Client X is the sole legal owner of a property. The beneficial interest is 70% as to client X and 30% for a Will Trust, with client X being one of the trustees. X wants to obtain finance, and the trustees are happy for him to do so.
The issue is that there is a restriction against the title and the mortgage lenders are apparently refusing to lend whilst the restriction remains. The (Will) trustees are happy for the restriction to be removed to enable X to more easily obtain finance. Will the land registry consent to the same? It appears that the land registry want proof that the restriction is no longer necessary - but that proof cannot be given as the Will trust will retain its 30% beneficial interest, they just are happy for the restriction not to be shown. Is there a way round this?
Firstly I must say I am not a professional but have used declarations of trust and restrictions at the Land Registery.
Unless it’s a form a restriction it is very easy to remove a restriction, if you phoned there helpline they would guide you through it.
However it’s a big problem with the mortgage company. Unless you tell them the beneficial owners are different (which could be problematic as most mortgage companies Freak put over things that are different or do not understand, technically the legal owners might well be committing mortgage fraud.
The restriction cannot be removed as the property is held on trust.
There will be a conveyancing solution (presumably involving consent and possibly a second legal owner) but it relies on the mortgage company being happy with it.
I suspect that even if the mortgage company can get comfortable, they may well want the will trustees to be party to the loan agreement as part owners of the property. Mainstream lenders may not want to get into it as their business relies on common ownership arrangements.
Thank you both for your responses. It is a Form A restriction and the position is as I expected. The irony is that the trustees who the restriction seeks to benefit, do not want the restriction. Had a trust been declared over the property the trustees (or other party) would have to request a restriction from the land registry, but the property would have been free from restriction enabling the legal owner to obtain finance. The end result will be that money can be borrowed but at a higher interest rate. Surely there should be some mechanism which allows the person who benefits from the protection of the restriction to obtain it’s removal. However, common sense and the law/rules do not always see eye to eye.
I must emphasise that I am not legally qualified but maybee I need you to talk to be entered into by existing trustees into one of there names. This might circumvent things