Cautions and Inhibitions
1. Cautions on Registered Land
1. Cautions on Registered Land
1.1 General A caution is a restriction on disposition by the registered owner without notice to a person who claims “any right in, to or over registered land or a registered charge” (section 97 (1)).
Section 3 (1) of the Registration of Title Act, 1964, defines “right” as including “any estate, interest, equity or power” over lands.
A caution entitles a cautioner to notice of dealings by the registered owner only and not in respect of dealings other than by the registered owner e.g. a judgment mortgage, etc.
A caution against registered land is entered in red on Part 2 of the Folio. A caution against a registered charge is entered on Part 3 of the Folio.
Examples of rights which may be protected by caution:
1. The right of a purchaser of lands under a contract for sale. (The caution can only be registered to affect the part of the property the subject of the contract).
2. The right of mortgagee under an agreement to give a charge on lands.
3. A right under any unregistered instrument or facts as would disclose an interest in the lands or a particular registered charge on the lands
4. The right of next-of-kin on intestacy or persons entitled under the will of a deceased owner to an interest in lands.
5. An option to purchase.
6. The right of a person who claims he has provided all or part of purchase money for the lands.
Cautions are not to be given
(a) in respect of rights which are immediately capable of registration as burdens under section 69 of the Registration of Title Act, 1964, or
(b) in respect of rights which affect without registration under section 72 of the Registration of Title Act, 1964.
However, a caution can be used as a temporary protection of an unregistered right equity pending its conversion into a registered interest or pending litigation, actual or contemplated. For example, the correct registration in respect of a section 69 burden is normally the registration of the burden. But, if the consent of the registered owner to such registration has not been given, the owner of the right in question could apply for a caution pending litigation to force the registered owner to give his consent.
If the right of the cautioner relates to a specific identifiable part of the property, such part should be identified in accordance with Rule 56 and the caution will be limited to affect such part only. If any difficulty arises in the mapping of a caution the dealing should not be put into Mapping Branch’s Query Shelf, but should be brought immediately to the H.E.O. of the Section.
A H.E.O. or higher officer should be consulted before settling any application for registration of a caution. On entry of a caution, notice is served on the registered owner (Rule 122(4)).
1.2 Evidence to support Caution The evidence necessary to support a caution is not as stringent as the evidence necessary to support an inhibition.
The cautioner must show by affidavit that he has prima facie a right enforceable against the registered owner, i.e. he must aver that he has such a right as would be suitably protected by a caution. The documents, e.g. contracts on which the right is grounded should not be called for.
A person lodging a caution without reasonable cause is responsible to make compensation to any person damaged thereby (section 97 (5)), whereas in the case of the registration of an inhibition, the Registrar takes responsibility for making the entry.
1.3 Dealings affected by Cautions and applications to discharge Cautions Whenever
(a) an application for discharge of the caution is made by the registered owner, or
(b) a dealing by the registered owner is lodged, a warning notice is sent to the Cautioner in LR Form 73 or LR Form 74 and the Cautioner must then reply and take whatever action is considered necessary to establish such right. (See Rule 125(2)).
If the cautioner does not reply to the warning, the caution will lapse and registration of the dealing should proceed and the caution should be cancelled. (Rule 127). The cancellation of a caution which has lapsed should be settled by a H.E.O.
If the cautioner replies to the warning requesting the continuance of the caution or objecting to the registration of the dealing on the grounds that it would defeat the cautioner’s interest in the lands or that proceedings are about to be issued or are pending in relation to the matter, such facts and evidence should be called for.
The officer should then refer the case to the Regional Manager for directions and in cases of difficulty the Divisional Manager should consult the Deputy Registrar.
It is not the function of the Authority to decide between the merits of the “equity” of the cautioner and the “equity” of the person in whose favour the dealing has been made.
In general, if the dealing is a transfer to a volunteer, such volunteer will be registered and the caution will be left standing on the folio, since a volunteer will take subject to any unregistered rights affecting the interest of the transferor including the unregistered right of the cautioner (section 52 (2) Registration of Title Act, 1964). But, if the dealing is for value, registration will be stayed pending litigation by the cautioner to establish his right. If proceedings are not instituted within a reasonable specified time, the dealing will be registered and the caution cancelled.
Similarly, on application to discharge a caution on the grounds that the right does not exist, the cautioner should be allowed a reasonable time to establish his right by litigation, and, if he does not do so, the caution should be cancelled.
A caution may be withdrawn at any time against the whole or part of the property to which it relates or alternatively a cautioner may consent to a specified dealing. (See Rule 126).
