitor can deal with that.

That arrangement will satisfy the buyer and the Land Registry - the buyer doesn't need to know why the restriction was registered.

can a mortgage charge be placed on land registry without there actually be a mortgage

as my friends property on deeds states there is a mortgage with halifax but when she contacted halifax they say there is no mortgage from them and no details of the address in question
she sold property to a friend in 2006 and rented back .

any thoughts

Hi all,

I have exchanged contracts and completed a sale however I received a b62 notice of an application to register a restriction. Where does this leave me as I have sold the property? Will the new owners be able to register ownership? Should I still put in an objection?

Please advise

Thank you

What is this meaning

RESTRICTION: No disposition by a sole proprietor of the land (not being a trust corporation) under which capital money arises is to be registered except under an order of the registrar or of the Court