October 2003
REGISTRATION OF COURT ORDERS
50.18 Registration of bankruptcy petition - in pending actions register
The LCD maintains a central register of pending court actions under the Land Charges Act 1972 (LCA1972). Immediately after a bankruptcy petition is presented, the court must notify the LCD to enable details of the petition to be entered in that register. This registration will be made against the name of the individual whether or not he/she is known to own any land. This entry alerts third parties to the possibility that a person of that name may be made bankrupt.
Notes: [r6.13, r6.43 and Form 6.14]
50.19 Registration of bankruptcy petition - in Land Register -Bankruptcy Notice - solely owned property
The LCD informs the LR daily of new bankruptcy petitions. The LR makes an entry on all title registers where it appears that a sole owner of the land may be subject of a bankruptcy petition. Under the LRA2002, section 86(2) this entry is called a bankruptcy notice (previously a creditors' notice) and is entered in the proprietorship register. Notices entered under the LRA 1925 in respect of the burden of interests affecting a registered estate or charge are treated for the purposes of the LRA2002 as if they had been entered as agreed notices (paragraph 2(1) of Schedule 12, LRA2002).
The entry will take the following form:
BANKRUPTCY NOTICE entered under section 86(2) of the Land Registration Act 2002 in respect of a pending action, as the title of the proprietor of the registered estate appears to be affected by a petition in bankruptcy against [name of debtor], presented in the [name] Court (Court Reference Number ) (Land Charges Reference Number PA ).
A similar entry would be made against the sole owner of a registered charge (i.e. mortgagee) but in the charges register. The entry will take the following form:
BANKRUPTCY NOTICE entered under section 86(2) of the Land Registration Act 2002 in respect of a pending action, as the title of the proprietor of the charge dated referred to above appears to be affected by a petition in bankruptcy against [name of debtor], presented in the [name] Court (Court Reference Number ) (Land Charges Reference Number PA ).
The registered proprietor is informed of the entry in accordance with Rule 165(2) of the LRR2003. There are indemnity provisions which may be called upon if there is loss to an estate due to failure by the Chief Land Registrar to register a notice.
Notes: [LRA2002, s86(2)] [LRR2003, r165(2)]
50.20 Jointly owned property
No protection is available at this stage of the proceedings in respect of jointly owned property as a bankruptcy notice cannot be registered against such property except as outlined in paragraph 50.26.
50.21 Dealings with registered land after petition and before bankruptcy order
A bankruptcy notice (which can only be registered against solely owned registered property) does not prevent the registered proprietor dealing with his/her land or charge. If an application to register a transfer, charge or lease by the registered proprietor of the land is actioned after the entry of the bankruptcy notice, the registration will be made subject to the bankruptcy notice unless it can be shown that the interest of the transferee, chargee or lessee has priority over the bankruptcy proceedings, e.g. the dealing is protected by an official search of the register, issued before the date of the bankruptcy notice, that gives it priority over the creditors’ rights.
Notes: [LCA1972][s284]
50.22 Dealings with registered property - no notice of petition,
If a bankruptcy petition is not protected by a bankruptcy notice in the proprietorship register, then a purchaser or chargee in good faith and for money or money’s worth, when registered, takes title free of the creditors’ rights unless at the date of the disposition he/she had notice of the petition. For this purpose a purchaser (of registered land) is under no liability to make a search against the individual’s name under the LCA1972 to see if a petition has been registered as a pending action with the LCD.
Notes: [s284(4)]
50.23 Dealings with unregistered property
Under section 5(8) of the LCA1972, a bankruptcy petition does not bind a purchaser of a legal estate in unregistered land in good faith, for money or money’s worth, unless it is for the time being registered in the register of pending actions. Thus a purchaser of unregistered land will, on the face of it, be bound by the petition whether he/she makes a Land Charges search or not provided the petition is protected by registration. If the petition is not so protected it may be that a purchaser who had actual knowledge of the petition could not rely upon section 5(8) of the above Act as he/she would not appear to be acting in good faith.
