Completion of house sale with restrictions, solicitors saying debts need to be settled

[had-enough]

Good evening

 

I hope someone can give me some advice on what to do next.

 

I was due to complete the sale of my house yesterday,

however 3 days ago (Friday) I was told by my solicitors that the house couldn't be sold due to 2 restrictions on it against my ex partner.

 

 

I have explained that all they need to do is to notify the creditors that the house is to be sold,

and have proof to show that they have given said written notification,

as this is what the LR will need to see before registering the transfer of the new owners

and the restriction being removed as the interest of the new owners overreaches the interest of the creditors.

 

I have confirmed this with the LR and have asked my solicitors to do the same in 3 separate emails,

however they have come back every time to say that the money to the creditors need to be paid

before the sale can complete and have not confirmed that they have spoken to the LR.

 

I am banging my head against a brick wall stating to them that this is not the case.

 

There will be no funds in my ex-partners share to pay any of the creditors as I have a court order for sale of the house

that states how the proceeds shall be divided.

 

 

After discharge of the mortgage, sellers and legal fees, all mortgage payments that I have made against the property for the past 2 years

and the amount of the arrears that have been accrued, (which is more than his half of the share) is due to myself.

 

I feel like my solicitors are not acting correctly, and are telling me pack of rubbish,

and I am at a loss as to what to do next.

 

 

Can I instruct another solicitor that knows what they are talking about to act on my behalf in the sale?

 

I am really worried that the sale will fall through due to their incompetence.:mad2:

 

Any advice is appreciated.

[goodatresearch]

Ask them to specifically state in writing whether they have spoken to the LR and ask the LR to send you an email stating that there is no need to pay the restriction and forward to your Sol.

 

If your Sol won't change their view tell them your going elsewhere as they don't understand the law and aren't acting in your best interests. As far as I'm concerned this is negligence.

[BazzaS]

Good evening

 

I hope someone can give me some advice on what to do next.

 

I was due to complete the sale of my house yesterday, however 3 days ago (Friday) I was told by my solicitors that the house couldn't be sold due to 2 restrictions on it against my ex partner. I have explained that all they need to do is to notify the creditors that the house is to be sold, and have proof to show that they have given said written notification, as this is what the LR will need to see before registering the transfer of the new owners and the restriction being removed as the interest of the new owners overreaches the interest of the creditors.

 

I have confirmed this with the LR and have asked my solicitors to do the same in 3 separate emails, however they have come back every time to say that the money to the creditors need to be paid before the sale can complete and have not confirmed that they have spoken to the LR.

 

I am banging my head against a brick wall stating to them that this is not the case.

 

There will be no funds in my ex-partners share to pay any of the creditors as I have a court order for sale of the house that states how the proceeds shall be divided. After discharge of the mortgage, sellers and legal fees, all mortgage payments that I have made against the property for the past 2 years and the amount of the arrears that have been accrued, (which is more than his half of the share) is due to myself.

 

I feel like my solicitors are not acting correctly, and are basically telling me pack of rubbish, and I am at a loss as to what to do next. Can I instruct another solicitor that knows what they are talking about to act on my behalf in the sale?

 

I am really worried that the sale will fall through due to their incompetence.:mad2:

 

Any advice is appreciated.

Ask them to specifically state in writing whether they have spoken to the LR and ask the LR to send you an email stating that there is no need to pay the restriction and forward to your Sol.

 

If your Sol won't change their view tell them your going elsewhere as they don't understand the law and aren't acting in your best interests. As far as I'm concerned this is negligence.

 

If there is a restriction at the land registry : it is there to prevent new owners being registered until the restriction is removed.

 

I don't understand why the OP feels they should be paid proceeds ahead of a registered interest.

This is why charges are registered over property : so they don't have to wait in line with unsecured creditors.

 

I'm also confused by the OP's use of the phrase "over-reaching" as this has a specific meaning applicable to overreaching

over a trust interest in the land (by ensuring there are at least 2 trustees who are paid market value for the land by the buyer).

 

Given the above, on what basis do you feel the solicitors have been negligent?

