Deeds being held although mortgage paid off

Hello,

Some advice please.
I was in the fortunate position of being able to pay off a mortgage which was an investment mortgage with one of the most expensive lenders currently for standard variable rates.

I requested that the charge be vacated from the property with the property registration authority and the deeds be sent to my solicitor for safe keeping.

The Bank reverted saying that it was their policy to keep any securities held against any other borrowings the customer may have.

I have a mortgage, ECB tracker for my principal residence with the same Bank.
(I do not intend paying this off early as the ECB rate is so low.)

If I paid off the investment mortgage in full and am up to date with my ECB tracker mortgage can they refuse to give me the deeds to the investment property back ?

Thank you

Check the contract of the loans you have.
As usual, there might be some tiny print allowing the bank to hold you to ransom.

Regardless of you being up to date with the loans, if they have contract permission
to keep the deeds, they will.

On a kind of similar note: Guy I knew sold his business and made a packet. He didn't lodge the cash with the bank who he had loans out with.
They rang him, most concerned. He was not required to lodge the money with them and didn't.
They were kind of annoyed they didn't get a large cash lodgement either off the other loans or lodged with the bank as security.

10amwalker said:

Hello,
If I paid off the investment mortgage in full and am up to date with my ECB tracker mortgage can they refuse to give me the deeds to the investment property back ?

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I have no legal background but I think if a clause similar to the one that is standard in Danske mortgages is in your agreement then yes they can.

Under security in the T&c’s it states;

(d) Any other security now or in the future held by us for your liabilities in general will be security for any liabilities under this agreement.

My understanding of this is in theory anyway, if I defaulted on my one remaining mortgage, the bank would have their choice of which security to call in.

I am in a similar situation and luckily not in arrears, but if I was in arrears my PPR is very saleable, my investment property is not.

10amwalker said:

The Bank reverted saying that it was their policy to keep any securities held against any other borrowings the customer may have.

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Well maybe you can tell them it's your 'policy' to keep any deeds you have to property you own.

Unless you signed something that allows them to keep these deeds they cannot do it.

And it looks like more disgusting behaviour by banks. Bully boy tactics.

I believe they're talking about consolidation rights, which is if they had to take possession of one of your properties but on resale there wasn't enough to fully pay off all the monies on that particular loan, then they have the right to sell off any other one in their charge (even though the mortgage payments on that one may be completely up to date) in order to recoup their losses. You then get the balance less any sale costs .

Once you pay off a loan and receive an all monies paid certificate your solicitor (you can do it yourself but be careful) applies to have a Form53 sealed by the lender which is then submitted to the Land registry to have the charge removed from the charges register. Once that's done it doesn't matter who has the physical possession of the deeds.

Which brings me to the original point, which is that since the late 90's early noughties pack of deeds have been phased out unless you're talking about unregistered land that hasn't been sold since compulsory registration came in. This means the Land Registry's title information which is now all electronic, is the definitive word on the subject of ownership no matter what bits of paper you have in your possession- unless you can prove a mistake has been made by them in the maintenance of their of their records etc .This has saved lenders millions on expensive storage costs but means the physical pack of deeds are a virtual thing of the past. Hope that helps.

Just to clarify the reasons why the Bank (or any bank can do this). Generally morttgages taken against properties other than PDH's are "all sums mortgages". This effectively gives the institution the right to hold any properties mortgaged (other than PDH) against any borrowings due. It's not necessarily "bully boy" tactics by the banks as I have come across situations where clients have tried to repay small residual debts where LTV's were low and redeem the properties, leaving the Banks with loans that were well under secured. Normally a Bank should only refuse to release a charge over a property where residual loans are under secured.

Once you pay off a loan and receive an all monies paid certificate

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John Simpson, thank you for your advice. Bronte is correct the bank is quoting section (d) above from the outstanding mortgage agreement.

So therefore I assume they will not issue me a monies paid certificate. I assume my statement showing the mortgage account closed would not suffice ?

I understand that deeds are a thing of the past although I use the term to describe that the bank is unwilling to discharge (not sure if that is the right term) my security or their charge on the property.

What should/can I do now ?

44brendan said:

Generally mortgages taken against properties other than PDH's are "all sums mortgages".

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Brendan, I have repaid in full my investment mortgage and still have a mortgage on my PDH.

However the agreement that I signed section (d) quoted by Bronte is for my PDH and the Bank want to keep the security for my investment property as I have not cleared the mortgage on my PDH.