2.1 General Section 98 of the Registration of Title Act, 1964, provides that an Inhibition may be entered on the register
(a) on foot of a Court Order, or
(b) by the Authority on application of any person interested in any registered land or charge after making such inquiries and notices as may be considered necessary.
The entry may inhibit any dealing with the lands or charge for a time, or until the occurrence of an event specified, or except with the consent or notice to some specified person, or until further Order.
Care should be taken in the entry of an Inhibition that dealings with the property are not unduly restricted. (See Rule 131(1)).
The entry of an Inhibition under a Court Order should state that it is made pursuant to such Order (Rule 136).
An Inhibition obtained under Court Order cannot be discharged or modified except by the Court. If application is made other than under a Court Order, the H.E.O. should be consulted.
An Inhibition may be withdrawn or modified at the request of all persons appearing on the register to be interested in same.
For procedure on application for registration of Inhibitions and their discharge see Rules 128 to 136 of the Land Registration Rules, 2012.
2.2 Purpose and Grounds for The object of an Inhibition, like that of a caution, is to protect unregistered rights against registrations under dispositions that would defeat them.
An Inhibition is usually a restriction on all dealings for value by a person except with the consent of specified persons or within a specified time. A voluntary disposition could not defeat or postpone unregistered rights (see sections 52 (2), 55 (2), 64 (4) (a), 68 (2) and (3) of the Act).
Inhibitions are suitable for the protection of persons entitled under trusts.
Under the Land and Conveyancing Law Reform 2009 Act (the 2009 Act) the only legal estates capable of being created or disposed of are a freehold estate and a leasehold estate. All other interests or estates take effect as an equitable interest only. Therefore, for example, where a life estate is created in freehold land, a trust will come into operation under Part 4 of the 2009 Act and the legal interest will vest in the trustees. Any interest of a life tenant or a remainderman is an equitable interest only and such interests are capable of being protected by means of a suitable inhibition.
The onus is on the applicant for registration who may be a trustee under any of the above heads to apply for the appropriate form of the of Inhibition to protect the trusts (see section 92 of the Act and Rules 49, 64, 69, and 128 and LR Form 77 of the Rules).
No query should be raised where an applicant trustee does not apply for the entry of an Inhibition to protect the trusts on which he/she holds. Registration should proceed.
Note section 21(3) of the 2009 Act states;
(1) Subject to subsection 3, a conveyance to a purchaser of a legal estate or legal interest in land [see section 11] by a person or persons specified in subsection 2 overreaches any equitable interest in the land whether or not the purchaser has notice of the equitable interest. Thus subject to some limitations the general rule is that a purchaser should obtain a good legal title to the land without being concerned with equitable interests. This overreaching will operate in favour of a purchaser only. This overreaching occurs whether or not the purchaser has notice of the equitable interest (as applied where a tenant for life conveys settled land under the Settled Land Act 1882). Note: the Doctrine of Notice remains, see section 86 of the 2009 Act and section 38 of the 2006 Act.
(2) States that persons specified shall in general [i.e. in the case of a strict settlement, a trust including a trust for sale of land held by persons in succession or land vested in or held on trust for a minor] be at least two trustees [as per the previous safeguards in section 39 of the Settled Land Act 1882] or a trust corporation but may be a single trustee or owner of the legal estate or interest in the case of any other trust in land (subsection 2(b)) [e.g. hidden co-ownership in the case of a resulting or constructive trust].
(3) States that subsection (1) does not apply to:
(a) any conveyance made for fraudulent purposes, of which the purchaser has actual knowledge at the date of the conveyance or to which the purchaser is a party, or
(b) It also does not apply to any equitable interest
(i) to which the conveyance is expressly made subject or
(ii) protected by deposit of title documents relating to the legal estate or interest. [This relates to an equitable mortgage created by such deposit and is necessary to protect the lenders security] or
(iii) in the case of single trustee or owner of the legal estate or interest in the case of any other trust in land [subsection 2(b) – hidden equitable interests] protected by registration prior to the date of the conveyance or taking effect a s a burden coming within section 72(1)(j) of the Act of 1964 (or in the case of unregistered land, which would take effect as such a burden if the land were registered land).
(4) Provides “protected by registration” means registration in the Registry of Deeds or Land Registry, as appropriate.
Registration in the Land Registry can be affected by way of a caution or inhibition [appropriate way to protect equitable interests] or in the alternative a note can be registered under section 72(3) of the ROT Act. Inhibitions may also be entered in the following cases:
(i) Bankruptcy. In Bankruptcy matters where the relevant Court Registrar furnishes a copy of a Petition of Bankruptcy or Petition for Arrangement – (See section 103 (2) of the Act). Such Inhibition is for a period of 3 months only, but may be extended by Court Order.
