In response to Peter Mason-Apps’ letter, I would first point out that there has been no change in policy regarding trusts of land. It may be that conveyancers are encountering more Form A restrictions because of changes in social conditions, in particular the status of women – co-ownership has overtaken sole ownership of domestic property.
The English Housing Survey of Households 2012-13 (Department for Communities and Local Government and Office for National Statistics) found that first-time buyers were most likely to be either couples with dependent children (38%) or couples with no dependent children (29%).
Land Registry registers only legal estates. The proprietor is registered as the owner of the legal estate. The register does not guarantee that the proprietor is the beneficial owner. Land Registry is not normally concerned with details of the equitable interest (such as the proportion of the undivided shares). Our interest is confined to whether or not trustees will be able to give a valid receipt for money arising from any dealing with the land.
The registrar is obliged to enter a restriction when registering two or more persons as joint proprietors of a registered estate unless he is satisfied that the applicants hold on trust for themselves as beneficial joint tenants (section 44(1) of the Land Registration Act 2002 and rule 95(2) of the Land Registration Rules 2003). The purpose of the restriction is to ensure that the provisions of section 27(2) of the Law of Property Act 1925 are complied with.
We must, therefore, enter a Form A restriction in the register without application whenever we register two or more persons as proprietors of a registered estate in land, unless we are told that they hold the legal estate on trust for themselves as beneficial joint tenants, or we are registering them as personal representatives.
Provided purchasers or lenders pay the purchase price or mortgage advance to at least two trustees of land, the beneficial interests are overreached. The trust attaches to the proceeds of sale or the mortgage monies (sections 2 and 27 of the Law of Property Act 1925). In the case of a sale, the restriction will be removed.
A trust may have come to an end, but neither the Registry nor a purchaser will know this unless the equitable title is deduced – the very problem that the 1925 legislation was designed to avoid. The choice is therefore either to deduce the equitable title or to appoint a second trustee to give a good receipt for purchase or mortgage money, where there is a Form A restriction on the register. The Form ST5 is not a prescribed form, but it has been designed to help customers show the registrar that the trust of land has come to an end.
Where a Form A restriction is entered by default, conveyancers will receive a letter informing them of this, giving them one month to complete and return a certificate confirming that the restriction is not required. Beyond that time, an application can be made in Form RX3 to cancel the restriction, with evidence showing why.
More help and legal background will be found in Practice Guide 24: private trusts of land, and Practice Guide 19: notices, restrictions and the protection of third-party interests in the register.
Steve Coveney, head of registration legal services, Land Registry, Croydon
