Caution and a Restriction as encumbrances on Land

 

1.0 Introduction 

Cautions and restrictions are instruments through which dealings in land can be curtailed until the happening of a certain event. Any person with an interest in the affected land can successfully lodge a caution or request a land registrar to place a restriction against dealing in a certain property.

In this article, we shall give an in-depth exploration of the two instruments and circumstances under which either can be applied.
 

1.1 Cautions

Section 71 of the Land Registration Act, 2012 is the guiding law on placement of cautions and it also outlines the persons who can be eligible to place a caution against a property.

By way of definition, a caution is a notice in form of a register to the effect that no action of a specified nature in relation to the land in respect of which the notice has been entered may be taken without first informing the person who gave the notice.

The caution is lodged by way of a specific form and the Registrar may in some instances require that the application be accompanied by a statutory declaration sworn by the person making the application. Persons who qualify to lodge a caution include but are not limited to spouses where property is held jointly ort where it forma part of matrimonial property and one of the spouses fears that the their partner may deal in a suspicious manner in the property in question, a person claiming a purchaser’s interest, this applies where a purchaser bought land but the Vendor has refused to complete the traction for one reason or the other or in a case where a purchaser has paid a deposit on property and they have reason to believe that the Vendor might deal fraudulently with the property before completion, a person or institution that has given an informal loan and has agreed with the borrower that they hold a title to a particular property as a lien for repayment of the loan, a lessee who holds a valid lease with a landowner etc. As long as a person is able to qualify their interest in the affected property and they have documentation to prove their claim, the registrar will make an entry of the caution in the register of the affected title. However, it is important to note that there are instances where a registrar will refuse registration of a caution specifically where they find that the caution is unnecessary or that the purpose for which the caution is being lodged can be achieved by lodging an instrument under the Act.

Upon registration of the caution, the registrar should give a notice in writing to the proprietor whose land, lease, or charge has been cautioned and this notice can be sent via registered mail or other means of communication provided that the registered owner of the affected property is sufficiently notified. Thereafter, a disposition which is inconsistent with the caution shall not be registered while the caution is still in effect except with the consent of the cautioner or by the order of the court.
Withdrawal and Removal of cautions

A cautioner may at any time before finalization of registration of the caution make an application to the registrar for withdrawal of the caution by means of the prescribed form and attaching reasons for withdrawal and where the registrar is satisfied that the reasons given are sufficient, they will approve the withdrawal as lodged.

On the other hand, a registered caution may be removed in three ways: –by the cautioner filing an application for removal of the caution in the prescribed form;
through a court order; or
by the registrar on application of any interested person and the registrar then serves a notice to the cautioner warning them that the caution will be removed at the expiration of the time stated in the notice thereof. If the cautioner would not have raised any objection at the expiry of the time stated in the notice, the registrar may proceed to remove the caution. In the event an objection by the cautioner is received, the registrar gives the parties an opportunity to be heard after which the registrar makes orders which they deem fit and may in the order provide for the payment of costs.

If for any reason a person who lodges or maintains a caution is found to have done so wrongfully and without reasonable cause, such persons will be liable for damages and may also be required to pay compensation in case of a suit by the affected person.

1.2 Restrictions

Restrictions as encumbrances against dealing in affected land as noted in section 76 of the Land Registration Act, 2021 are inhibitions that are imposed by the government or the registrar where land is set to be compulsorily acquired or to prevent fraud, or improper dealing or for any other sufficient cause. Restrictions are also known as registrar’s caveat for the reason that the registrar may, either with or without the application of any person interested in the land, lease or charge and after directing such inquiries to be made and notices to be served and hearing such persons as the Registrar considers fit, make an order (hereinafter referred to as a restriction) prohibiting or restricting dealings with any particular land, lease or charge.

A restriction may be expressed to endure for a particular period of time or until the occurrence of a particular event or until a further order is made and may prohibit or restrict all dealings or such other dealings that do not comply with specified conditions noted in the restriction and the restriction shall be registered in the appropriate register.

Once effected, the registrar is required to give notice, in writing, of a restriction to the proprietor affected by the restriction. The effect of a restriction is such that an instrument that is inconsistent with a restriction shall not be registered while the restriction is still registered except by order of the court or of the registrar.

1.2.1 Removal of Restrictions

The registrar may, at any time and on application by any person interested or at the registrar’s own motion and after giving the parties affected by the restriction an opportunity of being heard order the removal or variation of a restriction. Upon the application of a proprietor affected by a restriction and upon notice to the registrar, the court may order a restriction to be removed, varied or make such other order as it deems fit, and may make an order as to costs.

Both cautions and restrictions are ways in which affected parties, other than the registered proprietor of the land in question, can prevent dealings and dispositions in such land provided that there are sufficient grounds for placing the encumberances.