I would think that the question "is there a charge on Property 1" is a matter of fact today. Check with the PRA if there is a charge.
Wether the above gave the bank a right to put a charge on property 1 in 2006 isn't clear to me, but if they did not put such a charge then they could hardly do so now.
If there is a charge, you could seek to have it removed on the basis that the mortgage is paid in full. I doubt the bank would be able to refuse just on the basis of the above.