Notes: [LCA1972, s5(8)]
50.24 Vacation of registration - pending action
Under section 8 of the LCA1972, a registration of a bankruptcy petition as a pending action with the LCD will be automatically vacated after 5 years unless it is vacated in one of the following circumstances:-
Notes: [LCA1972, s8] [s266(2), r6.25(2), r6.27, r6.32 and Form 6.22] [r6.213(1)]
50.25 Vacation of registration - bankruptcy notice
The registration of the bankruptcy notice on the proprietorship register remains in force until a bankruptcy restriction is registered. It will also remain in force if the LCD automatically vacates an entry in the register of pending actions. The cancellation of the entry at the LCD will not cause the LR to cancel any bankruptcy notices automatically. Separate application must be made to the LR by the debtor for a bankruptcy notice to be removed. The debtor can apply to cancel the registration in the proprietorship register following the action in (a) or (b) above. Additionally, when the trustee in bankruptcy wants to register himself/herself as proprietor of the property (see paragraph 50.43), the bankruptcy notice will remain in force until the registration is complete or the property is conveyed by the official receiver or trustee.
50.26 Protection of jointly owned property - official receiver acting as interim receiver
The LR cannot register a bankruptcy notice against jointly owned property. Where the official receiver is acting as interim receiver and becomes aware of registered land owned by the debtor jointly with others he/she should consider applying for a restriction against the property to protect the creditors’ interest (see Part 7). The official receiver must first make application to the court for permission to apply for a restriction. The procedure necessary to apply for a restriction is explained in paragraph 50.79. The official receiver should withdraw the restriction if he/she ceases to act as interim receiver.
If the land is unregistered and solely owned the official receiver should consider registering a caution against first registration (see paragraph 50.75). If a bankruptcy order is subsequently made the caution should be withdrawn.
Notes: [s286]
50.27 Registration of the bankruptcy order in the writs and orders register
The LCD keeps a central register of writs and orders under the LCA1972. After a bankruptcy order is made, the official receiver must send notice of the bankruptcy order to the Chief Land Registrar at the LCD within 24 hours of notification of the bankruptcy order unless the court orders that the notice should not be sent or that advertisement or the proceedings should be stayed (see paragraph 50.40). The LCD will enter the details in the register of writs and orders under the name of the bankrupt whether or not the bankrupt is known to own any land. This entry alerts third parties to the fact that a person of that name has been made bankrupt. Under section 6(3) of the LCA1972, no fee is charged for this registration.
Notes: [r6.34(2)(a) or r6.46(2)(a) and Form 6.26, r6.34(3) or r6.46(3), r6.208] [LCA1972, s6(3)]
50.28 Registration of the bankruptcy order in the Land Register - bankruptcy restriction and solely owned property
The LCD informs the LR daily of new bankruptcy orders. The LR then makes an entry on all title registers where it appears that the sole owner of the land may be the subject of a bankruptcy order. This entry will be made in the proprietorship register and under the LRA2002, section 86(4) this entry is called a bankruptcy restriction (previously a bankruptcy inhibition) (see paragraph 50.30). Inhibitions entered under the LRA1925 are entries that prohibit dispositions from being entered in the register and therefore are treated as restrictions for the purposes of the LRA2002 (paragraph 2(2) of Schedule 12, LRA2002).
The entry would take the following form:
BANKRUPTCY RESTRICTION entered under section 86(4) of the Land Registration Act 2002, as the title of the proprietor of the registered estate appears to be affected by a bankruptcy order made by the [name] Court (Court Reference Number ) against [name of debtor] (Land Charges Reference Number WO ). No disposition of the registered estate is to be registered until the trustee in bankruptcy of the property of the bankrupt is registered as proprietor of the registered estate.
A similar entry would be made against the sole owner of a registered charge (i.e. mortgagee) but in the charges register. The entry would take the following form:
BANKRUPTCY RESTRICTION entered under section 86(4) of the Land Registration Act 2002, as the title of the proprietor of the charge dated referred to above appears to be affected by a bankruptcy order made by the [name] Court (Court Reference Number ) against [name of debtor] (Land Charges Reference Number WO ). No disposition of the charge is to be registered until the trustee in bankruptcy of the property of the bankrupt is registered as proprietor of the charge.
This entry alerts third parties to the possibility that the owner of the land/charge may be bankrupt. Under Rule 166(2) of the LRR2003 the Chief Land Registrar must give notice of the registration to the proprietor of the land or charge. There are similar indemnity provisions as in paragraph 50.19.
