When there is a restriction on your property it means you cannot sell it without meeting certain obligations. Restrictions are added to the registered title deeds held by the Land Registry and can be used for many reasons, including to protect someone’s share of a home, secure a debt against it or prevent changes being made to a building.
Types of restriction
There’s a long list of standard restrictions. They cover all sorts of situations, specific restrictions can also be drawn up to reflect specific concerns and circumstances. A restrictive covenant, for example, can be placed on a home to prevent owners from making certain changes. Perhaps the property is a listed building or in a conservation area, a covenant could stop the owner extending it in a way that is out of step with the surrounding buildings.
When you buy a home your conveyancer should make you aware of any restrictive covenants. If you sell a home having breached one you could be forced to return the property to its original state, that could mean taking down any unauthorised work you’ve carried out including extensions.
Covenants can go back a long way and stay with the property as it passes from owner to owner. You can buy indemnity insurance to protect you if it’s believed a breach occurred before you took ownership of the home.
Tenants in common
When two or more people buy a home and own it as tenants in common rather than joint tenants, a restriction is added to the title deeds. Tenants in common have equal shares in a property and can pass on that share to whoever they wish. Joint tenants on the other hand have equal rights to the whole property and pass ownership to each other if they die.
In the case of tenants in common the restriction stops a home being sold without the money being fairly distributed between all owners. It also prevents a co-owner selling a home if another owner has died, without the permission of those inheriting their share. It’s not unusual to own a home in this way and your conveyancer should make sure the restriction is complied with properly.
We’re experienced at buying homes in various forms of ownership and dealing sensitively with challenging home-selling situations involving inheritance and divorce. We’d be happy to chat about how we can help you get moving quickly if you are tenants in common.
Restrictions and debt
In some cases your creditors, people you owe money to, can put a restriction on your home. This means you cannot sell it without using any money you make to cover your debt. Or, at least, an agreed portion of your debt.
If you have an individual voluntary arrangement (IVA), a form of insolvency that involves repaying only part of your debt, a restriction will probably be placed on your home. This will stop you from selling it without the permission of your creditors. If you attempt to sell your home with an IVA restriction, the insolvency practitioner managing your IVA will be notified and you’ll be expected to pay any money you make to your creditors.
An IVA runs for five or six years, once it is finished the restriction should be lifted, always double check it has been. So it may be better to wait until it’s over to consider selling your home.
In a similar way, a creditor can secure your debt against your home using a charging order. They can only do this if they already have a county court judgement forcing you to repay your debt. They will have to apply to the court again for a charging order. Initially, an interim charging order will come into effect which restricts you from selling your home while it is being considered.
The final charging order changes joint tenants into tenants in common, so that any debts are only taken from the share of the property owned by the person in debt, if it is sold. Charging orders do give creditors the right to try and force you to sell your home to cover your debt, although this is very rare.
Working with us
Sometimes selling your home before you are the subject of an IVA or charging order is a better way to get on top of your finances. This will depend on your circumstances and there are lots to consider, in particular where you will live next. Selling won’t be right for everyone.
But if you decide you’d like to avoid the wider repercussions of IVAs and charging orders, such as the impact on your credit rating, realising the value in your home could be one way to pay off your debts before either is needed. Alternatively, if you’ve finished your IVA period and no longer have any restrictions on your home, you may want to sell your home quickly to generate much needed funds.
We specialise in buying houses quickly, in as little as seven days if necessary. That means your mortgage payments will quickly stop, which isn’t the case when long unpredictable chains are involved in a sale. Working with us you’ll have no estate agent fees to pay and we cover all solicitor costs. Get in touch if you think we can help.