Restrictions

Guidance

Restrictions

There are various options available to protect interests under a deed of trust. Several types of restriction are expanded upon below to allow you to fully understand their relevance and application. The Land Registry have provided guidance with regard to the entry of restrictions and the elements that are relevant to trusts are reproduced below.

Restrictions prohibit the making of an entry in respect of a disposition or a disposition of a specified kind. The prohibition may be indefinite or for a specified period and it may be absolute or conditional on something happening (for example on the consent of a third party being obtained).

The term ‘disposition’ is not defined in the Land Registration Act 2002. Most restrictions refer to dispositions by the proprietor of the registered estate or of a registered charge, implying some action by that proprietor to make the disposition.

A restriction makes it apparent from the register that either the powers of the relevant proprietor are limited, or that a prior condition must be met before a disposition can be registered.

Once entered, a restriction will remain in the register until it is cancelled or withdrawn. Restrictions are not automatically cancelled following a disposition, although the Land Registry may cancel any restriction that has clearly become superfluous.

A Form A restriction is the minimum that should be placed on the register for the reasons discussed below. If you require further protection for your interests then one of the further restrictions detailed below may be appropriate. Please note that we do not charge for assisting with the completion of applications to register a restriction but the Land Registry do levy a charge for all applications other than those to register a Form A restriction.

Details of costs are included with each respective type of restriction discussed below and you can find further details of Land Registry fees here. Please note that the current fee for a standard form restriction is £40.

Who can apply for a Restriction?

You only apply for the entry of a restriction if you:

Are the relevant proprietor
Are entitled to be registered as the relevant proprietor
Have obtained the consent of the relevant proprietor or someone entitled to be registered as such, or
Otherwise have a sufficient interest in the making of the entry.

Compulsory Applications

Rule 94 of the Land Registration Rules 2003 prescribe certain situations where a person must apply for a restriction. In particular, where a new trust is set up or there is a change in a trust of land and as a result a sole proprietor will not be able to give a valid receipt for capital money, a proprietor must apply for a restriction in Form A (Schedule 4, LRR 2003).

Restrictions relevant to trusts

An interest under a trust of land cannot be protected by an agreed or unilateral notice but may be protected by a restriction. Generally, a beneficiary under a trust of land may apply for a Form A restriction if one has not already been entered in the register. A Form A restriction ensures that any capital money must be paid to two trustees or a trust corporation. A second Form A restriction cannot be entered because the purpose of a Form A is to ensure that interests behind the trust are overreached; it does not give notice of an individual’s interest under a trust.

An interest under a trust of land means the interest of a person under such a trust who stands only one step away from the registered estate. Examples include:

where A and B are the proprietors of the registered estate and hold on trust for themselves (both have interests under a trust of land)

where C and D are the proprietors of the registered estate and hold on trust for E for life and for F thereafter (E and F have interests under a trust of land)

where G is the proprietor of the registered estate and holds on a bare trust for H (H has an interest under a trust of land).

If another form of restriction is required either in place of or in addition to a Form A restriction, evidence may have to be lodged showing that the applicant has a sufficient interest in the making of the entry. This should not be necessary when the application is made by all of the registered proprietors.

If the application was for a consent restriction such as Form N, the Land Registry would have to be satisfied that it was necessary or desirable for such a restriction to be entered. To allow a consent restriction to be entered (except, for example, when it was required under the trust) would be to give the beneficiary a right they are not entitled to and could result, in practice, in thwarting the clear intention of the Law of Property 1925 that overreaching should take place.

Where a Form A restriction is considered insufficient to protect a beneficiary’s interest under a trust of land, they may also apply for a restriction in Form II. A restriction in this form should ensure that the person named in the restriction receives notice of the disposition, thereby giving them the opportunity of pursuing the proceeds of sale.

If the beneficiary’s consent is required under the terms of the trust, an application may be made for a Form B restriction.

