Manchester Conveyancing Solicitors | Ford Banks Irwin Solicitors

Manchester Conveyancing Solicitors | Ford Banks Irwin Solicitors - The Property Lawyers in Manchester on Transfer, Equity and Trusts of Land

Please note: Not to be used or relied upon without legal advice. These notes are for illustrative purposes ONLY.

. . . continued from page 3

Private Trusts of Land / Property

Standard Form Restrictions:

Form A - the joint proprietorship restriction:

Property Lawyers and Conveyancing Solicitors would normally expect to see the following form of wording:

'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.'

The purpose of the restriction is to ensure that the provisions of section 27(2) Law of Property Act complied with. As amended by Trusts of Land and Appointment of Trustees Act 1996 section 25(1) and schedule 3, paragraph 4, which reads as follows:

'Notwithstanding anything to the contrary in the instrument (if any) creating a trust of Land or in any trust affecting the net proceeds of sale of the Land if it is sold, the proceeds of sale or other capital money shall not be paid to or applied by the direction of fewer that two persons as trustees, except where the trustee is a trust corporation, but this subsection does not affect the right of a sole personal representative as such to give valid receipts for, or direct the application of, proceeds of sale or other capital money, nor, except where capital money arises on a transaction, render it necessary to have more than one trustee'

This means that a Form A restriction should be entered whenever two or more persons are registered as joint proprietors of a registered estate, except where:
- they are beneficial joint tenants (because when only one is left, the trust will have come to an end) or
- they are personal representatives of a deceased sole proprietor, unless that proprietor was a trustee.
A form A restriction should also be entered whenever a sole proprietor is, or becomes, a trustee of Land.

If a Form A restriction is registered, it will generally be necessary for a new trustee or trustees to be appointed before Land held by a single trustee on a trust of Land can be dealt with in such a way that capital money arises.

When will Land Registry enter a Form A restriction automatically?

Land Registry will enter a Form A restriction in the register (Property Title Deeds), without requiring the Property Lawyers and Conveyancing Solicitors to make an application, whenever Land Registry register two or more persons as proprietors of a registered estate in Land, unless they are told that they hold the legal estate on trust for themselves as beneficial joint tenants, or they are being registered as personal representatives. Land Registry are obliged to do this by section 44(1) Land Registration Act 2002 an rule 95(2)(a) Land Registration Rules 2003. Section 44(1) Land Registration Act 2002 reads as follows:

'If the Registrar enters two or more persons in the register as the proprietor of a registered estate in Land, he must also enter in the register such restrictions as rules may provide for the purpose of securing that interests which are capable of being overreached on a disposition of the estate are overreached.'

Rule 95(2)(a) Land Registration Rules 2003 provides that the restriction will be form A.

Section 27(2) Law of Property Act 1925 does not affect the right of a sole personal representative as such to give a valid receipt for capital money. Therefore a Form A restriction will not automatically be entered when registering personal representatives (or a sole personal representative) as proprietors of Land. If there is an existing form A restriction, however, it will remain on the register (Property Title Deeds). This is because, in that case, the personal representatives are in effect succeeding the deceased as trustees of the trust. For the same reason, Land Registry will enter a Form A restriction on first registration when registering the personal representatives of a deceased proprietor who was a sole trustee or (unless the survivor of beneficial joint tenants) the last surviving trustee.

Similarly section 27(2) Law of Property Act 1925 does not affect the right of the survivor of beneficial joint tenants to give a valid receipt for capital money.

When applying to the register joint proprietors of an estate, Property Lawyers and Conveyancing Solicitors should therefore make clear the capacity in which they hold it. Otherwise, Land Registry will enter a Form A restriction by default.

Land Registry will not enter a Form A restriction in respect of a registered charge (Mortgage). Although a charge (mortgage) can be held on trust, the survivor of the registered charges is always able to give a valid receipt for the money secured by it (section 56 Land Registration Act 2002), as stated by HMLR notes.

(All italics in this page are Crown Copyright and reproduced here for your information with permission from HM Land Registry)

. . continued on page 5 (Property Lawyers and Conveyancing Solicitors in Manchester - Transfer, Equity and Trusts of Land page 5)

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Manchester Conveyancing Solicitors | Ford Banks Irwin Solicitors - The Property Lawyers in Manchester on Transfer, Equity and Trusts of Land