For updated guidance regarding the registration of a Form J restriction please see the Case Help Manual part, Freehold Property – Jointly owned – Registering a Form J restriction (ISCIS).
50.69 General - Form J restrictions (Amended March 2010)
Under the LRA2002 cautions against dealings were abolished. Under the LRA2002 Form J restrictions are available to protect the interest in a jointly owned property. The general effect of the LRA2002 is to preserve the nature and effect of existing cautions against dealings. This is achieved by providing that sections 55 and 56, LRA1925 continue to have effect in relation to existing cautions (paragraph 2(3) of Schedule 12, LRA2002). A Form J restriction can be registered by the official receiver as trusteeor by an insolvency practitioner as trustee to protect the equitable interest of a bankrupt’s estate that vests in the trustee.
A Form J restriction, when registered, is placed on the Proprietorship Register of property as a warning to anybody having possible dealings with that property. A Form J restriction will warn any prospective purchaser of the trustee’s interest. The Form J restriction will also warn other parties, e.g. a finance company thinking of providing funds secured by a charge on the property.
A Form J restriction reads as follows:
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 [name of trustee in bankruptcy] (the trustee in bankruptcy of [name of bankrupt person]) at [address for service].
This wording cannot be amended as it is prescribed by the Land Registration Act 2002, section 43(2)d, and by the Land Registration Rules 2003, Schedule 4., as amended by the Land Registration (Amendment) Rules 2008.
Further details about form J restrictions and guidance on the process for applying for a form J restriction is outlined in the Case Help Manual part - Jointly Owned: Registering a Form J restriction
50.70 Instances where a Form J restriction should be registered - bankruptcy (Amended March 2008)
The official receiver will not have an interest in the legal estate of a jointly owned property but will have an interest in the proceeds of sale. The official receiver, when acting as trustee, should consider registering a Form J restriction with the relevant Land Registry office in the following circumstances:
(a) Where the property is a jointly owned dwelling house;
(b) Where the property is or is suspected to be jointly owned with another but is not a dwelling house e.g. it is suspected that the bankrupt has an interest under a trust of the property but is not registered as proprietor;
(c) Where the property is jointly owned but is not a dwelling house and it is not readily saleable at the time but there is every reason to believe that the circumstances will enable disposal at a later date.
Any suspicion that a debtor has an interest in a property will firstly need to be based on sound enough evidence for the Land Registry to be prepared to accept the application in the first place, and secondly, if the entry of the restriction was ever challenged in court, the official receiver would want to be able to show that he/she had acted reasonably in entering the restriction or he/she will be liable in damages.
50.71 Notice to mortgagees
The registration of a Form J restriction has only limited effect because it does not prevent dealings with the property. Accordingly, the official receiver must contact all known mortgagees as soon as possible after the bankruptcy order is made. To protect his/her interest in the property, whilst trustee, the official receiver must serve notice on the mortgagees asking them to account to him/her if they realise their securities or if any other action is taken against the property.
Notes: [form MP3]
50.72 Registering a Form J restriction - when receiver and manager
(Amended March 2008)
The official receiver must be trustee when he/she seeks to register a Form J restriction. If the official receiver is receiver and manager and has reason to believe that a property is at risk, he/she should take the necessary steps to become trustee or to seek to have a trustee appointed so that a Form J restriction may be registered.
If the Official Receiver is aware of any dealings on the property he/she should consider writing to all parties concerned informing them of the bankruptcy and informing them that the bankrupt’s interest in the property vests in the trustee.
[Notes: Land Registration Act 2002, section 43(2)d, and the Land Registration Rules 2003, Schedule 4].
(Removed December 2012)
(Added December 2012)
Where the official receiver is the liquidator of a company that is the registered proprietor of any registered land or a registered charge it is possible to make application for an entry at the Land Registry to note the official receiver as liquidator. The application should be made using Land Registry form ‘AP1’ and the application needs to be accompanied by evidence of the official receiver ‘becoming’ liquidator (i.e. a certified copy of the winding-up order).