Form A

When an application for a restriction must be made

94.—(1) A proprietor of a registered estate must apply for a restriction in Form A where—

(a)the estate becomes subject to a trust of land, other than on a registrable disposition, and the proprietor or the survivor of joint proprietors will not be able to give a valid receipt for capital money, or

(b)the estate is held on a trust of land and, as a result of a change in the trusts, the proprietor or the survivor of joint proprietors will not be able to give a valid receipt for capital money.

(2) A sole or last surviving trustee of land held on a trust of land must, when applying to register a disposition of a registered estate in his favour or to be registered as proprietor of an unregistered estate, at the same time apply for a restriction in Form A.

(3) Subject to paragraph (6), a personal representative of a deceased person who holds a registered estate on a trust of land created by the deceased’s will, or on a trust of land arising under the laws of intestacy which is subsequently varied, and whose powers have been limited by section 8 of the Trusts of Land and Appointment of Trustees Act 1996(1), must apply for a restriction in Form C.

(4) Subject to paragraphs (6) and (7), a proprietor of a registered estate must apply for a restriction in Form B where—

(a)a declaration of trust of that estate imposes limitations on the powers of the trustees under section 8 of the Trusts of Land and Appointment of Trustees Act 1996, or

(b)a change in the trusts on which that estate is held imposes limitations or changes the limitations on the powers of the trustees under section 8 of the Trusts of Land and Appointment of Trustees Act 1996.

(5) Subject to paragraphs (6) and (7), an applicant for first registration of a legal estate held on a trust of land where the powers of the trustees are limited by section 8 of the Trusts of Land and Appointment of Trustees Act 1996 must at the same time apply for a restriction in Form B.

(6) Paragraphs (3), (4) and (5) do not apply to legal estates held on charitable, ecclesiastical or public trusts.

(7) Paragraphs (4) and (5) apply not only where the legal estate is held by the trustees, but also where it is vested in the personal representatives of a sole or last surviving trustee.

(8) An application for a restriction must be made where required by paragraphs (2) or (3) of rule 176 or paragraph (2) of rule 178.

Cost

There is no charge by the Land Registry to enter a restriction in standard Form A. In addition there is no charge levied by us in completing the application for the restriction on your behalf, applications are made by completing Form RX1

Effect of Registration

It is important to note that if there is only one registered proprietor of the property shown at the Land Registry then the presence of a Form A restriction may affect their ability to sell, lease or remortgage the property in the future

Form B

Form B (Dispositions by trustees—certificate required)

No disposition [or specify details] by the proprietors of the registered estate is to be registered unless they make a statutory declaration, or their conveyancer gives a certificate, that the disposition [or specify details] is in accordance with [specify the disposition creating the trust] or some variation thereof referred to in the declaration or certificate.

This type of restriction is more onerous than a standard Form A restriction and may be appropriate where you wish to stipulate that a transaction involving the property (it can be specific, e.g. a disposition or a charge) made by the registered proprietors cannot be successfully registered without a statutory declaration from them or their conveyance that the terms of a deed of trust have been complied with.

You may wish to limit the ability of the registered proprietor to mortgage the property or indeed sell it without the consent of all parties to the deed of trust and this type of restriction may be appropriate in such circumstances. The deed itself may contain a provision that any new mortgage or charge to be secured on the property requires the consent of all parties to the deed, therefore in order to make the statutory declaration or for the conveyance to provide a certificate such consent will need to obtained.

Cost

We do not charge for the preparation of an application to register a Form B restriction but the Land Registry do levy a charge which currently stands at £40 for the entry of a standard restriction, further details of fees can be found here.

Effect of Registration

Similar to a Form A this restriction may affect the registered proprietors ability to sell, lease or remortgage the property in the future. This restriction will also result in details of the deed of trust including the parties to it and the date it was executed, being shown on the title register at the Land Registry. The consent of all parties to the deed of trust will usually be needed in order to register a disposition (or a certificate from a Conveyancer), therefore this restriciton offers a far greater degree of protection to the parties to the deed. You will also be required to send a cheque for £40 directly to the Land Registry with the application we provide you with on completion.

