Withdrawal of a Form J restriction (ISCIS)

Withdrawal of a Form J restriction (ISCIS)

(December 2010)

Introduction

1)   Why does the official receiver have to register a Form J Restriction?

The Land Registry will not register a bankruptcy restriction against any jointly owned land in which the bankrupt has an interest, even where all the owners are subject to bankruptcy proceedings. As a result the official receiver has to lodge a Form J Restriction (formerly known as a caution) with the Land Registry in order to protect his or her interest in a property where one or all of the owners are bankrupt.

For more information see Case Help Manual (CHM) part – Freehold Property – Solely owned - Registration of a Bankruptcy Restriction.

It was under the Land Registration Act 2002 (LRA2002) that ‘cautions against dealings’ in properties were abolished and replaced with Form J Restrictions. The Act came in to force on 13 October 2003 so no cautions will have been registered by the official receiver since that date. Furthermore, the changes that the Enterprise Act 2002 (EA2002) brought in when it came in to force on 1 April 2004 regarding ‘The Family Home’ and the 3 year rule etc should have ensured that the vast majority, if not all, of the old caution cases have been dealt with.

If for any reason the official receiver has cause to make application to the relevant District Registry for removal of a caution he or she will need to complete and forward form LRWCT – ‘Land Registry, withdraw caution’ that is still available in ISCIS (‘Docs’ tab).

 

2)  What is the effect of a Form J Restriction?  

The effect of a Form J Restriction is that if an attempt is made to sell the property, any prospective purchaser who obtains a copy of the register of title will become aware of the official receiver’s interest in the property. The prospective purchaser (or representative, usually a solicitor) will then generally contact the official receiver to query why the Form J Restriction is held and request that it be withdrawn, at which point the official receiver can consider the most appropriate course of action.

For more information see CHM part – Freehold Property – Jointly owned - Registering a Form J Restriction

 

3)  When should the official receiver withdraw a Form J Restriction?

The official receiver or his or her solicitor may withdraw a Form J Restriction at any time. This action is usually prompted where the beneficial interest in the property has been dealt with and the trustee therefore has no further interest in it.

 

4)  Why would the official receiver withdraw a Form J Restriction?

Where the official receiver no longer holds any legitimate entitlement to an interest in a property or part thereof, it follows that he or she should remove any precautions taken to secure the asset. For example, where the official receiver is selling his or her beneficial interest in a property to a joint owner or other third party, he or she would then be required to withdraw the Form J Restriction registered at HM Land Registry, but only on completion of the sale.

The official receiver may also be requested to withdraw his or her Form J Restriction where an insolvency practitioner (IP) is appointed trustee after the official receiver has registered an interest in the property with the Land Registry.

 

5)  What if the owners are selling their property themselves?

Where joint owners are selling their property at ’arm's length’ (i.e. not to a relative or associate) and one (or both) of them is bankrupt, their conveyancing solicitor may contact the official receiver to request the withdrawal of his or her Form J Restriction(s).

Before agreeing to do so, the official receiver should ensure that the property is not being sold at an undervalue. Also, an undertaking must be obtained from the solicitor that the official receiver will receive half of the net proceeds from the sale of the property, being the bankrupt’s share, (or all, if there are two owners and both are bankrupt), for the benefit of the bankrupt's estate(s). Any queries regarding such a sale should be referred to the examiner.

 

6)  How is a Form J Restriction withdrawn?

(Amended May 2013)

The official receiver or his or her solicitor may withdraw a Form J Restriction by making application to the Land Registry Bankruptcy Unit, by completing and forwarding Land Registry form RX4 – ‘Application to withdraw a restriction’ To view and download a Word version of the latest issue (10/12) of form RX4, Click HERE.  The completed form RX4 should be sent to:

Land Registry Bankruptcy Unit

Plymouth Office

Seaton Court

2 William Prance Road

PL6 5WS

  

If TLT Solicitors are involved in the conveyancing, where the official receiver is ’selling’ the bankrupt’s beneficial interest in a jointly owned property, for example to the other non-bankrupt joint owner, they will make the application to withdraw the Form J Restriction on the official receiver's behalf.

 

7)  Can a bankrupt or non-bankrupt joint owner apply for withdrawal of a Form J Restriction

A bankrupt or a non-bankrupt joint owner could apply to the Land Registry to have the Form J Restriction withdrawn. If the official receiver has not requested that it be withdrawn, it may well be the case that he or she is not agreeable to its removal, so advice should be sought from the examiner.

 

8)  What are the effects of withdrawing a Form J Restriction?

In practical terms, by withdrawing a Form J Restriction the official receiver is in effect giving up any interest in the land/property. However, in law he or she is probably only losing the benefits that a Form J Restriction might bring.

 

9)  Will the Land Registry confirm when the Form J Restriction has been removed?

The Land Registry does not send written confirmation that the Form J Restriction has been removed. As part of their procedure, prior to  removing the Form J Restriction they will send a 'warning notice' to the person who  registered the Form J Restriction, in this case the official receiver. The notice clearly states the time limit for receipt of a response detailing an objection, and also points out the other options available. If no objection is received from the official receiver within the time limit, the Form J Restriction will cease to have any effect and will be automatically cancelled from the register.

Where an RTLU is dealing with the property concerned it is envisaged that the majority of the 'warning notices' should be dealt with by them. It is important to act promptly when a 'warning notice' is received in the office, in view of the short timescale involved.

 

Where can I find out more?

Enterprise Act 2002

Land Registration Act 2002

Land Registration Rules 2003

Land Registration (Amendment) Rules 2008

Technical Manual

Chapter 50 – Dealings with the Land Registry

Case Help Manual

Freehold Property – Jointly owned - Registering a Form J Restriction

Freehold Property – Solely owned - Registration of a Bankruptcy Restriction

Forms to be used

LRWCT – Land Registry, withdraw caution

RX4 – Application to withdraw a Form J Restriction - Click HERE to view 

 

Withdrawal of a caution or Form J restriction Flowchart  

 

Procedure

Dealing with a request for the removal of a Form J Restriction

   Receive a request for the official receiver to withdraw his or her Form J Restriction.

2    If an IP has been appointed trustee and is still in office, forward the request to him or her.

   If the IP who has been appointed trustee makes the request complete LR form RX4. Often the IP will forward a completed form RX4 for signature only.

  Send the completed form RX4 to the official receiver (or deputy) for signing, together with the letter from the IP and proof of his or her appointment.

5   When the official receiver (or deputy) has signed the LR form RX4,  forward the original to the IP and place a copy on the case file.

6   Update ISCIS (‘Notes’ tab) as appropriate.

7   If the RTLU are dealing with the property forward the initial request letter to them.

   Where the property is not being dealt with by the RTLU, refer the matter to the examiner for instructions on how to proceed and action as appropriate.

Dealing with a 'Warning Notice' received from HM Land Registry

9    Warning notices must be dealt with urgently as there are time limits within which to respond. Seek advice immediately from the examiner.

10    If a warning notice is not objected to by letter within the time limit stated, a Form J Restriction will be removed.

11    Check to see whether an IP has been appointed trustee and is still in office. If so, forward the warning notice to him or her without delay.

12    Where the RTLU are dealing with the property, send the warning notice to them immediately.

13    Where TLT solicitors are dealing with the sale of the OR’s beneficial interest, they will have applied to the Land Registry on his or her behalf. If this is the case, file the warning notice with the case papers and take no further action.

14    In the event of the official receiver not being aware of any property transaction or has not agreed to the withdrawal of the caution or Form J Restriction, refer the matter immediately to the examiner for instructions and action as appropriate.