Notes: [LRA2002, s86(4)] [LRR2003, r166(2)]
50.28A Registration of bankruptcy order – follow up (Amended May 2010)
The official receiver should ensure that a bankruptcy restriction has been registered at the land registry against each registered estate/charge where he/she is aware that the bankrupt is the sole registered proprietor and sole beneficial owner of a registered interest in land. A search of the proprietorship and charges register of the relevant District Registry should be carried out to confirm that the restriction has in fact been registered.
Where the bankrupt is the sole registered proprietor but the property interest is held under a trust, the legal estate would not vest in the official receiver [Note 1] and a bankruptcy restriction would not be appropriate.
Once the official receiver is satisfied that a legitimate trust exists he/she should seek to have the bankruptcy restriction removed (see paragraph 50.34B).
50.29 - jointly owned property
It is not possible to register a bankruptcy restriction where a property is owned jointly by the bankrupt and others. Reference should be made to paragraph 50.36 and Part 7 for guidance on protecting jointly owned property (see also Chapter 31.3, Part 2).
50.30 Effect of registration of bankruptcy order
The effect of a bankruptcy restriction is that no dealing, except by the official receiver acting as receiver and manager or by the trustee in bankruptcy, affecting the property or charge in respect of which the restriction has been entered can be registered until the restriction is cancelled. The bankruptcy restriction does not prejudice dealings with, or in right of, interests or charges over land which have priority over the bankrupt’s estate. For example, the proprietor of a registered charge, which was registered before a bankruptcy restriction (and any bankruptcy notice) was entered in respect of the registered land, could exercise its power of sale, notwithstanding the entry of the bankruptcy restriction in the proprietorship register.
The trustee receives protection by the registration of a bankruptcy restriction without registration of the trustee’s title or Form J restriction
50.31 Vacation of registration of bankruptcy order
Under section 8 of the LCA1972, the entry against the name of the bankrupt in the register of writs and orders at the LCD will lapse automatically after 5 years. This cancellation will not cause the LR to cancel any bankruptcy notices or bankruptcy restrictions. The Chief Land Registrar will only remove these after an enquiry or if the court so orders (see paragraph 50.32).
Notes: [LCA1972]
50.32 Annulment of bankruptcy order
If the court makes an order annulling a bankruptcy order it will usually also order that the petition be dismissed. In such cases, provision should be made in the order for the vacation of the registration of the bankruptcy petition and the bankruptcy order. The application to remove the entry from the Land Charges register or the title register is the bankrupt’s responsibility and not that of the official receiver.
Notes: [s261, s282; r6.210(3), r6.212(1), r6.213(1) and Form 6.71]
50.33 Vacation of registration in other circumstances
A bankruptcy restriction will be vacated where the property is disposed of, e.g. by sale by the trustee or by a prior registered chargee under its power of sale or where the trustee is registered as proprietor of the land or charge (see paragraph 50.43).
50.34 Vacation of registration and discharge from bankruptcy
When a bankrupt is discharged from the bankruptcy proceedings, the registration of a bankruptcy petition or bankruptcy order at the LCD will not be cancelled unless there is a specific order of the court directing cancellation. The production of a certificate of discharge is insufficient for the LCD. If an order for vacation is obtained the registration of the bankruptcy petition and bankruptcy order will be vacated. Such an order has no effect on the vesting of the property. Consequently any land or charge which has vested in the trustee in bankruptcy will remain so vested and will not re-vest in the discharged bankrupt. Therefore a bankruptcy notice or bankruptcy restriction will not be removed from a registered title if such an order is lodged.
50.34A Removal of a bankruptcy restriction vesting property
(Amended March 2011)Because the legal interest in a registered estate/charge vests in the official receiver where the bankrupt is the sole registered proprietor and sole beneficial owner a bankruptcy restriction will not be removed without evidence that the legal estate has re-vested in the bankrupt.
The application to cancel the bankruptcy restriction form (RX3) must be submitted to the Land Registry. The appropriate legislative provisions to quote in the application is either:
Section 283A(2) IA 86 (period in which to deal with the property interest has expired); or
Section 283A(3) IA86 (property interest has been dealt with, e.g. a charging order has been made); or
Section 283A(4) IA86 (where e.g. a charging order application is dismissed); or
Section 261 EA02 (interest has re-vested under the transitional arrangements in cases where the bankruptcy petition was presented before the Enterprise Act 2002 came into force).