Form N

Form N (Disposition by registered proprietor of registered estate or proprietor of charge—consent required)

No disposition [or specify details] of the registered estate [(other than a charge)] by the proprietor of the registered estate [or by the proprietor of any registered charge] is to be registered without a written consent

[signed by [name] of [address] (or [his conveyancer] or specify appropriate details)]

[signed on behalf of [name] of [address] by [its secretary or conveyancer or specify appropriate details]].

This type of restriction is different to a Form B restriction in that there is no requirement for a statutory declaration or a certificate of compliance with the deed of trust. The restriction merely imposes a demand to obtain the written consent of a specified person (or their conveyancer) before the mentioned change can be made to the register (this may limit the ability to sell, lease or just mortgage the property).

Cost

We do not charge for the preparation of an application to register a Form N restriction but the Land Registry do levy a charge which currently stands at £40 for the entry of a standard restriction, further details of fees can be found here.

Effect of Registration

A Form N restriction will not necessarily detrimentally affect the registered proprietors ability to deal with the property (for a example a future remortgage) as long as written consent is obtained from the beneficiary of the restriction. The Beneficiary will usually be the party or parties to the deed of trust who are not also registered proprietors. This restriction therefore provides a degree of protection for those parties to a deed of trust who are not automatically protected by virtue of registration as proprietors of the property.

Form NN

Form NN (Disposition by registered proprietor of registered estate or proprietor of charge – consent or certificate required)

No [disposition or specify type of disposition] of the registered estate [(other than a charge)] by the proprietor of the registered estate [, or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction,] is to be registered without a written consent signed by

[choose one of the bulleted clauses]

[name] of [address] [or their personal representatives] [or [their conveyancer or specify appropriate details]],
[name] of [address] [or their personal representatives] and [name] of [address] [or their personal representatives] [or [their conveyancer or specify appropriate details]],
[name] of [address] and [name] of [address] or the survivor of them [or by the personal representatives of the survivor] [or [their conveyancer or specify appropriate details]],
[name] of [address] or [after that person’s death] by [name] of [address] [or [their conveyancer or specify appropriate details]],

or a certificate signed by

[choose one of the bulleted clauses]

a conveyancer
the applicant for registration [or their conveyancer]
[name] of [address] [or [their conveyancer or specify appropriate details]]

that the provisions of [specify clause, paragraph or other particulars] of [specify details] have been complied with [or that they do not apply to the disposition]

This restriction is becoming a more popular option when registering deeds of trust. It allows the wording of the restriction to make specific reference to the deed of trust and requires that either written consent is required or a certificate is needed to confirm that the provisions of the deed have been complied with.

Cost

We do not charge for the preparation of an application to register a Form NN restriction but the Land Registry do levy a charge which currently stands at £40 for the entry of a standard restriction, further details of fees can be found here.

Form II

Form II (Beneficial interest that is a right or claim in relation to a registered estate)

No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to [name] at [address].

This restriction is a notice restriction. Its entry on the register places an obligation on the applicant for any new disposition to have served notice on the specified person at the specified address. This type of restriction is commonly used when someone with an interest in the property would like to be notified of a sale in order that they can then pursue any proceeds of the said sale.

Cost

We do not charge for the preparation of an application to register a Form II restriction but the Land Registry do levy a charge which currently stands at £40 for the entry of a standard restriction, further details of fees can be found here.

Guidance

Who can apply for a Restriction?

Compulsory Applications

Restrictions relevant to trusts

Form A

When an application for a restriction must be made

Cost

Effect of Registration

Form B

Form B (Dispositions by trustees—certificate required)

Cost

Effect of Registration

Form N

Form N (Disposition by registered proprietor of registered estate or proprietor of charge—consent required)

Cost

Effect of Registration

Form NN

Form NN (Disposition by registered proprietor of registered estate or proprietor of charge – consent or certificate required)

Cost

Form II

Form II (Beneficial interest that is a right or claim in relation to a registered estate)

Cost

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