I have taken over a file where a DOV created a life interest trust for the family home with the wife of the deceased as life tenant and sons as beneficiaries. There was a small equity mortgage on the property and the mortgage company have refused to allow a restriction to be registered at the Land Registry. Can anyone help me with the legal status and effect of the deed of variation please?
The trusts under the DoV remain effective.
The mortgage company’s refusal to allow a restriction on title does not affect the trusts under the DoV, it merely(?) means the trustees’ interest is not protected by registration of the restriction.
Was the deceased the sole legal owner? If so, it may be that the creation of a trust over the property represents a breach of the terms of the mortgage so that the mortgage company could demand immediate repayment of the loan. If this is the case, it might be better to let sleeping dogs lie rather than challenge the mortgage company’s attitude.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thank you very much Paul. The property was owned jointly by husband and wife. The concern is that the solicitors who drafted the trust could be liable if the trust is not effective.
The effect of the DOV creating a life interest is that the life interest is treated as though it were created in the deceased’s Will.
The trustees of the trust are entitled to take a view as to whether the protection afforded by a restriction should or should not be registered against the title. If they consider that it should, the best action you could take is to register the restriction without asking the mortgagees. Indeed, perhaps you should ask yourself what reason there could possibly be for them not to agree to such a registration. For my part I would not ask them, but would just register.
Thank you Julian, it is the Land Registry who are refusing to register without the consent of the mortgagees.
Would a restriction similar to Form L or Form N not work here? I’m sure that will not need consent of the mortgage company as the title is not being changed and this will protect the terms of the DOV.
Can the mortgage be repaid? Forms L and N are still restrictions and the mortgagee can refuse consent. Would a notice work instead or register the death at the land registry so that there is some indication that the deceased’s share may devolve differently under the terms of their will to that of the survivor.
Thank you Claire and Kamlesh. Yes, the mortgage company will not agree to any restrictions whatsoever. I will look at those options, thanks Claire.