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Sale completion process of a mortgaged property

Sale completion process of a mortgaged propertyThe lender has to be assured that the property on which the loan is advanced is worthy of the money advanced and that the money can be recovered from the borrower. This article discusses the process to be undertaken by the lender’s conveyancing solicitor at the pre-completion stage. It also discusses the procedures to be undertaken by the seller’s conveyancing solicitor to disburse the seller’s loan amount.

The seller

The seller’s conveyancing solicitor should make arrangements for the redemption statement to be obtained from his lender. This statement shows the amount required to discharge the loan. This statement also indicates a daily rate applicable to the seller’s mortgage so that redemption figures can be adjusted if completion takes place earlier or later.

The discharge form for mortgage should be prepared by the lender. Form DS1 is to be used for this purpose especially when dealing with registered land.  It is now common for lenders to make use of electronic ED or the e-DS1 system. When they are used the Land Registry shall accept an electronic message from the lender informing him of the discharge of loan in place of Form DS1.  In the case of an unregistered land, this discharge is made by a receipt of the mortgage itself.

The buyer

A conveyancing solicitor acting for the lender should ensure that the title is investigated from his end and provide a certificate that the investigated land is indeed safe, marketable and can be accepted as a valid security for the loan advanced to the buyer. Conveyancing solicitors use the form of certificate approved by the Law Society and the Council of Mortgage Lenders in the case of residential transactions. In the case of commercial transactions, the form provided by the London City’s Law Society is used. Problems if any relating to the title should have been clarified with the lender before the stage of transaction is reached.

The buyer’s conveyancing solicitor should make a request to the lender for advance money to be transferred promptly. Depending on the lender’s policy, this request can be made as a part of the report on the title form or may be sent as a separate request.

The next step is to prepare a mortgage deed. This should be signed by the borrower; sometimes lenders request that the deed be executed in the presence of their conveyancing solicitor.

Photo courtesy: Karen Roe

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