When a client is reliant on a mortgage to fund their
purchase of a property, there are certain requirements which a Solicitor must
meet before they are able to request the mortgage advance from the lender in
anticipation of completion. Solicitors request mortgage monies from the lender
by submitting a form known as the Certificate of Title – COT for short; this
article provides a guide of the process leading up to, and including,
completion.
Before your Solicitor is able to submit the Certificate of
Title, the Solicitor must ensure that all outstanding matters have been
resolved, as, by submitting this request, the Solicitors is providing their
confirmation to the lender that they have complied with, and satisfied, their
requirements as outlined in the Council of Mortgage Lenders Handbook – the CML.
A Solicitor must be able confirm the property has a good marketable title. Such matters include, but are not limited to,
the following:
Ø ID
checks have been carried out
Ø Any
potential gift elements connected to the transaction have been considered and
acted on appropriately
Ø All
enquiries with the seller’s solicitors have been resolved to a satisfactory
standard
Ø All
search results have been returned, reviewed and are clear of issues.
Ø The
valuation report has been considered and is clear
Ø Client’s
details, the purchase price and property details concord with the mortgage
offer. Also, any special conditions attached to the mortgage offer have been
considered.
Ø Any
prejudicial issues affecting the valuation of the property must have also been
reported to the lender during the course of the transaction and resolved.
Ø Confirmation
that there are no onerous covenants or lack of rights of access or services to
the property.
Once the above conditions have been satisfied, a transaction
is able to proceed to exchange and completion, for which, a Solicitor will
require a signed Contract and Transfer Form (though the latter is needed for
completion more than at the point of exchange), confirmation that the client
has approved the completion statement, an agreed completion date, deposit funds
and confirmation that buildings insurance is in place.
It is important to note that standard practice usually
dictates that 10% of the purchase price of the property acts as a deposit on
exchange; furthermore, a Solicitor will require buildings insurance to be in
place before they are able to proceed to exchange of Contracts – your insurance
cover note should have your lender noted as an interested party.
Each lender will require a period of notice from receiving
the certificate of title to releasing the funds which can be up to 10 working
days (although usually 5 working days). This can sometimes lead to a delay in
the exchange process as if a Solicitor is giving the lender less than their required
period of notice they will need to obtain written confirmation from the lender
that the mortgage advance will be released on the date of completion before
committing you to exchange Contracts.
It is important to note that your Solicitor is only able to
release the mortgage funds on the completion date if they hold sufficient funds
to complete the purchase of the property, pay all stamp duty land tax and
registration fees. This will mean that although after completion your Solicitor
has 30 days to submit to the Inland Revenue the duty payable they will require
you prior to completion to ensure they would sufficient cleared funds to enable
them to do so.
Article written by Charlotte Ribbons Trainee Solicitor
MJP Conveyancing are solicitors who provide residential conveyancing services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk
