Outstanding interest on title deeds - house closing delayed

I'm meant to be closing on my house this Tuesday 17th July. I just got a call from my solicitors saying that the vendors solicitor has noticed thee is an outstanding mortgage interest on the deeds from the previous owners of the propertly to the people we are buying from.
What exactly does this mean in real terms. Does it mean that there is more to be paid on the house than our purchase price as in to buy out that outstanding interest or would it simply be a clerical/admin error where the deeds had not been amended after the last sale of the property?

Any help and advice is appreciated.

Thanks,

Pete.

Re: Outstanding interest on title deeds - house closing delyed

A bank still has a mortgage registed againts the house....

this may be becuase

a) mistake at the bank
b) money is still owed on it


If its A, it will be easy enough to solve. If its B its not really the sellers house to sell.

The vendors solicitor should have investigated the title at the time they became the registered owners of the house. If the vendors had/have a mortgage the solicitors would have provided an undertaking to the lender that there was good title.

Its hard to say without knowing all the facts but the likelihood is that the solicitor omitted to discharge the previous burden or the vendors changed lenders and the original lenders burden was never removed.

If the previous owners have been removed from the title deeds and only the burden in favour of the original lender remains, its unlikely (but not impossible) there is an outstanding mortgage in someone else's name and far more likely that it was an admin error which is easily rectified by the vendors solicitor and lender.

pete4130 said:

I just got a call from my solicitors saying that the vendors solicitor has noticed thee is an outstanding mortgage interest on the deeds from the previous owners of the propertly to the people we are buying from.
What exactly does this mean in real terms.

Click to expand...

Why didn't you ask your solicitor to explain? That's what you're paying them for!

Ok, managed to get this resolved today after alot of calling around my solicitor (Solicitor A). What should happened was this:

The outstanding interest charged in the deeds was from the previous owners to the current vendors. This should have been vacated from the deeds when the current vendors obtained title by their solicitors (Solicitor B) as the previous owners solicitors (solicitor C) should have had it vacated from the deeds so there would be clean title.

What actually happened was this: *be warned it gets complicated and convoluted and is an accurate description as I can make out from what I was told*

"Solicitors C" got ANOTHER solicitor (Solicitor D) to carry out the work to vacate the interest from the deed and a letter of undertaking was written to guarantee this. "Solicitors C" transferred the deeds to "Solicitors B" (the current vendors solicitors) who had the letter of undertaking promising the outstanding interest would be removed from title. "Solicitor D" mever actually submitted anything to the Land reg for whatever reasons so the outstanding interest was showing up on the deeds.
This was spotted by our solicitors (Solicitors A) a few months ago and they obtained a letter of undertaking from the vendors solicitors (Solicitor B) to ensure the interest would be vacated. In the mean time the vendors solicitor had left eh practice and another solicitor took on the file and wasn't willing to stand over the other solicitors letter of undertaking....which is where the problems arose.
My solicitor (Solicitor A) was sent a letter from the vendors solicotor explaining why they couldn't/wouldn't release the deeds as there was this outstanding interest. This letter referred to the previous owners solicitors (Solicitor C). "Solicitor C" was contacted by my solicitor who was then told that "Solicitor D" had been instructed to carry out the job to vacate the interest from the deed.
The vendors solicitor (Solicitor B) then carried out this small investigation and received a letter of undertaking from "Solicitor D" that the title would be vacated which in turn allowed the vendors solicitor to write a letter of undertaking to my solicitor assuring that the title was a clean title with no outstanding interests on it, thus resolving the problem.

In short, a breakdown of communication & someone forgetting to follow through on something they were supposed to caused alot of stress and hassle. All this happenning 3 working days before closing isn't what I wanted to hear after already being delayed closing since January!

Thankfully its sorted *fingers crossed I don't get a call on Monday!*

Thanks for the advice and input everyone.

Pete.

Lucky for you that solicitor 'D' was still contactable or it might have been a more lengthy process. Glad you got it resolved.

