Legal charge

M

MrCat

Registered User
Messages
24
Both myself and my wife are former staff of a particular irish bank.
When our staff mortgage was being set up the bank made a couple of mistakes. Long story short anyway it appears the way it is set up the bank have no "legal charge" on our property.
I mentioned this to a solicitor I met in the bank one day about 4 years ago and asked her what it meant. She more or less said " you could sell the house without the bank knowing".
The bank rang me about 18 months ago and said some errors had been discovered on how our mortgage had been set up and I would receive paperwork soon to rectify it... heard nothing since.
We are planning on selling the house this year and want to ensure we don't run into problems if we get sale agreed.
Does anyone know how I'm fixed with no legal charge and could it affect our sale?
Tried finding answers online but can find no complete explanation of the implications.
 
If the bank has no legal charge, that most likely means that no legal mortgage has been registered on the title to the property.

If the bank advanced monies to fund the purchase of the property, at some point the bank will likely have taken possession of the title deeds. If so, and if the bank possesses the deeds, this is known as an equitable mortgage. If the bank holds the deeds, it will be difficult for you to sell the house as the purchaser will require to take possession of these and the bank will not likely release them to you.

If the bank gets wind that you’re selling without regard to them, you can expect court proceedings to issue against you where the bank will seek to rectify the mistake unless you agree to rectification yourselves.

You sell at your own risk. Also, any purchaser will require to know the legal and financial history of the property which you’ll be required to disclose. Such an issue will likely spook a purchaser.
 
Last edited:
Didn't your solicitor give you any advice on how this situation could be rectified?
 
She wasn't my solicitor clubman, just a customer I knew and asked the question while she was there.

Yeah I assumed they'd have the deeds johnno. The mortgage is 16 years old at this stage and they've made moves to correct things 3 times but have never actually done anything.
My plan wasn't to sell and run off with the money (although if it was possible it would be great ).
My main concern would be if I was a drawn out process to get it sorted would we need to get going on it, we hope to sell in about 5 or 6 months .
 
The timeline is very odd.
You asked this solicitor about this 4 years ago so obviously knew about it then.
But the lender only contacted you about it 18 months ago.
Seems odd to sit on such a situation for at 2+ years without either party doing anything to resolve it?
 
Mortgage drawn down in 2006. In 2008 they contacted us re mortgage issued in sole name but title to be registered in joint names. Asked us to sign new letters of offer and send back in order to upgrade to a legal charge (which we did)... heard no more about it.
I was an employee and looked at the mortgage on their systems where I was set up as guarantor rather than borrower, this was around mid 2017 so that's why I brought the subject up with a solicitor who I just knew as a customer who used to come I to the branch regularly.
August 2018 the bank rang me and said errors had been discovered in our mortgage which would need to be fixed. I said yep no problem, never heard back.
I've never been particularly bothered about it until now as we intend to sell.
My wife just found an email from Jan 2010 where she was asking for updates on the original issue and was told nothing fixed yet, they'll get back to her.. heard nothing.
 
This is more or less their first email about the problem

As you may be aware because of Government legistrative changes in the Land Registry know as the Section 73 Registration of Deeds and Titles act, ,since 1st January 2007 Land Certificates will not issue.

Therefore without an original Land Certificate we cannot complete our original security requirements of a Verbal Deposit of title deeds as originally sought in our letter of sanction. I am sorry but this change was outside our control.

In the case of Staff we do have the option of registering the original Letter of Undertaking as a lien on the land Registry folio. However, the registration details must match exactly the original Letter of Undertaking, if differs in any way the Land Registry will reject.

At the time of your drawdown we accepted in good faith a letter of Undertaking from your solicitor in your name only and as we now understand that the property is being registered in your joint names the Land Registry will not allow the registration of this Undertaking. Accordingly, we are not in a position to cover the cost of putting this legal charge in place. I would trust that as your solicitor is still dealing with the title the costs should be minimum.

I would avise that it is now a requirement that in the case of top ups secured by Equitable Deposits or Registered Liens, Staff Business must upgrade the security to a Legal Charge. Therefore, in your case the new security will cover future top ups, if so required and minimise any further costs
Click to expand...
Click to expand...
 
