Which Solicitor is responsible for not recognising restriction on property?

by Readers Question

8:14 AM, 1st March 2020
About 6 months ago

Which Solicitor is responsible for not recognising restriction on property?

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Which Solicitor is responsible for not recognising restriction on property?

I have a restriction on a property as security against a loan lent to a property Director of a Company. The property was owned within the company by two Directors. The Director who took my loan has since left the company and the sole remaining director is stating no knowledge of the loan and states they are not liable for repayment.

Unknown to me they then sold the property I had a restriction on. I received a letter from the buyers solicitor asking me to remove the restriction and that they themselves were not aware of my restriction which had come to light between their standard search and completion.

They are now unable to register the Title for their client the new owner. Who is at fault here?

The present sole Director of the company by not informing new information prior to exchange and completion when they were made aware of the ‘other Directors activities’? or the Vendors Solicitor (if they knew maybe)? or the buyers Solicitor for not carrying out a ‘last same day search’ with land registry on exchange and completion and missed my restriction and passed funds to the Vendors Solicitor.

The new owners Solicitor has forcefully written to me stating I must sign an RX4. I have evidence proving the vendor was made aware of the loan/debt/RX1 about 2 weeks prior to completion.

There is quite a lot of money at stake here so any conveyancers or anyone who have experienced that can assist would be very helpful.

Many Thanks

DSouth



Comments

Mark Smith (Barrister-At-Law)

9:10 AM, 1st March 2020
About 6 months ago

“I have a restriction on a property as security against a loan lent to a property Director of a Company”
1. A loan is secured by a charge not a restriction. This loan is therefore unsecured.
2. A restriction on an asset owned by a company will not secure a loan to a director in his personal capacity.
3. If a restriction is lodged it will be evident from any LR search.
4. If the loan is to the director personally then it is not a company debt and cannot be enforced against a company asset. A company is a separate legal entity and its property belongs to it, not its directors.

aydin

15:04 PM, 2nd March 2020
About 6 months ago

Hi,
Were you represented by a solicitor when the restriction was registered? if you were, depending on your instructions and their advice to you, you should look at their responsibility first and foremost before asking about those of other solicitors involved

What exactly does your restriction say and what does it restrict?

If the restriction was registered with the consent of the registered proprietors, then they all are bound by it irrespective of who got the benefit of your loan.

No self-respecting buyers solicitor would complete a purchase knowing that there is a restriction on the title. If there has been completion, then the purchase took effect subject to your restriction.

Rennie

12:00 PM, 5th March 2020
About 5 months ago

I would be interested to know the outcome of this

DSouth

17:45 PM, 6th March 2020
About 5 months ago

Reply to the comment left by Mark Smith (Barrister-At-Law) at 01/03/2020 - 09:10
Hi Mark, thank-you for your response. My comments to your points: Thank-you.
2, The property I was issued an RX1 on was owned by an asset of the company signed by a company Director. The Director took my loan in his own bank account and did not inform the other Director.
3, The restriction is lodged with LR.
4, The loan contract was with the company but the guarantor was also the Director who took the money.

The company have now sold the property without declaring the knowledge of the pending RX1. The RX1 was registered shortly after the buyers solicitor's primary search. The property has now completed with my restriction still in place so they cant register the title? and I haven't been repaid?

DSouth

17:51 PM, 6th March 2020
About 5 months ago

Reply to the comment left by aydin at 02/03/2020 - 15:04
Hi Aydin,
My restriction is against a property and on Land Registry it states that the property can not be sold without my permission. The conveyancer received their primary search results back and my restriction was registered 3 days after so they were not aware and continued to exchange and complete. Now they can not register the title? are they at fault here?

Kate Mellor

12:43 PM, 7th March 2020
About 5 months ago

Reply to the comment left by DSouth at 06/03/2020 - 17:51
The purchaser’s solicitor will have a legal responsibility to their clients, the purchaser and their lender, for any loss they incur through professional negligence, but not in any capacity to you. The solicitor’s insurers would in turn have a claim against the vendor for fraudulent misrepresentation. (That is my interpretation, but I’m not a solicitor).


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