Solely owned: Registration of a bankruptcy restriction (ISCIS) August 2010

Solely owned: Registration of a bankruptcy restriction (ISCIS)

August 2010

Introduction 

1. Solely owned property

When a property is solely owned and the owner is made bankrupt, the bankrupt’s legal interest in the property will vest automatically in the trustee. Where the property falls under the provisions of s283A, e.g. is recognised as the bankrupt's principal residence at the date of the order, the trustee has 3 years from the date of the bankruptcy order within which to deal with the bankrupt's interest. Where s.283A applies and the trustee fails to deal with the bankrupt's interest within the relevant 3 year period the property will automatically revest in the bankrupt. There are exceptions to the exact timing of the 3 year period. For more information on this subject please refer to the Case Help Manual: The Family Home.

Where the property falls outside the terms of s.283A and is not deemed to be the bankrupt's family home it will remain vested in the trustee at his/her discretion for the benefit of creditors, until it is sold or otherwise disposed of (e.g. disclaimed). It does not revest in the bankrupt on discharge. To protect the trustee’s interest in the property, a bankruptcy restriction is registered against the title at the Land Registry. In order for this to be done, certain other procedures have to be followed. Thus, it is important to understand a few basic functions of HM Land Registry. 

2. HM Land Registry

The Land Charges Department and District Land Registries are both part of HM Land Registry and are headed by the Chief Land Registrar. Access to information recorded by both, is available to the official receiver to assist in the discovery and/or protection of any registered land or charge affecting an individual or company.

HM Land Registry has a useful website  http://www.landregistry.gov.uk which contains explanatory leaflets, practice advice leaflets, all forms and the current Land Registration Fees Order (which was last amended in 2009). There is also an on-line enquiry system that can provide answers by e-mail. This facility can be found in the “Questions” section of the website. 

3. Land Charges Department (LCD)

(Amended October 2013)

Is situated at Seaton Court, 2 William Prance Road, Plymouth, PL6 5W. The LCD maintains a central register of pending court actions. Every bankruptcy petition presented to the court is recorded by the Land Charges Department in the register of Pending Actions and given what is known as a PA(B) number. Registration is made in every case against the individual’s name and regardless of the fact whether he/she owns or rents the property. This entry alerts third parties of the possibility that this person may be made bankrupt. 

When a bankruptcy order is made, the official receiver must immediately inform the Land Charges Department (except in exceptional circumstances e.g. stay of advertisement or stay of proceedings cases) whereupon the order will be recorded in the register of Writs and Orders and given a WO(B) number. No attempt is made at this stage to establish whether or not the bankrupt has any interest in the land.

The LCD informs the Land Registry daily of new bankruptcy petitions. The system is explained in more detail below.

The PA(B) Number and the WO(B) number should be recorded on ISCIS, (‘Data Store’ tab) under the land charges registry details section.  If there is insufficient space for the numbers to be recorded on the ‘Data Store’ tab then a note should be made on ISCIS recording the relevant dates and numbers (ISCIS ‘Notes’ tab) 

4. District Land Registries

(Amended November 2010)

These are more commonly referred to as "the Land Registry" but are situated on sites throughout England and Wales serving various areas. They are responsible for the registration of title to land and charges affecting the land. The District Land Registry maintains an up-to-date and authoritative land register showing an official record of legal ownership and certain other matters relating to the piece of land. Upon registration, each parcel of land is given a title number and every charge registered against that land is recorded in the Register of Title. It only deals with registered land. 

When the LCD informs the Land Registry of bankruptcy petitions, the Land Registry makes an entry on the title register where it appears that a sole owner may be the subject of a bankruptcy petition. This entry is known as a bankruptcy notice (previously a creditor’s notice). The Land Registry has a dedicated Bankruptcy Unit currently based in Plymouth. When a bankruptcy order is registered at the LCD, the LCD will provide the Land Registry’s Bankruptcy Unit with details of the bankruptcy proceedings and a list of title numbers that may be affected. The Land Registry then has to decide whether the individual subject to the bankruptcy proceedings is the same person as the registered proprietor of the land or of any charges on the titles which have been revealed. If it appears that the debtor is the sole –registered proprietor then an appropriate entry is made on the register of the title affected. If it is not clear that the debtor is  the registered proprietor then the Land Registry will write to the owner to clarify before any restriction is entered. In accordance with the Land Registration Rules 2003, the registered proprietor is informed of the entry that has been made. 

5. HM Land Registry Portal

(Amended July 2010)

The Land Registry portal offers instant on-line access to Land Registry information. Official receivers are connected to this facility and authorised user access can be granted to staff that require access to Land Registry information as part of their work. Each official receiver’s office has at least one Business Unit Administrator (BUA) who is responsible for maintaining user accounts within the office concerned and is the first point of contact for any Land Registry portal related queries by staff.  The BUA will act as a contact between the Land Registry and individual offices. Land Registry guidance notes are available on the intranet and contain a table listing the BUA’s.

To access the information held on the Land Register the full address of the property is required. Where the full address details are not known the official receiver should continue to use the paper/postal system.

