WHAT IS A REGISTERED NOTICE OR A RESTRICTION AGAINST A PROPERTY – WHAT IT CAN MEAN TO A PURCHASER
WHAT A PROPERTY SEARCH CAN REVEAL
When a property search is being undertaken, usually when some one has made an offer which has been accepted, the legal team apply to the Land Registry and make a search.
These searches can reveal any number of things, including Notices and Restrictions against the property. Unless these can be either removed or dealt with the sale cannot go ahead.
Notices and Restrictions placed against a property and registered with the Land Registry can come in many forms.
A Notice is an entry on the Charges Register of the Official Copies. It is placed there, normally to protect a third party’s rights against the ‘disposition’ (sale) of the property. This is a claimed interest and does not always mean it is a valid interest but must be cleared to give the purchaser a free and good title. If a third party interest is not registered and later claimed against the property, the free and good title stands.
A Restriction is an entry which can be found on the Proprietorship Register on the title to a freehold property. Any entry on this register is confirmed and restricts the ‘deposition’ or sale of the property until the restriction is satisfied. A very common example is the repayment of a mortgage on the property before the title can be transferred to the new owner.
TYPES OF REGISTERED NOTICE
There are four common types of Notices which can be entered on the register:-
An Agreed Notice – such a Notice must specify what it is protecting and when the notice is registered (on an AN1 form) any evidential document must accompany the Notice. If a document accompanies the Notice it will be attached to it or an extract will be set out in the register. The Land Registry will have note of what document and that a copy is available. This type of Notice needs the land owner’s consent or documentary evidence to back up its claim to be accepted and registered. Removal or cancellation requires an AN4 form to be submitted.
Unilateral Notice – This type of notice is one which can be placed on the register ( using a UN1 form ) without the owner’s consent or any evidence of its validity. If such a notice is registered the property owner will be informed of it. Therefore such a Notice is not so reliable as an Agreed Notice. If an objection is raised against a Unilateral Notice and the person registering it cannot provide any evidence to back up the claim, it will be removed ( removal is by using an UN4 form ).
Homes Rights Notice – This was changed from the Matrimonial Home Rights Notice shortly after Civil Partnerships were recognised in 2004 in England. This notice is intended to protect any spouse or partner’s interest in a property who does not have a registered interest in it. Made on an HR1 and if registered without consent, evidence must be provided, such as a marriage or civil partnership certificate. Removal of such a notice is dealt with on an HR4 or by written application. The removal form or notice must also be accompanied by either:
- A death certificate;
- Office copy of a Decree Absolute;
- Office Copy of an order of the Court ending the home rights;
- An Office Copy of the dissolution, nullity or presumption of Death; or
- An Office Copy of a separation order or the ending of a civil partnership.
Bankruptcy Notice – This notice is placed on the Proprietorship Register after first being registered with the Land Charges Department. Confirmation by the Land Charges Registry Unit to see if the registered proprietor is one and the same is made and then they allow the Notice to be placed.
Restrictions are used to protect a number of interests in a property, this is done on a standard form dependant on the restriction being affixed to the property at the time.
Below are the most common, but the list is long and varied:-
- Restrictions on Dispositions by a Sole Proprietor – This type of restriction can only be placed on a property by an Order made by a court. The Tenants in Common can apply for this as can a tenant who has severed a Joint Tenancy. This restriction helps to prevent a property being sold, on the death of one of the proprietors, by the survivor.
- Non-exempt Charity – Certificate Required – This restriction registers land which is held in a Charitable Trust from being sold for less than market value. Neither can the property be sold to any person who has a connection to the charity without an order of the court or the Charities Commission.
- Restriction on Sale when one of the Proprietors is a bankrupt – In this instance there will be more than one proprietor but one of them has been declared bankrupt. The property cannot be vested in the Trustee in Bankruptcy but his interest is noted. When the property is being sold then the trustee is put on notice and can pursue the bankrupt’s assets held in the jointly owned property. It also alerts the Trustee of a bankrupt that he is attempting to sell the property at undervalue to avoid payment to creditors.
- Consent Required – This is a general form of restriction where by a transfer cannot be registered without the name of the person on the restriction, for example a management company may have to agree to a transfer, similarly a Landlord.
- Consent of Chargee – This charge will require an undertaking from a solicitor to ensure repayment of the charge upon the transfer of the property. For example the repayment of a mortgage from the sale funds prior to the balance being paid to the vendor.
PROTECTING A PERSONS INTEREST IN A PROPERTY
These restrictions are intended to protect a person interest. If you own a property with a partner or friend, these restrictions or notices prevent the sale of the property without your agreement. Likewise, if you are a creditor and a person who has been made bankrupt tries to sell their property without repaying you, these notices or restrictions will alert you to the position and give your the ability to protect your interests in the bankrupt’s property.
When buying a property you are protected from purchasing one which has hidden owners or cannot be sold unless agreement of others is obtained. They can also prevent your interest in a property being overreached by another person through being sold without your knowledge.
These restrictions can be very varied but their intention is always to alert a buyer or a person with an interest in the property to what is happening to that property and preventing any sale without the agreement of all interested parties.