It is important to quote the provision that is appropriate for the mode of re-vesting which has occurred.
50.34B Removal of a bankruptcy restriction non-vesting property (Amended March 2011)
If the property interest has never vested, e.g. the property interest is held by the bankrupt under a trust (See paragraph 50.28A), or the property has been sold prior to the bankruptcy order being made but the purchaser’s solicitors had not yet registered their application a different process needs to be followed. In these circumstances the official receiver should write to the Land Registry and explain that the legal estate has not vested and that the official receiver does not have an interest in the property. Application to withdraw the bankruptcy restriction should be submitted on form RX4 along with the letter.
50.35 Jointly owned property - protection
No registration of a bankruptcy notice or a bankruptcy restriction will be made against any jointly owned land in which the bankrupt has an interest, even where all the owners are subject to bankruptcy proceedings. The reason that a bankruptcy restriction cannot be registered is that in such cases the legal title (the only estate which is registerable) is not vested in the bankrupt alone (and consequently does not vest in the trustee of the bankrupt’s estate) but in the joint proprietors and the joint legal estate is not severable. The bankrupt’s beneficial interest is in the proceeds of sale. The Chief Land Registrar is not concerned with the beneficial interest in the property (which is severable).
Notes: [s283(3)] [Law of Property Act 1925, s36(2) and (3), s306]
50.36 Form J restriction and Form A restriction
Accordingly, dispositions by the registered proprietor(s) will not be prevented unless a Form J restriction is registered (see Part 7). A Form A restriction, which is equivalent to the old joint proprietorship restriction, should also be requested to protect the interest in land if one is not already in place (see paragraph 50.37 for a description of what a Form A restriction would look like). Both of these restrictions can be applied for at the same time on the same application (using form RX1).
Notes: Land Registry Practice guide 34, para 6.2
50.37 Registration of Form A restrictions in bankruptcy cases
(Amended March 2012)
When applying for a Form J restriction the official receiver should also apply for a Form A restriction unless one is already in place. Application for a Form A restriction is made by amending the text in box 9 of form RX1 to read “The applicant applies to enter a restriction [in standard form J & A] against the estate referred to in panel 3 in the following words:”. The words “A restriction in Form A” should be added following the standard text in Form J at the bottom of box 9. The registrar will acknowledge receipt of the request for registration and the date of acknowledgement will be the date of registration. If an acknowledgement is not received the official receiver may consider it prudent to apply for copies of the registry entries.
The Form A restriction states the following:
“No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court. “
The Form A restriction indicates that a sole survivor of joint registered proprietors cannot (unlike a sole beneficial owner) give a valid receipt for purchase monies and that a further trustee of the trust for sale needs to be appointed so that the purchase monies are received by at least two proprietors. It should be noted that a trustee appointed for the trust for sale need not be the trustee in bankruptcy.
Notes: [LRR2003, r93(a)] [HM Land Registry form RX1]
50.38 Registration of winding-up order by liquidator (July 2007)
There is no machinery for automatically making entries in the registers when a company proprietor of registered land or of a registered charge goes into liquidation. The appointment of the official receiver as liquidator of a company may be noted on the proprietorship or charges register maintained by the relevant District Registry if a company is the owner of land or charge(s). Registration of the winding-up order should ensure that if a disposition executed by the company (other than a disposition under the contractual powers of a receiver, appointed under a charge) is lodged for substantive registration, the LR will ensure that it was executed in the presence of the liquidator. Application for a restriction to be entered on the proprietorship register must be made using Form RX1 together with the appropriate fee. The Chief Land Registrar will , when he/she approves such an application, enter a restriction in the proprietorship register as follows: -
“(Date) By an Order of the court dated (date of winding up order) (name of official receiver) Official Receiver of The Insolvency Service (address of official receiver’s office) has become the liquidator of (name of company).”
(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.
If the official receiver considers that registration of the winding-up order is necessary he/she should make application on Form AP1 to the relevant District Registry with a certified true copy of the winding-up order and the certificate of his/her appointment by the Secretary of State under section 399 of the Insolvency Act 1986 together with the appropriate fee.
Notes: [LRR2003, r184(4) and (5)] [HM Land Registry Form RX1] [HM Land Registry Form AP1] [s399]
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