Registering restriction at hmlr for life interest trust

Trusts Discussion
1

Many months ago i submitted 2 standard form B restriction applications to HMLR - we have a life interest trust in relation to half share of the property so I have removed the deceased’s details from the register and in his place registered the trustees

The restriction is the standard restriction I have been registering for nearly 20 years to clarify there is a will trust in place with details of the will trust

One registered title was returned with the restriction in place and the other was categorically denied with the following reasoning

"By way of further clarification, a restriction in Form B is intended to
protect the interest of a person under a trust of land (that is a trust of
the registered estate) where the powers of the trustees are limited
by section 8 of the Trusts of Land and Appointment of Trustees Act
1996.

Therefore, even if the trust you describe contains limitations on the
trustees’ powers, as it is not a trust of land/trust of the registered
estate, it does not give rise to an entitlement to inhibit the registered
proprietors’ ability to exercise owners’ powers over the registered
estate by entry of a Form B restriction.

For the avoidance of doubt, it would not be appropriate for you to
apply for entry of a Form B restriction in respect of a trust of the
beneficial interest only. The amendments that you have requested
to the form of restriction applied for do not change the situation as
the wording used is still that of a standard Form B restriction.

When I’ve gone back to them for clarity as to why one was registered without question but not the other they have replied to say they will now be removing the restriction i have brought to their attention as it should not have been put in place!

Is there another restriction I should include to make it clear to third parties that there is a trust in relation to the property and that the legal owners are acting as trustees?

A pointer in the right direction much appreciated as ive never had to deal with such a response from HMLR in the past

2

HMLR have changed their practice regarding this and have rewritten PG24 to reflect a “legal purist” view. You could perhaps draft a declaration of trust setting out the relevant interests and the a Form B restriction exhibiting the new DoT.

3

The real point here is that by sections 2 and 27 of the Law of Property Act, 1925 all trusts of land are over-reached so long as the proceeds of sale are paid to two trustees or to a trust corporation. This applies whatever is stated in the instrument creating the trust, for instance it applies despite a provision that the trustees are to seek the consent of Mr X (or confirm they have the consent of Mr X). HMLR will not allow any restriction which would have the effect of undermining this fundamental principle of the 1925 legislation. Nor will it allow any entry which is in substance notice of any trust affecting the land (see LRA 2002 section 33).

A form B restriction which is based upon some requirement internal to the trust or the trust documentation would have exactly the effect, which is not permitted, of limiting the application of LPA 1925 section 2 ; and therefore is not allowed.

The only restriction available is such a case is the Form A restriction, which (to ensure compliance with LPA s 2) is required by LRA 2002 section 44.

Clifford Payton
Alpha Court Chambers