The entry would normally read as follows:
“(Date) By an order of the court dated [Date of WUO] [Name of OR] of [OR office address] has become liquidator of [Company name]”
The fee for making this application is currently £40. Where the official receiver requires a restriction to be placed against the estate/charge then an application using form ‘RX1’ should be submitted along with the form ‘AP1’ application. A fee is also normally payable for this type of restriction (currently £40 ) unless the court has ordered that a restriction be made, in which case no fee would be payable. The wording of the restriction against a registered estate would read:
“(Date) RESTRICTION: No disposition by the proprietor of the registered estate other than a transfer on sale is to be completed by registration unless made pursuant to powers granted by the Insolvency Act 1986.”
Where the company is the registered proprietor of a registered charge the restriction would read:
“(Date ) RESTRICTION: No disposition by the proprietor of the Charge dated [Charge date] in favour of [Company name] referred to above is to be registered other than a discharge, a transfer of charge for value or a transfer in exercise in the power of sale, unless made pursuant to the powers granted by the Insolvency Act 1986.”
The official receiver should exercise extreme care when applying to register a Form J restriction. All details included in the application (see paragraphs 50.79 to 50.80) must be accurate.
The LRA2002, section 77(1) states that a person must not exercise the right to lodge a Form J restriction with the registrar without reasonable cause. If they do, they owe a duty to anyone who suffers damage and the person adversely affected may bring an action for damages.
Notes: [LRA2002, s77(1)]
The official receiver may have to deal with unregistered land owned by the bankrupt. The only protection available for the trustee, without seeking a caution against first registration (applicable to only solely owned unregistered land until October 2005) or first registration of the unregistered land (only available where the unregistered land is solely owned), is that afforded by the registration of the PA(B) and the WO(B) at the LCD and the control of the title deeds where possible. The official receiver must ensure that the bankruptcy order is registered at the LCD.
If the unregistered land is solely owned the legal estate vests in the trustee in bankruptcy. The official receiver should endeavour in all cases to obtain and hold the title deeds for the unregistered land from the bankrupt . If a mortgagee is in possession of the title deeds the official receiver must ensure that the mortgagee is aware of the trustee's interest in the unregistered land.
- pre October 2005
Under the LRA2002, section 15(3), the trustee, as legal owner, is unable to lodge a caution against first registration over the unregistered land. The LRA2002, schedule 12, pargaraph 14, defers the provision under section 15(3) until October 2005. Until October 2005 the trustee is able to apply for a caution against first registration against unregistered solely owned land. Application is made using the new HM Land Registry Form CT1. This form should be sent to the Land Registry office which covers the area in which the land is situated. Form CT1 is available from the website, www.landreg.gov.uk. The statutory declaration included in Form CT1 must be completed and it should state the nature of the cautioner's interest in the property. The text for the declaration should be as follows:
A fee is payable for the registration in accordance with the current Land Registration Fees Order. The fee should be charged to the appropriate estate and a debit balance may be incurred for this purpose, if necessary. The declaration must be made by the official receiver or a solicitor acting in relation to the estate, in the presence of a person empowered to administer oaths, such as a commissioner for oaths or a practising solicitor. The declaration fee should also be charged to the appropriate estate.
- post October 2005
Under the LRA2002, section 15(3), and after the expiration of the transitional provisions the trustee, as legal owner, is unable to lodge a caution against first registration over unregistered land. After October 2005, apart from ensuring that the LCD have registered the bankruptcy order and having attempted to secure the title deeds there is only one other measure of protection of unregistered solely owned land available to the official receiver, as trustee, and that is applying for first registration of the land. If the official receiver as trustee is concerned about the level of protection over the unregistered solely owned land he may consider, as legal owner, applying for first registration of the unregistered land. Application for first registration must be made using HM Land Registry Form FR1 which can be obtained from the website. There is a fee payable for first registration in accordance with the current Land Registration Fees Order. The fee should be charged to the appropriate estate and a debit balance may be incurred for this purpose, if necessary.Notes: [LRA2002, s15(3) and Schedule 12] [HM Land Registry Form CT1] [LRA2002, s15(3)] [HM Land Registry Form FR1]
50.77 Effect of registration of caution against first registration
The registration of such a caution at the relevant Land Registry office has limited effect.The person who lodged the caution will be entitled to notice of any application made for the registration of that estate that may affect his/her interest. The official receiver must contact all known mortgagees without delay. The official receiver will only be entitled to make representations as to why registration of land should not be made or should be registered only on certain terms, when registration of the land is subsequently sought.