Ok. It looks like an equitable mortgage scenario. If you want to sell the property, get a Solicitor, get on to the bank and register the charge (ie perfect the bank’s security). If you do not, this may delay the closing of your sale. But your Solicitor will be best placed to advise. If you’re selling, you’ll have to engage a Solicitor at any rate and disclose this to them.
 
Is it going to matter one way or the other? Either way the bank has the deeds, if they have then your solictor when you want to sell has to request them on accountant receipt meaning they guarantee to return them or pay off the loan.
 
So it turns out the bank actually have no legal charge, and our solicitor has discovered that they never had the title deeds either.
We've gone sale agreed and are presuming this is gonna cause a delay.
All this after I contacted the bank a month ago to make sure everything was in order.
 
MrCat said:
So it turns out the bank actually have no legal charge, and our solicitor has discovered that they never had the title deeds either.
We've gone sale agreed and are presuming this is gonna cause a delay.
All this after I contacted the bank a month ago to make sure everything was in order.
Click to expand...

This will cause a delay and could potentially mean the sale may fall through.

You could sell the house from under the banks nose and pocket the cash without paying the mortgage. However that will end up with you being dragged through the courts. This would also impinge on your ability to work in financial services (if you still work in banking).

It will be up to you to resolve this title issue so the first thing to do is to contact the solicitor you engaged in the purchase of the house and find out if they have the title deeds or can track them down.

Once you have title deeds you could possibly sell the property with your solicitor providing an appropriate undertaking to the bank. The bank would be likely to prefer that your solicitor carry out first registration and formally register a mortgage however.
 
So, who does have the title deeds? Or put it another way, is your current solicitor able to convey the property to the purchaser? If so, there is no problem. The purchaser pays over the money, your solicitor conveys the property, and your solicitor pays the bank the amount of the outstanding loan, and sends whats left over to you. This can happen regardless as to whether or not the bank has a legal charge.
 
I'd have to assume the solicitor who handled our purchase has the deeds. As far as we knew everything was in order, that solicitor is no longer in business though.

Mortgages Overview – McMahon Legal (Solicitors)

mcmahonsolicitors.ie mcmahonsolicitors.ie
The piece under registry of deeds - failure to register runs the risk a later deed obtains priority etc. im livid with the bank,what's the chances of selling and successfully leaving the bank hanging... hypothetical of course?

Oh and I don't work in banking anymore, my wife works in finance though.
 
Last edited:
MrCat said:
what's the chances of selling and successfully leaving the bank hanging... hypothetical of course?
Click to expand...

I'm not a solicitor but I'd say your chances are zero. Just because the bank didn't complete their paperwork correctly, I'd be pretty sure that you signed plenty of documents agreeing to their having first charge over the property. Get on to the Law Society and find out who took over the practice of your former solicitor. Then do as TLO says above.
 
MrCat said:
I'd have to assume the solicitor who handled our purchase has the deeds. As far as we knew everything was in order, that solicitor is no longer in business though.

Mortgages Overview – McMahon Legal (Solicitors)

mcmahonsolicitors.ie mcmahonsolicitors.ie
The piece under registry of deeds - failure to register runs the risk a later deed obtains priority etc. im livid with the bank,what's the chances of selling and successfully leaving the bank hanging... hypothetical of course?

Oh and I don't work in banking anymore, my wife works in finance though.
Click to expand...

Get onto the practice closures section of the law society to find out where your file/deeds went to.

You shouldnt be livid with the bank. Its your solicitors issue, not the bank. The bank is emtitled to rely on the solicitors undertaking.

You could leave the bank hanging but you still owe the money. If you try to do so, you will be sued in the high court. You could be sued for judgment in your mortgage amount, the bank could seek an injunction to freeze your accounts to prevent you spending the sale proceeds and they could sue for breach of contract. You would be looking at a six figure sum for costs which would be added to your mortgage debt. Its quite a bad idea to leave the bank hanging.
 
You must log in or register to reply here.
Back
Top