I am up to date with my PDH payments and the mortgage now is approximately half of what I took out originally to purchase the PDH.

So does that mean that until I pay off the mortgage on my PDH they will keep the charge on my investment property ?

I understand that they do not want to have unsecured loans however I do feel that having security on two properties is a bit over the top.

What if I wanted to sell the investment property ?

10amwalker said:

I understand that they do not want to have unsecured loans however I do feel that having security on two properties is a bit over the top.

What if I wanted to sell the investment property ?

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Your bank did not quote you clause d). They said it was their policy to keep the documents. I'd tell them that you are intending to sell and see what happens then.

I agree that it's over the top in your situation them keeping so much security.

Bank approach does appear somewhat heavy handed unless the value of your PDH has reduced to a level where the associated loan to value ratio is very high. It may well be worh your while getting your solicitor to write to te Bank demanding that the charge be released. This at least will force their hand into having to provide a response as to why they are refusing to release the charge. Cost of sucg a letter should be relatively low. Make sure you agree a cost with the solicitor up front!

44brendan said:

Bank approach does appear somewhat heavy handed unless the value of your PDH has reduced to a level where the associated loan to value ratio is very high.

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I do accept that the value of the PDH has fallen however the loan to value ratio I estimate as being 74.5% using conservative value and the actual loan amount remaining.

However I wonder is it because the PDH is an apartment ?

Bronte said:

Your bank did not quote you clause d).

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Bronte, they did in the letter received this morning.

They sent me a copy of the facility letter and highlighted section (d) under security.

I wonder at what point the mortgage on my PDH would have to be at before they release the charge on my investment property ?

I may have to wait until the PDH mortgage is fully paid and as it is a ECB + 0.5% I am in no rush to pay it off !!

I think the reality is that if the bank has the legal right to retain the security/deeds they will do so.

If you wanted to sell your investment property they could in theory ask you to pay off the other loan first and then let you keep the balance. In practice they might only do this say if you'd played them up big time with your repayments, there wasn't a lot of equity in your other one which might give them concern particularly if we were in a falling market. Otherwise why would they want your money back? They're a money lender and they'd only have to find someone else to lend it to who perhaps had never been tried out before as a borrower. If I were you I'd ask for an all monies paid and submit a Form53 for them to sign. If asked tell them you're looking to sell it.

Not necessarily. I am involved in decision such as this and Banks are obliged not to insist on unnecessary levels of security. If there is a LTV of 74.5% on the HL of the OP, and repayment track record is satisfactory a good solicitor could and should make a case for the RIP security to be released. If the case is as presented then the Bank are unnecessarily harsh in refusing this request. If I was the borrower I would get my solicitor on to the case!

John Simpson said:

In practice they might only do this say if you'd played them up big time with your repayments, there wasn't a lot of equity in your other one which might give them concern particularly if we were in a falling market.

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Sorry John- I am unsure what played them up big time with your repayments means.. can you express it a different way for me please.

44brendan said:

a good solicitor could and should make a case for the RIP security to be released. If the case is as presented then the Bank are unnecessarily harsh in refusing this request. If I was the borrower I would get my solicitor on to the case!

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Brendan, my solicitor signed both facility agreements along with myself. Do you think this compromises the case if he/she continues to act for me in endeavouring to secure the release of the charge on the investment property.

Thanks

The bottom line here is that the mortgage on the investment property has not been paid off.

The mortgage you consider to be for your home is in fact a mortgage on both the home and the investment property.

When you borrowed money for the investment property you gave the bank a mortgage over your home.

Your solicitor should have advised you of this at the time.

cremeegg said:

The bottom line here is that the mortgage on the investment property has not been paid off.

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Cremeeg I am missing something in your post.
Neither the investment property mortgage nor my PPR mortgage notes two properties on the agreement.

In other words the investment mortgage does not specify that my PPR is security for the investment and vis versa.

10amwalker

cremeegg said:

The bottom line here is that the mortgage on the investment property has not been paid off.

The mortgage you consider to be for your home is in fact a mortgage on both the home and the investment property.

When you borrowed money for the investment property you gave the bank a mortgage over your home.

Your solicitor should have advised you of this at the time.

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How can you come to those conclusions from the information posted here by the OP?
It seems to be your mission to be harsh on everybody. I really don't understand the point or helpfulness of the above.