Acting for Lender and Certificates of Title

Question 1

What is the difference in aims for lender and buyer?

Answer 1

Buyer: Emotional / commercial significance
Lender: Does property have sufficient value and marketability to repay loan?

Question 2

When can a solicitor act for both buyer and lender?

Answer 2

If they have a substantially common interest

Question 3

What is a substantially common interest?

Answer 3

Clear common purpose between clients and strong consensus on how it is to be achieved

Question 4

Why would a buyer and lender typically have substantially common interest?

Answer 4

Both want a property that is:
- Worth what buyer has paid
- Which is suitable for purpose easy to sell if buyer wants to move or lender wants to repossess

Question 5

When is conflict risk low between buyer and lender?

Answer 5

• Non-negotiable mortgage terms and conditions
• Solicitor’s discretion in acting for high street lender limited by standard instructions

Question 6

What type of transaction has a higher risk between buyer and lender?

Answer 6

Commercial transactions

Question 7

What will lender’s solicitor do in commercial transaction?

Answer 7

• Specify what enquiries / searches needed
• Ask buyer’s solicitor to send copies of all searches
• Draft legal charge and other security documents
• Draft certificate of title / ask buyer’s solicitor to provide

Question 8

What are the different lending documents?

Answer 8

1) Mortgage offer
2) Certificate of title
3) Facility letter
4) Legal charge (or mortgage deed)

Question 9

What is a certificate of title in lending?

Answer 9

Document that solicitor certifies that title is satisfactory for lending purposes

Question 10

What does a facility letter outline?

Answer 10

Terms and conditions of the loan

Question 11

Whose certificate of title does lender rely on? What is the effect?

Answer 11

The solicitors – will be able to sue if any material errors / omissions