What is a restriction on title when you are buying or selling property?

What is a restriction on title when you are buying or selling property?

A restriction on title is a measure commonly used by people looking to protect their interests in a property. It means that an entry is made on the Title Deeds stipulating certain conditions which must be met should the property be sold, transferred or gifted in the future.

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Why use a restriction on title?

A restriction on title is often used in cases where obligations need to be met before a property is sold. It may be used where two or more buyers have purchased a property in unequal shares or to protect the interests of someone not named on the property’s title deeds. A restriction can be used where non-owners have a right to benefit from a sale, such as in bankruptcy cases. Another common restriction prevents land held by a charitable trust from being sold for less than market value. Many newer properties have restrictions to enter a Deed of Covenant, legally binding you to do something such as pay towards building maintenance or communal areas.

The Land Registry has set out a list of 30 standard form restrictions that are frequently used but in certain circumstances, a non-standard restriction can be drawn up.

Selling a property with a title restriction

If you are selling a property with a title restriction, it almost goes without saying that you need to be able to meet the restriction first. The wording of the restriction will dictate what needs to be done and how to do it and your conveyancer will be able to help you understand it. It may be that you need to carry out certain steps or obtain the consent of a third party, such as a management company or a mortgage lender prior to disposition (sale or transfer) of the property.

Buying a property with a title restriction

When purchasing a property with a restriction on title, it is the job of your conveyancer to ensure the seller has satisfied any conditions contained therein. Some restrictions, such as one in favour of a management company, may stay on the property for future sales, while others will be removed. Applying to the Land Registry for removal is a job for your conveyancer.

Using a restriction to protect you from fraud

Another common type of restriction is a Form LL restriction. These are not mandatory but are highly recommended by the Land Registry to prevent anyone selling your property without your knowledge. A Form LL Restriction prevents any disposition of a property until a conveyancer has checked the identity of the person trying to sell it and signed a certificate confirming that identity. A Form LL restriction has to be removed by a qualified and registered conveyancer.

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Restrictions on title can be applied at the discretion of a registrar. One is likely to be added where it can be shown to help protect a right in relation to a registered estate, securing interest or preventing unlawfulness.