Under the LRA2002, section 86, the trustee's interest in jointly owned unregistered land is not classed as an interest affecting a qualifying estate. As a result of this and the fact that the trustee is not the legal owner the trustee is unable to obtain a caution against first registration over the unregistered land. Where the unregistered land is jointly owned the official receiver should attempt to obtain and hold the title deeds of the unregistered land. Where the title deeds are held by a mortgagee the official receiver must ensure that his/her interest in the unregistered land is noted and acknowledged. The only form of protection of the jointly owned unregistered land available to the trustee are the bankruptcy entries at the LCD and the possible control of the title deeds. As the official receiver as trustee is not the legal owner of the unregistered land he/she is unable to apply for first registration of the land. If the joint owners of the unregistered land arrange for the land to be registered the trustee will be in a position to apply for a Form J restriction to protect his/her interest.Notes: [LRA2002,s86]
50.79 Procedure for registration of a Form J restriction against dealings (registered land)
(Amended July 2013)
Where the official receiver as trustee considers it necessary to register a Form J restriction he/she should make application on HM Land Registry form RX1. Form RX1 can be obtained from the website, www.landreg.gov.uk. A fee is payable in accordance with the current Land Registration Fees Order (see paragraph 50.50), the fee is currently £40. The fee should be charged to the relevant estate and a debit balance may be incurred if insufficient funds are available. The details of the property must clearly identify it and, if necessary, a map or plan should accompany the application. Part 13 of Form RX1 requires evidence that the applicant has sufficient interest in the making of the entry of the restriction applied for. Under the LRR2003, rule 93(j) a trustee in bankruptcy will be regarded as having a sufficient interest. The following information should be inserted at Part 13 of Form RX1:
1. On (date) a bankruptcy order was made against (name of bankrupt) in the (Court details). I am trustee of the bankrupt's estate.
2. The bankrupt is one of the registered proprietors of the land in title number (xxx) and at the date of the bankruptcy order the bankrupt had a beneficial interest in the proceeds of sale of the land.
3. The bankrupt's beneficial interest forms part of the bankrupt's estate and has been vested in me under section 306 of the Insolvency Act 1986.
Once completed the form RX1 should be submitted via the Land Registry Portal using the electronic Document Registration Service (e-DRS) see paragraph 50.90. Where it is not possible to use the Land Registry Portal users are able to send paper applications (with any other standard Land Registry applications) to HM Land Registry Bankruptcy Unit, Plymouth Office, Seaton Court, 2 William Prance Road, Plymouth, PL6 5WS. There is no need to complete a covering letter in support of the application and all standard Land Registry applications (except applications on form PN1 which should be sent to the Land Registry Bankruptcy Unit) can be sent in the same package, as a batch.
The Chief Land Registrar will check the application to see that the person requesting registration of a Form J restriction is claiming an interest which on the face of it is capable of being registered but will not consider whether the claim can be substantiated. The Chief Land Registrar will acknowledge receipt of Form RX1 by sending a PDF document which will be available through the Notifications tab of the Land Registry Portal (see paragraph 50.98). The notification will also appear as a PDF document under PDF downloads, the PDF and notification will only be available for 15 days. The registration date of the Form J restriction is when the application is received and entered into the Land Registry's 'day list'. When registration of a Form J restriction is requested in bankruptcy cases the official receiver as trustee should also request registration of a Form A restriction (see paragraph 50.37). The registration of a Form J restriction will not lapse after a period of time, it will remain in the register until it is cancelled or withdrawn.
Notes: [LRR2003, r93(j)] [HM Land Registry form RX1]
50.80 Address on forms used in conjunction with registration of Form J restrictions (Amended March 2012)
When producing Land Registry form RX1 used in conjunction with the registration of Form J restrictions, Insolvency Service, PO Box 10089, Birmingham, B2 4WH must appear as the default address at Panel 9 instead of the local office. The reason being that once the restriction has been registered, most properties will be dealt with by the RTLU rather than the home office. The RTLU Midlands will forward any subsequent Land Registry correspondence to the appropriate office dealing with the case. Using this address covers the problem of dealing with properties in matters where the official receiver has relocated some years after the original restriction was lodged and a redirection of mail (maximum of 1 year) is no longer effective. The local office address should be entered at Panel 7 to ensure correspondence regarding the RX1 is returned directly to the official receiver. The completed form RX1 should be sent to the Land Registry address as shown at paragraph 50.86.