[goodatresearch]

The argument that the restriction has to be paid before the new owners can register the land had no legal basis at all.

 

 

Unfortunately many solicitors don't understand this and if they kept their legal knowledge current they would know this.

Of course a solicitor telling a Client that the restriction legally has to be paid when it hasnt is negligent.

 

Read around this forum on this issue and the LR guidelines and you will see I am right.

 

If there is a restriction at the land registry : it is there to prevent new owners being registered until the restriction is removed.

 

I don't understand why the OP feels they should be paid proceeds ahead of a registered interest. This is why charges are registered over property : so they don't have to wait in line with unsecured creditors.

 

I'm also confused by the OP's use of the phrase "over-reaching" as this has a specific meaning applicable to overreaching over a trust interest in the land (by ensuring there are at least 2 trustees who are paid market value for the land by the buyer).

 

Given the above, on what basis do you feel the solicitors have been negligent?

[AndyOrch]

Since the Land Registry Rules 2003 took effect in October 2003,

a charging order is registered as either an ‘agreed notice’ (shown on the register as an ‘equitable charge’) or a ‘restriction’.

 

Prior to October 2003 where only one of the owners / registered proprietors was the judgment debtor, the order was registered as a ‘caution’.

A caution served much the same purpose as a restriction.

Any cautions registered before October 2003 will remain on the register.

 

A notice or restriction does not impose an obligation to make payment when the property is sold.

However if the judgment debtor (or any one of the co-proprietors) attempts to dispose of the property,

the District Land Registry will advise the claimant of the interest in the property.

 

Prospective purchasers will be wary of buying a property subject to a notice or restriction and, more often than not,

will want the notice or restriction removed before completing the sale.

 

Obviously Claimants will not allow restrictions to be removed until the judgment debt has been paid.

 

Regards

 

Andy

 

 

Thread moved to the appropriate forum.

[BazzaS]

The argument that the restriction has to be paid before the new owners can register the land had no legal basis at all. Unfortunately many solicitors don't understand this and if they kept their legal knowledge current they would know this. Of course a solicitor telling a Client that the restriction legally has to be paid when it hasnt is negligent.

 

Read around this forum on this issue and the LR guidelines and you will see I am right.

 

"A notice entered in the register in respect of a third party interest will protect its priority against that of a subsequent registrable disposition for value. A restriction, by preventing the registration of a subsequent registrable disposition for value, will prevent the priority of a third party interest from being postponed."

 

From:

https://www.gov.uk/government/publications/notices-restrictions-and-the-protection-of-third-party-interests-in-the-register/practice-guide-19-notices-restrictions-and-the-protection-of-third-party-interests-in-the-register--2

 

Which is a link following from

https://www.gov.uk/government/publications/notices-restrictions-and-the-protection-of-third-party-interests-in-the-register

 

Which notes: "Updated: 30 June 2014"

 

Read around this forum on this issue and the LR guidelines and you will see I am right.

 

In practice : a buyer won't buy a property subject to a restriction. Why invite trouble?.

[Ganymede]

The argument that the restriction has to be paid before the new owners can register the land had no legal basis at all. Unfortunately many solicitors don't understand this and if they kept their legal knowledge current they would know this. Of course a solicitor telling a Client that the restriction legally has to be paid when it hasnt is negligent.

 

Read around this forum on this issue and the LR guidelines and you will see I am right.

 

Well solely in relation to the negligence issue, I'm not sure we have enough information to make that call.

 

We have no idea if the solicitor is acting for the mortgagee as well and what their instructions are etc.

[Mike_hawk]

Agree with Gany...nor form of restriction (there are many). I think its been assumed its k but not always the case.

[goodatresearch]

They may want the restriction removed before completion but it is not necessary.

 

 

The beneficiary of the restriction just needs notifying than a transfer is taking place and the Land Registry advised when its done.

The LR will then proceed without further problems.

Any up to date solicitor acting for either party should know this.

Essentially its all about timing it properly. Plenty have done this.

 

 

Since the Land Registry Rules 2003 took effect in October 2003,

a charging order is registered as either an ‘agreed notice’ (shown on the register as an ‘equitable charge’) or a ‘restriction’.

