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Practice guide 19: notices, restrictions and the protection of third-party interests in the register

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Practice guide 19: notices, restrictions and the protection of third-party interests in the register

5. Transitional provisions

5. Transitional provisions

Contents

5.1 The entries for protecting third-party interests under the Land Registration Act 1925

5.2 Notices entered under the Land Registration Act 1925

5.3 Restrictions entered under the Land Registration Act 1925

5.4 Inhibitions

5.5 Cautions against dealings

5.5.1 The nature of a caution against dealings

5.5.2 Notice served on the cautioner

5.5.3 Options open to the cautioner

5.5.4 Withdrawal of a caution

5.1 The entries for protecting third-party interests under the Land Registration Act 1925

Under the Land Registration Act 1925 there were 4 mechanisms in which third-party interests could be protected in the register. These were:

  • notices
  • restrictions
  • inhibitions
  • cautions against dealings

These entries continue to have effect under the provisions of the Land Registration Act 2002 with certain amendments.

5.2 Notices entered under the Land Registration Act 1925

Notices in respect of the burden of interests affecting a registered estate or charge are treated for the purposes of the Land Registration Act 2002 as if they had been entered as agreed notices (paragraph 2(1) of Schedule 12 to the Land Registration Act 2002).

5.3 Restrictions entered under the Land Registration Act 1925

The provisions of the Land Registration Act 2002 generally apply to restrictions entered under the Land Registration Act 1925 in the same way as they apply to restrictions entered subsequently (paragraph 2(2) of Schedule 12 to the Land Registration Act 2002).

However, the registrar will interpret a restriction entered under the Land Registration Act 1925 to preserve its effect. Paragraph 1 of Schedule 12 to the Land Registration Act 2002 provides that the repeal of the Land Registration Act 1925 will not affect the validity of any entry made in the register. For example, the registrar will not interpret a restriction entered under the Land Registration Act 1925 that states: “no disposition shall be registered or noted ———” as preventing the entry of a unilateral notice. This is because the restriction would not have prevented the entry of a caution against dealings under the Land Registration Act 1925 and interests that previously would have been protected by caution will often be protected by unilateral notice under provisions of the Land Registration Act 2002.

Similar interpretation will apply to an application to discharge a registered charge. This is not a ‘disposition’ and is not caught by a ‘no disposition’ restriction.

5.4 Inhibitions

The provisions of the Land Registration Act 2002 that relate to restrictions also apply to inhibitions in the register. Inhibitions are entries that prohibit dispositions from being entered in the register and therefore are treated as restrictions for the purposes of the Land Registration Act 2002 (paragraph 2(2) of Schedule 12 to the Land Registration Act 2002).

5.5 Cautions against dealings

5.5.1 The nature of a caution against dealings

A caution against dealings is an entry in the register in respect of a claim to an interest in a registered estate or charge. Although no new cautions against dealings can be created after 13 October 2003, existing cautions will continue to have effect.

The general effect of the Land Registration Act 2002 is to preserve the nature and effect of existing cautions against dealings. This is achieved by providing that sections 55 and 56 of the Land Registration Act 1925 continue to have effect in relation to existing cautions (paragraph 2(3) of Schedule 12 to the Land Registration Act 2002). Rules 218 to 223 of the Land Registration Rules 2003 make similar provisions for how cautions procedures will have effect to those in the Land Registration Rules 1925.

A caution does not confer any priority on the interest that it protects. However, the person claiming the interest, ‘the cautioner’, is identified in the entry and is entitled to be notified before any entry is made in the register that might prejudice their interest, thus giving them opportunity to object to the entry.

Cautions offer an unstable form of protection because they are liable to be cancelled whenever a dealing by the proprietor or a registrable disposition is entered in the register. As with unilateral notices, cautions are also vulnerable to the relevant proprietor applying to cancel the caution and requiring the cautioner to prove their claim.

5.5.2 Notice served on the cautioner

The registrar will serve a notice on the cautioner:

  • before approving any application to process a registrable disposition which is not accompanied by the cautioner’s consent
  • before approving any application to make any entry in the register in respect of a dealing by the relevant proprietor which is not accompanied by the cautioner’s consent
  • where the relevant proprietor (or someone who is entitled to be registered as such) applies for cancellation of the caution

An application by the relevant proprietor to cancel the caution must be made by including the ‘cancellation of a caution’ transaction in your application and uploading form CCD. No fee is payable.

The notification will give the cautioner a set period (initially 15 working days) within which to respond. The caution will then be cancelled unless the registrar makes an order to the contrary.

5.5.3 Options open to the cautioner

If the cautioner wishes the registrar to make an order permitting the caution to remain in the register they may:

  • object to the application by lodging a statement showing a fairly arguable case for the registrar not to give effect to the application that generated the notice. The grounds of their objection might be that the application is defective in some way or that, even though the application appears to be in order, it would have the effect of postponing the priority of their interest
  • consent to the application proceeding but request that their caution be entitled to remain in the register

The second option would only be available if the effect of the application would not wholly defeat the cautioner’s interest. Where, for example, the application is to register a transfer for value that would postpone the cautioner’s priority, or is for cancellation of the caution itself, the caution will not be allowed to remain.

A dispute about whether the application should proceed would be referred to the tribunal if it could not be resolved by agreement (see practice guide 37: objections and disputes: HM Land Registry practice and procedures for more information).

5.5.4 Withdrawal of a caution

The cautioner or their personal representative may apply at any time to cancel a caution against dealings.

To apply, include the ‘withdrawal of a caution’ transaction in your application and upload form WCT. No fee is payable.

A cautioner is not permitted to apply for a notice or a restriction in respect of the claim they have protected by caution unless they also apply to withdraw the caution (paragraph 17 of Schedule 12 to the Land Registration Act 2002).

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