Note: [HM Land Registry form RX1]
50.81 Effect of registration of a Form J restriction (Amended March 2008)
Prospective purchasers or chargees of registered land would normally obtain an office copy of the Register of Title from the Land Registry, which would show all the entries made before the date of the office copy. A caution (pre LRA2002) or a Form J restriction lodged by the official receiver as trustee or liquidator will be shown on the register. In addition, once contracts have been exchanged or before an advance of money is made, an official search of the register would normally be made which would reveal any entries made since the date of the office copy, previously requested, and the delivery of the official search.
In order to ensure that the vendor or chargor is in a position to give good title to the land, the purchaser or chargee will normally require the vendor or chargor to obtain from the person who registered the caution (pre LRA2002) or Form J restriction details of what is required before that person will withdraw his/her caution (pre LRA2002) or Form J restriction. The official receiver, therefore, has the opportunity to consider the appropriate action.
There may be circumstances where, despite the caution (pre LRA2002) or Form J restriction or because a purchaser or chargee has not carried out an official search or the search was carried out prior to the registration of a caution (pre LRA2002) or Form J restriction, the purchaser or chargee is unaware of the existence of the caution (pre LRA2002) or Form J restriction and the transaction is entered into.
An example might be where a finance company obtains a second charge on registered land and only becomes aware of the caution (preLRA2002) or Form J restriction after it applies for registration of its charge. If the registered land was vested in the bankrupt and his/her spouse/civil partner originally as joint beneficial owners, the bankrupt’s interest will have vested in his/her trustee. The legal estate will remain in the bankrupt and his/her spouse/civil partner on trust for the spouse/civil partner and the trustee in bankruptcy. Thus if the trustee had protected his/her interest by a caution (pre LRA2002) the finance company may argue that any objection by the trustee to the registration of the charge (in response to the notice which is served by HM Land Registry on a cautioner (pre LRA 2002) upon dealing being received for registration) is unsustainable. The basis for this would be that it has paid capital money (i.e. the advance) to two trustees (i.e. the bankrupt and his/her spouse/civil partner) who were able to give him/her a valid receipt under section 27(2) of the Law of Property Act 1925, so that the trustee in bankruptcy’s interest has, to the extent of the advance, been ‘overreached’.
Equally, if an application is made to the Land Registry to register a transaction as a result of which capital monies arising have been paid to two or more trustees, and a certificate is given to the Land Registry that the person named in the Form J restriction has been notified of the transaction, it will be registered because the interest protected by the Form J restriction will have been overreached.
‘Overreached’ here means that the trustee in bankruptcy’s interest has been (in part at least) transferred to the advance itself and his/her rights postponed to the finance company’s. Once again the official receiver should ensure that prompt notification of the winding-up order or bankruptcy order is given to all mortgagees and, where he/she is trustee, serve notices on the mortgagees to account to him/her if they realise their securities. Where the land is unencumbered the official receiver should take all possible steps to recover the title deeds.
It is important, if notice is received by the official receiver that land subject to a Form J restriction is to be sold or charged and the capital monies arising paid to two or more trustees, that the official receiver acts promptly to ensure that his/her interest in the capital monies will be realised.
Notes: [Law of Property Act 1925, s27(2)] [MP3]
50.83 Rights of prior registered chargeholders (Amended March 2008)
The registration by the official receiver as trustee of a caution against dealings (pre LRA2002) or a Form J restriction will not affect the rights or powers of any prior registered chargee(s) to execute a transfer of the property under its power of sale. If the official receiver is a cautioner (pre LRA2002) he/she will receive notice of such transfer at the time of registration but cannot prevent registration. Accordingly the official receiver should, in company and bankruptcy cases, contact all prior chargee(s) in order to protect the official receiver’s interest in the property (see Chapter 3, Initial Procedure when a Winding-Up Order is made and Chapter 4, Initial Procedure when a Bankruptcy Order is made) and, where he/she is trustee, serve notice on them to account to him/her if they realise their securities.