 

Prior to October 2003 where only one of the owners / registered proprietors was the judgment debtor, the order was registered as a ‘caution’.

A caution served much the same purpose as a restriction.

Any cautions registered before October 2003 will remain on the register.

 

A notice or restriction does not impose an obligation to make payment when the property is sold.

However if the judgment debtor (or any one of the co-proprietors) attempts to dispose of the property,

the District Land Registry will advise the claimant of the interest in the property.

 

Prospective purchasers will be wary of buying a property subject to a notice or restriction and, more often than not,

will want the notice or restriction removed before completing the sale.

 

Obviously Claimants will not allow restrictions to be removed until the judgment debt has been paid.

 

Regards

 

Andy

[goodatresearch]

In the case of jointly owned property, if only 1 of the owners owes a debt, only a restriction can be entered .

 

This is a K restriction which has specific wording.

 

Of course the creditor can ask the LR to use different wording so to stop sale without payment,

but the LR is not likely to agree due to the rights of the other co owner.

 

What usually happens is the purchasers Sol will tell the LR that a disposition has taken place and the creditor has been notified.

The LR will not insist that the creditors permission is needed.

 

Unfortunately many solicitors don't know this.

You have sellers sols insisting it has to be paid and buyers sols not advising their client that there won't be a problem.

 

=Mike_hawk;4605076]Agree with Gany...nor form of restriction (there are many). I think its been assumed its k but not always the case.

[Mike_hawk]

I did mention there seemed to be an assumption it was a form k restriction, without the op confirming we would be ignoring forms of A, B, BB, C, D, DD, E, F, FF....etc etc

[had-enough]

I did mention there seemed to be an assumption it was a form k restriction, without the op confirming we would be ignoring forms of A, B, BB, C, D, DD, E, F, FF....etc etc

 

Thank you everyone for comments so far

 

I don't know if it is a form K restriction as it doesn't specify it on the title, but the wording for both is as follows:

 

(DATE) RESTRICTION: 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

CREDITOR & ADDRESS, being the person with the benefit of

an interim charging order on the beneficial interest of CO-OWNER

made by the LOCAL COURT on DATE (Court reference

XXXXXXXXX).

[Mike_hawk]

Standard form K restriction, the issue you have is that mortgage providers tend to insist on removal of all restrictions as a condition at drawdown of funds. Legally, I don't believe there is any requirement to satisfy the charge...... in the real world I would imagine the mortgagee is fairly explicit in its instruction to the conveyancer.

 

The response you received... 'however they have come back every time to say that the money to the creditors need to be paid before the sale can complete' is probably entirely accurate, if a little short.

[goodatresearch]

So as iv suspected a standard K restriction.

 

Can't assume that its all down to the buyers mortgage company's instructions to the buyers solicitor. When this problem arises, from complaints Iv seen its usually the buyers/sellers solicitors who are mistaken in their interpretation of the rules. Mortgage companies main concern is profit and most, i believe, would understand the difference between an restriction and a CO. It is possible that they have just said the restriction should be removed to remind the buyers Sol to follow the correct procedure I.e notify the creditor and tell the LR they have done so.

 

If i was the OP, i would ask her solicitor to put in writing why it has to be paid off. If its because the buyers sols are insisting of this, is it because of the mortgage companys instructions or because of their own interpretation of the rules. If the latter, her Sol has a duty to act on her best interests and should be explaining to them that they are incorrect. If seen this happen and the sale has proceeded without the destruction being paid.

 

If its her own Sol, I'd be going elsewhere and lodging a letter of complaint. I'm not the op, but I'd rather lose the sale than pay my exs debt. Don't forget, she has a court order.

 

 

 

Standard form K restriction, the issue you have is that mortgage providers tend to insist on removal of all restrictions as a condition at drawdown of funds. Legally, I don't believe there is any requirement to satisfy the charge...... in the real world I would imagine the mortgagee is fairly explicit in its instruction to the conveyancer.

 

The response you received... 'however they have come back every time to say that the money to the creditors need to be paid before the sale can complete' is probably entirely accurate, if a little short.

