Conveyancing: What is a Restriction On Title?

Image of keys being handed over.

A ‘restriction on title’ is an entry made on the title deeds of a property in favour of those who want to protect their interests in a property. Trainee Solicitor, Connor Ball-Wood discusses in his latest blog…

A restriction prevents a disposition (sale, transfer, gift or new mortgage) of the property being registered unless certain conditions are fulfilled. If the terms of a restriction are not complied with, the Land Registry will not register the disposition.

Restrictions are generally used for two reasons. However, this list is not exhaustive:

• To protect the interests of a third party (not the registered owner) e.g. a beneficiary.
• To ensure that the owner of the property complies with certain conditions before the property is disposed of.

Selling A Property With A Restriction

When you are selling a property with a restriction, you must take all necessary steps to comply with the restriction.

One of the most common restrictions is one registered in the favour of a mortgage lender who has a mortgage secured on the property. To comply with this restriction, the lender will require repayment of the mortgage.

If the property was to be transferred without repayment of the mortgage, consent from the lender would be required in order to comply with the restriction.

Other common restrictions to be aware of when selling a property may require you to obtain the consent of third parties e.g. a Management Company.

There are many Land Registry Standard Form restrictions, and Non-Standard Restrictions that can be registered. In all cases the wording of the restriction will indicate which steps are required to be taken to dispose of the property.

Buying a Property with a Restriction

If there is a restriction on the title of a property that you are buying, your Conveyancer will ensure that all the required steps have been taken by the seller to comply with the restriction upon completion. Using the example of the restriction in favour of a mortgage lender, your Conveyancer will ensure that the sellers Conveyancer will repay any outstanding mortgage(s) on completion for that restriction to be removed.

Common restrictions with new build and leasehold properties are in favour of a Management Company to secure the payment of a service charge in respect of common areas, private roads or open spaces.

To comply with these particular restrictions, written consent from the Management Company will be required. In most cases, this will include the payment of additional fees to the Management Company, and the completion of additional documents e.g. a Deed of Covenant. It may also be necessary to apply to become a member of the Management Company.

A restriction in favour of a Management Company will remain on the title and will need to be complied with each time the property is sold, transferred or mortgaged.

Land Registry Practice Guide

More information on restrictions on title is available in Land Registry Practice Guide 19: Notices, Restrictions and the protection of third-party interests in the register which can found HERE.