Most of the HM Land Registry forms used by official receivers can be downloaded from the HM Land Registry website, http://www.landreg.gov.uk/. Photocopies of forms are not acceptable. When using any HM Land Registry form, the title number of a specific property should be quoted. Title numbers are available free of charge from the Land Registry's website home page. 

6. What information is held on the Land Register?

The Land Register is a record of all registrations in England and Wales. The register provides an up-to-date official record of the legal ownership relating to registered property and certain other matters. The Land Register is separated into three parts. They are: 

  • the property register which identifies the correct address and indicates whether the property is freehold or leasehold. There is also reference to the official title plan and it may also give particulars of any rights that benefit the land e.g. a right of way over adjoining land.
  • the proprietorship register which gives the name and address of the legal owner and shows whether there are any restrictions on their power to sell, mortgage or otherwise deal with the land. This is where a bankruptcy restriction (previously known as a bankruptcy inhibition) should appear. 
  • the charges register which contains particulars of registered mortgages or charges secured on the property. It also contains notice of other rights and interests to which the property is subject, such as leases, rights of way or covenants restricting the use of the property. The register will show for example, if there is a charge under the Housing Acts to secure repayment of the discount allowed under the council tenants "right to buy" scheme.

The official receiver will check the register in all cases to determine ownership and other information. 

7. Registration of Court Orders – bankruptcy notices and bankruptcy restrictions

As explained in para 4 , the Land Charges Department provides the appropriate District Land Registry with details of the petitions and bankruptcy orders made on a daily basis. Where the Land Registry identifies a debtor as a person owning registered land in his/her sole name, it must record a bankruptcy notice in the proprietorship register. Similarly, a bankruptcy restriction is registered once a bankruptcy order is made against an individual who has sole interest in the land. The Chief Land Registrar must give notice of the entry to the proprietor of the land or charge in accordance with Rule 165(2) of the Land Registration Rules 2003. 

8. Amendment of title of proceedings

Where an application is granted for the title of the proceedings to be amended, the official receiver should send notice immediately to the Chief Land Registrar to enable the appropriate amendments to be made to the register or make any new registrations that are required using form LRRABO (‘Docs’ tab). For further information, see Case Help Manual part: Application to Amend Description. 

9. How long do these registrations last?

The registration of a PA(B) or WO(B) number (indicating that a bankruptcy petition and/or order has been made) will remain against an individual’s name for at least five years from the date of registration, after which it will be automatically cancelled by the Land Charges Department. The only way an entry may be removed before this ‘expiry date’ is by order of the court that:

the petition is dismissed or withdrawn and an order is made vacating its registration, the bankruptcy order is annulled.

It is the debtor’s responsibility not the official receiver’s to request removal of the entries from the registers.

Conversely, the registration of a bankruptcy notice or bankruptcy restriction at the Land Registry will remain in force even though the Land Charges Department has automatically vacated its own entries (i.e. PA(B) and/or WO(B) number). A bankruptcy notice or bankruptcy restriction can only be removed in the circumstances outlined above or if the property is sold by the trustee. They will remain registered for as long as the debtor or bankrupt is proprietor of the property. 

10. What happens if a bankruptcy restriction has not been registered?

(Amended October 2013)

Where the official receiver becomes aware that a bankruptcy restriction has not been registered at the Land Registry, he/she should ensure that the Land Charges Department at Plymouth were originally informed of the bankruptcy order and has also been appropriately notified of any amendment(s) to the title of the proceedings. If not, form LRRABO (‘Docs’ tab) should be sent to the Chief Land Registrar immediately. Where the Land Charges Department was notified and has returned its acknowledgement quoting the WO(B) number, form LRCBI must be sent immediately to the Land Registry, Bankruptcy Unit, Land Charges Department, Seaton Court, 2 William Prance Road, Plymouth, PL6 5W (DX 8249, Plymouth 3). This letter requests that a bankruptcy restriction be registered and must be accompanied by a copy of the bankruptcy order. Land Registry are also requested to confirm that a bankruptcy restriction has been registered.

11. Registration of trustee as proprietor

Under the Land Registration Rules 2003, the official receiver as trustee may be registered as proprietor of solely owned land in place of the bankrupt. The application must be made on Land Registry form AP1. There is a fee payable to the Land Registry for this. The official receiver must also provide the Chief Land Registrar with a copy of the bankruptcy order and a statutory declaration signed by the official receiver stating that the land or charge is part of the bankrupt’s estate. 

12. Dealing with unregistered land that is solely owned

Where a bankrupt is the sole owner of unregistered land, the only real protection for the trustee is control of the title deeds and registration of the PA(B) and WO(B) entries at the LCD. Thus, the official receiver should endeavour in all cases to obtain and hold the title deeds from the bankrupt. Similarly, the official receiver must ensure that the bankruptcy order is registered at the LCD. Also, any mortgagees have to be made aware of the trustee’s interest in the land.