[steampowered]

You have to consider the view of the purchaser/lender. Most buyers/lenders will want the restriction to be discharged before the sale goes through.

 

If its because the buyers sols are insisting of this, is it because of the mortgage companys instructions or because of their own interpretation of the rules. If the latter, her Sol has a duty to act on her best interests and should be explaining to them that they are incorrect.

I don't think it matters what the solicitor thinks, if he has instructions about how to approach this issue. The solicitor has to follow the instructions of his/her client. Banks have panels of conveyancing solicitors who are given very clear instructions about what the bank's policy is.

[goodatresearch]

I understand this, but we don't know this is the case do we. Its all guess work at best.

 

As I've explained, she should go back to her Sol and confirm the facts so that she can make an informed position.

 

I don't know what figures we are talking about, but it could be cheaper to withdraw (if this is down to the purchasers mortgage company/bank being numptys in their prior understanding of the law), then to pay a debt that is not hers and try and pursue her former partner for the Money).

 

 

[/b]

=steampowered;4605387]You have to consider the view of the purchaser/lender. Most buyers/lenders will want the restriction to be discharged before the sale goes through.

 

I don't think it matters what the solicitor thinks, if he has instructions about how to approach this issue. The solicitor has to follow the instructions of his/her client. Banks have panels of conveyancing solicitors who are given very clear instructions about what the bank's policy is.

[had-enough]

Thank you again for the comments, they have been very helpful.

 

I have asked my solicitors the reason why they believe the debt should be paid and they have responded in writing saying that the buyers solicitors will not complete unless they have assurance that the restrictions will be removed upon completion.

 

 

My solicitors have stated that they cannot give this as they have from the third party, along with a redemption statement, that they will not remove the restrictions until the debt is paid.

 

So again they are not understanding the restriction and are taking no steps to investigate fully.

 

I spoke to another conveyancing firm today who also said that the third party would not give a certificate until it had been paid, it seems solicitors that know the rules seem to be like rocking horse poo (excuse the term)

 

I will be looking to bring a claim against my solicitors for negligence as they are not acting in my best interest given that I have informed them of the actual rules and asked them to clarify with the LR, but they have not.

 

Unless I can find a solicitor that understands the restriction I will be forced to hand the house back to the mortgage company,

The house is empty, however I am still paying the mortgage on it , which is money that I cannot get back.

 

 

This will mean that I will lose circa of 30k from the proceeds of the sale.

The debt is owed is circa 40k.

The house is empty, however I am still paying the mortgage on it

[goodatresearch]

They can give their assurance that the restriction will be removed because the LR will remove it following the sale as it is now obsolete. The LR do not need the creditors permission to remove it following the sale. The creditor hshas been economical with the truth, what they mean is they can only block its removal before the sale and they have no such power after the sale.

 

If i were you id sit down with phone for as long as it takes until i found a solicitor who understood the law.

 

Thank you again for the comments, they have been very helpful.

 

I have asked my solicitors the reason why they believe the debt should be paid and they have responded in writing saying that the buyers solicitors will not complete unless they have assurance that the restrictions will be removed upon completion. My solicitors have stated that they cannot give this as they have from the third party, along with a redemption statement, that they will not remove the restrictions until the debt is paid.

 

So again they are not understanding the restriction and are taking no steps to investigate fully.

 

I spoke to another conveyancing firm today who also said that the third party would not give a certificate until it had been paid, it seems solicitors that know the rules seem to be like rocking horse poo (excuse the term)

 

I will be looking to bring a claim against my solicitors for negligence as they are not acting in my best interest given that I have informed them of the actual rules and asked them to clarify with the LR, but they have not.

 

Unless I can find a solicitor that understands the restriction I will be forced to hand the house back to the mortgage company, The house is empty, however I am still paying the mortgage on it , which is money that I cannot get back. This will mean that I will lose circa of 30k from the proceeds of the sale. The debt is owed is circa 40k. The house is empty, however I am still paying the mortgage on it

[had-enough]

I plan to tomorrow goodatresearch , fingers crossed i find one

 

Thank you for all your help