The official receiver, when trustee, may apply to the court for a charging order to protect any interest in a dwelling house which is comprised in the bankrupt’s estate and which is occupied by him/her, his/her spouse/civil partner or his/her former spouse/civil partner. Official receivers should note that whilst the process of obtaining a charging order is legally available to trustees it is not the policy of The Insolvency Service to make such applications. Certain charging orders can be protected by the registration at LR of a Form K restriction under the LRA2002, section 42(4) (see Chapter 31.3, Part 8).
Where an insolvency practitioner is removed, resigns or otherwise vacates office, details of any unrealised property should be notified to the official receiver. The official receiver as trustee ex-officio should without delay ensure that adequate protection in the form of a bankruptcy restriction or a caution (pre LRA2002) or a Form J restriction is currently registered against the title of any land or charge which still constitutes part of the bankrupt’s estate. If the position regarding protection is in doubt a specific search should be made (see paragraph 50.53). HM Land Registry see a caution against dealings (pre LRA2002) or a Form J restriction as personal to the applicant so when an insolvency practitioner ceases to act as trustee of a bankruptcy estate, passing the case to the official receiver to deal with as trustee ex-officio, the benefit of any caution (pre LRA2002) or Form J restriction placed by the (former) trustee is, strictly speaking, lost, as it is personal and not capable of being transferred. If the trustee’s interest was protected by a caution (pre LRA2002) or Form J restriction, the caution (pre LRA2002) or Form J restriction should be withdrawn by lodging HM Land Registry Form WCT (Application to withdraw a caution) or HM Land Registry Form RX4 (Application to withdraw a restriction), signed by the practitioner or his/her solicitor. At the same time the official receiver should apply for a fresh Form J restriction to protect his/her interest.
Notes: [HM Land Registry Form WCT and form RX4]
(Amended June 2013)
An application to withdraw either a caution against dealings or Form J restriction should be submitted via the Land Registry Portal using the electronic Document Registration Service (e-DRS) see paragraph 50.90. Where it is not possible to use the Land Registry Portal users are able to send paper applications to the HM Land Registry Bankruptcy Unit at the following address:
2 William Prance Road
No covering letter is required for these applications as they are standard in nature and as such they can be sent as a batch with other standard applications (e.g. RX1 forms). An application to withdraw a caution against dealings should be made on form WCT whereas an application to withdraw a restriction should be made on form RX4. No fee is payable when making an application on form WCT or RX4.
It would not be possible for the official receiver to make application to withdraw a Form A restriction as the restriction serves to give notice that a joint tenancy has been severed. It should be noted that it is the making of the bankruptcy order which severs the joint tenancy and not the making of an application in Form A.
Notes: [form WCT and form RX4]
50.87 Registration of the official receiver’s interest in land in Scotland
An insolvency order made in England or Wales under the Insolvency Act 1986 is not enforceable against assets in Scotland under section 426(2) of the Insolvency Act 1986. Where an insolvent owns property situated in Scotland, the official receiver may need to have the insolvency order, validated in Scotland. Where the official receiver, in the specific circumstances of a case, decides it is appropriate to register his/her interest in a property located in Scotland and therefore requires validation of the insolvency order by the Court of Session, he/she does not have a right of audience to make the application directly and should approach a solicitor-advocate to act on his/her behalf. Further details of the actions required to obtain a validated insolvency order are detailed at paragraph 43.12.3.
Thereafter the validated insolvency order, with evidence of the official receiver’s appointment as liquidator/trustee, should be lodged with the Keeper Of the Registers of Scotland, Erskine House, 68 Queen Street, Edinburgh EH2 4NF DX 550906 EDINBURGH 9 with a request that it be entered on the Register of Inhibitions and Adjudications.
The Register of Inhibitions and Adjudications records the Scottish equivalent to bankruptcy orders (sequestration); inhibitions and adjudications are described as:
The purpose of the Register is to give notice to the public that the persons inhibited are unable to grant a good title and are registered against the individual rather than the property. Registration should alert any person who attempts to purchase or lend on the land that the official receiver has an interest. The official receiver should consider the necessity for such an application as he/she would when dealing with property in England or Wales (for further guidance please see Chapter 31.3).
Notes: [s426] [Law Reform (Miscellaneous Provisions)(Scotland) Act 1990, section 24] [MP3]