Under the LRA2002, the trustee as legal owner is unable to lodge a caution against first registration over unregistered land but this provision was deferred until October 2005.  However, the official receiver can enter a caution against first registration if the bankrupt is the joint owner of a property, For further information please refer to Technical Notice: T45-05: Registration of Land: Withdrawal of facility to register cautions against first registration. Technical Manual paragraph 50.78 is being updated with this information. It is not anticipated that there will be many cases where the bankrupt is the sole owner of unregistered land and in any instances full guidance will be given by the examiner concerned.

 

Where can I find out more?

ISCIS Protocols

Data Store

Case Instructions & Notes

Asset Recording

Technical Manual

Chapter 31.3

Chapter 31.3 Part 1 paragraph 31.3.3 Initial Enquiries

Chapter 50: Dealings with the Land Registry

Insolvency Rules :

6.34(2)(a) Notice to Chief Land Registrar of BO (creditor’s petition)

6.46(2)(a) Notice to Chief Land Registrar of BO (debtor's petition)

6.35 (2) Amendment of title of proceedings (creditor's petition)

6.47 (2) Amendment of title of proceedings (debtor's petition)

Land Registration Act 2002

Land Registration Rules 2003

165(2) debtor informed of entry of bankruptcy notice

Case Help Manual parts:

Application to Amend Description 

Freehold property: Jointly owned - Registering a Form J Restriction 

Technical Notice: T45-05: Registration of Land: Withdrawal of facility to register cautions against first registration

OROS Bulletin Feb 06: paragraph 16: Land Registry - free searches

Forms to be used:

LRRABO

Land Registry, register BO or amend registration

LRCBI

Letter to Land Registry confirming bankruptcy restriction registered

MP1 

Offer to purchase letter

MP2

Letter seeking information from mortgagees

MP3

Letter to a mortgagee asking them to note the OR's interest in a property which forms part of the bankruptcy estate

Land Registry

Land Registry website http://www.landreg.gov.uk/  

Form: AP1 Application to change the register

Land Registry Practice Guide (LRPG) no 34 – Personal Insolvency

Land Registry Practice Guide (LRPG) no 35 – Corporate Insolvency

 

Registration of a Bankruptcy Restriction Flowchart 

 

Procedure

1. Receive instructions from examiner to deal with solely owned property.

2. Using the Land Registry Portal facility, obtain an office copy of the register of title for the property by means of either the address or the title number if known. Print the details shown on the screen.

3. Confirm that the bankrupt is the sole owner (Proprietorship Register).  Once established, details of the asset should be entered on ISCIS, along with charge details and property type (e.g. family home). These details should all be added under the ‘Assets’ tab.

4. If not, check address for accuracy. If address is correct but the bankrupt is not the sole owner, refer to the B1 examiner immediately.

5. A bankruptcy restriction should be recorded in the Proprietorship Register. If it has not follow the instructions set out in steps 9 - 15.  

6 Send form MP2 to all known mortgagee(s) (‘Docs’ tab).

7 If the OR is (to be) trustee, send 2 copies of form MP3 to all known mortgagees (‘Docs’ tab) and await their return by way of acknowledgement.

If a bankruptcy restriction has not been registered

8 Check that the address has been included in the description. If not, refer to examiner for amendment of title of proceedings. For further information on this procedure, please refer to CHM part: Application to Amend Description.

9 If the address is included in description, check that form LRRABO (‘Docs’ tab)  has been sent to Land Charges Department. Send immediately, if previously not sent.

10 If the title of proceedings has been amended, has an updated LRRABO (‘Docs’ tab) form been sent to Land Charges Department? Send immediately if not.

11 If all the relevant form(s) have been sent, acknowledgement should have been returned from the Land Charges Department quoting the WO(B) number which should be entered onto ISCIS (‘Data Store’ tab).

12 Contact the Land Charges Department if you do not have this.

13 If the Land Charges Department have been correctly notified and you have received their acknowledgment(s) but there is still no bankruptcy restriction recorded on the register of title, send 2 copies of form LRCBI to the Land Registry Bankruptcy Unit quoting the address and title number of the property (‘Docs’ tab).

14 Await return of second copy of letter to confirm registration of restriction.

When a bankruptcy restriction has been registered

15 Check charges register corresponds with bankrupt’s list of mortgagees and charge-holders.

16 Notify any additional mortgagees or charge-holders as in steps 6 & 7.

17 Ensure questionnaire(s) and duly signed copy/ies of form MP3 have been returned from all mortgagees and charge-holders. If not, send reminders.

18 Check questionnaires for any endowment policies or details of security held by mortgagees.

19 Send to the insurers forms NTASS (one of which will be a schedule) requiring them to give details of the policy/ies held and give notice to the OR of any proposed action or dealings during the term of the policy/ies (‘Docs’ tab)

20 When all mortgagees, charge-holders and insurers have duly replied, ensure that full details are recorded on ISCIS (‘Assets’ tab) as a note. Also, remember to update the ‘Assets’ tab on ISCIS to confirm whether or not the property is to be considered under s.283A i.e. the bankrupt's family home. The information is recorded against the relevant property on ISCIS (‘Assets’ tab) using a drop down menu for property type.