MENU
The Restriction I am referring to is a Form K Restriction normally worded as follows:
“Restriction: No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to XYZ Limited being the person with the benefit of an interim charging order on the beneficial interest of Joe Bloggs made by the Newport County Court on 13th January 2015 (Court ref 7XY1234)”.
The wording of the Restriction seems to suggest that by serving notice, a seller will satisfy the terms of the Restriction and a purchaser will be registered as the new owner.
However, there is more to it than that. XYZ Limited obtained an Interim Charging Order against Mr Bloggs.
Therefore, even though it does not have a legal interest in the land, it does have an equitable or beneficial interest, i.e. an interest in the proceeds of sale. The company must therefore be repaid when the property is sold by the owners. This is on the assumption that XYZ Limited obtained a Final Charging Order of course.
It is correct that the purchaser will be able to register the title in his or her name free of the Restriction simply by providing a copy of the notice served on XYZ Limited. However, the seller still needs to deal with the underlying debt.
The seller and his solicitors will hold the sale funds as Trustees and the seller will be responsible for repaying the Charging Order in full.
Simply serving notice and thinking that the solicitor’s job is done will likely lead to further action against the seller and, in turn, a potential negligence claim against the solicitor.