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If you’re buying a house, you need to be aware that if you’re getting a mortgage (unless the mortgage company has instructed separate conveyancing solicitors), your solicitor has to act on behalf of you and your mortgage lender.
The Council of Mortgage Lenders’ Handbook gives conveyancing solicitors special instructions regarding what they must do when they come across certain issues in a conveyancing transaction. If you want to read it, you can find the Handbook at http://www.cml.org.uk/handbook/frontpage.aspx
If what you tell your conveyancing solicitor to do contradicts what the mortgage lender tells him to do, then unfortunately, your solicitor has no option but to refuse to act for either of you. Conveyancing solicitors are not allowed to act on behalf of parties who have a “conflict of interest” either when buying a house or when selling a house.
This means that such issues that might not be of concern to you may still be of concern to the lender and the conveyancing solicitor may still need to investigate them.
For example, I had a client who was buying a house in Middlesbrough. The house had a loft conversion to use as a bedroom, with a fixed staircase. The seller hadn’t bothered to obtain the usual building regulation approval.
I had to tell the buyer that if she wanted to go ahead, this issue had to be resolved. She said, “Well I know it’s safe, it’s been there for years. I’m not really bothered about it”.
The problem here was that because the client was getting a mortgage when buying a house, she didn’t really have any option but to have the issue resolved. One of the conditions in the CML Handbook states that on behalf of the lender, the conveyancing solicitor has to make sure that all relevant building regulation approvals have been obtained. This is because building regulations (unlike planning permissions) are enforceable by the Council indefinitely and they can take proceedings to enforce them. Whilst this is unlikely, it might potentially de-value the property and this would of course bother the mortgage lender (and probably the client)!
The conveyancing solicitor faces negligence claims by lenders if he doesn’t comply with the terms of the CML Handbook and no firm would want to put themselves in this position.
Just something to bear in mind when buying a house, next time your solicitor tells you that an issue has to be resolved!
2 Responses to “Buying a house – Relationship between your mortgage lender & solicitor explained.”
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January 27th, 2009 at 10:10 pm
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October 16th, 2009 at 7:59 pm
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