(ii) to protect the right of some person to the exclusive use of registered property other than a dwellinghouse for life. (An exclusive right of residence, which is a burden registrable under section 69 of the Act, should not be protected by Inhibition.)
(iii) to protect the interest of a person entitled to an option to purchase in a Deed. Such option must take effect within the time allowed. Agreements and covenants in leases which give options to purchase the freehold are not to be registered as burdens. The only entry that can be made is an inhibition.
(iv) to protect the unregistered right of a person arising on the disposition by way of transfer or charge of the remainderman’s interest under a registered settlement.
(v) The provisions of section 121 Registration of Title Act, 1964, where a mistake has been made in registration. Any such matter should be referred to a Divisional Manager.
(vi) Registration of a person in capacity as personal representative of a deceased owner (See under Practice Direction on Devolution and Transmission).
2.3 Evidence to support Inhibition The evidence necessary to support an inhibition is more stringent than that to support a caution.
If the consent of the registered owner is provided, a statement of the facts showing the nature of the unregistered right should be provided (Rule 129). Such statement is not necessary if the deed indicates the trust, e.g. transfer to Diocesan Trustees.
If the consent of the registered owner is not provided, the applicant for an inhibition must establish his right to have the inhibition entered (Rule 130). The instrument (if any) creating the right must be lodged.
When satisfied that there is prima facie a case for entry of the inhibition, notice is served, as prescribed by Rule 131, and the inhibition is not entered until all objections are considered.
The sole duty of the Authority is to determine whether a person claiming as inhibitor has prima facie a right or interest which warrants its protection by entry on the register. If there is a conflict as to the existence of a right or interest claimed or if two or more applicants make conflicting claims, the duty of the Authority is confined to staying registration pending the determination by the Court of the matters in dispute.
If an applicant applies for an inhibition requiring notice to be served, and the consent of the registered owner to the entry is not provided, and the right in question is one for the protection of which a caution in identical format is appropriate, it is necessary to inform the applicant, before proceeding to register, that a caution in that form can be entered rather than an inhibition. The reason for this is that in respect of a caution the provision of section 97 (5) of the Registration of Title Act, 1964, applies whereas the Registrar takes responsibility for the entry of an inhibition (section 98 (1)).
2.4 Practice on Dealings with Folio Affected by Inhibition On lodgment of a dealing affecting a Folio on which an inhibition is registered the terms of the inhibition must be carefully considered to see if the dealing is of the kind inhibited. If not, it must be considered whether, on registration of the dealing, the inhibition is to continue or should be cancelled.
The instrument under which the inhibition was entered should normally be inspected.
(i) Inhibition restricting dispositions for value If a voluntary disposition or transmission is lodged registration should proceed and the inhibition is left standing. If the dealing lodged is for value and the consent of the inhibitor is provided, the continuance of the inhibition depends on whether the right protected continues in respect of the property.
(ii) Inhibitions restricting dispositions for value except transfers on sale On lodgment of a transfer on sale, the inhibition should be cancelled.
(iii) Inhibition requiring consent Where the dealing is of the kind inhibited and the consent is not lodged, the dealing should be rejected for the consent.
(iv) Inhibition of dealings save with approval of or under order of the Authority If the dealing lodged is of the kind affected, it should be set up. The instrument under which the inhibition was registered should be got up. The H.E.O. should write his/her recommendation and forward the dealing to the Divisional Manager for reference to the Deputy Registrar.
(v) Inhibition on registrations after cessor of limited estate save after notice The settlement and instrument under which the inhibition was registered should be inspected. Usually the inhibition protects the owner of a charge on the remainder estate or a transferee from the remainderman. In either case, if the inhibitor’s interest is now being registered, no notice need be served and the inhibition should be cancelled.
(vi) Inhibition requiring notice to be served The practice on lodgment of a dealing of the kind affected by the inhibition is the same as that for cautions. (Rule 135).
(vii) “Charity” inhibitions, i.e. restrictive of dispositions and transmissions where the number of registered owners is reduced below two.
So long as there are two or more registered owners the restriction imposed by the inhibition does not apply. If a disposition by the surviving registered owner or his personal representative is accompanied by the consent under seal of the Commissioners of Charitable Donations and Bequests, service of notice is not necessary.
Frank Treacy Deputy Registrar 30 November 2009 Updated 12 January 2015