Hi Pete,

I am looking to buy a house. Everything is near to closing but my solicitor says the first vendor's solicitor hasn't transferred 'Title of Deeds' to the 2nd Vendors' bank. Hence the 2nd vendor's (from whom I am buying the house) solicitor doesn't have 'Title of Deeds' to be sent to my solicitor. This is the only thing that I am getting delayed to get house Key. We will be the third owner of the house.

My questions are:

1. What is 'Title of Deeds'?
2. How was it possible to sell the house from first vendor to second vendor without transferring the 'Title of Deeds'. Does this mean the second vendor doen't have right of property?
3. How complicated is it to obtain 'Title of Deeds'? Will it take too long?

Thanks in Advance.
Jack.

Title deeds are a set of documents relating to the house. They include everything from showing that building regulations were complied with to the registered owners of the property. 'Good Title' means they are all in order. Solicitors provide an undertaking to the lender that this is done/will be done and the lenders release funds on this basis.

The vendors solicitor would have taken up the title deeds to investigate the title and when satisfied everything is in order usually retain the title deeds until such time as they passed them to the lender.

When the first vendor sold the house their solicitor would have contacted the lender to redeem any outstanding mortgage and a vacated mortgage is sent from the lender to the solicitor. From your post its my guess that the second solicitor has the title deeds but is still waiting for the vacated mortgage deed from the original lender.

The delay is as long as it takes for the original solicitor to obtain the vacated mortgage and pass it on.

As said above this is just my taking from your post as its unlikely that the second lenders solicitor would have provided an undertaking of 'Good Title' to the second lender before sighting the title deeds.

Thanks PM1234. I am not from legal background so I will try to explain what I have understood and what I would like to know.

There are three owners, three solicitors and three lenders involved. Let me name it as O1, O2 and O3. O3 would be me. The solicitors will be S1, S2 and S3. S3 would be my solicitor. The lenders will be L1, L2 and L3. L3 is the bank from whom I am taking mortgage from.

From your post I understood there are two documents involved: Title Deeds (TD) and Vacated Mortage Deed (VMD).

Let me put the sequence below:

1. S1 must have studied TD and having found it 'Good' it recommended L1 to lend money to O1. Now when O1 got the key of the house, S1 sent Title Deeds to L1. Now L1 has Title Deeds.

2. Now O1 wanted to sell the house. S1 then requested L1 to send Vacated Mortage Deed (VMD). S2 requested Title Deeds from L1. Having studied it and found it 'Good' S2 recommended L2 that it can lend money to O2. Now O2 got the keys, S2 sent Title Deeds to L2. Now L2 has Title Deeds.

S1 should have passed VMD to S2 but he never did. O2 got the house without S1 sending VMD to S2.

3. Now O2 wanted to sell the house. This point, S2 should request L2 to send VMD and also get VMD from S1. S3 (my solicitor) requested Title Deeds from L2. He found it ok and recommended L3 (my lender) to give me mortgage.

To close the deal S3 should have two VMDs one from S1 and another from S2.

There shouldn't be any problem of Title Deeds as without it S3 cannot recommend L3 to lend me the money. Am I correct?

If above assumption is correct I have following questions:

1. O2 could never have got the mortgage without S2 receiving Title Deeds from L1.

Am I correct?

2. My bank would never have granted me loan if my solicitor (s3) didn't have Title Deeds. Am I correct?

Now, if my above three questions are correct then is it so that to close the deal my solicitor (S3) should recieve two VMDs: one from S1 and another from S2? Is it correct?

Many thanks for your help so far.
Jack.

When a vendor draws down a mortgage the solicitor acting on his/her behalf provides an undertaking to the lender in which he undertakes to complete the legal work in a satisfactory manner. The lender will release funds on receipt of the undertaking if all other requirements have been met.

It is unlikely a solicitor would give an undertaking to the title without first investigating the title deeds, which is why my guess is that 02 solicitor is possibly waiting for the vacated mortgage deed although it could be any outstanding document that the original solicitor undertook to give to him but to date has not.

You can't know without asking your solicitor what exactly s/he is waiting for. It is in the interests of the person from whom you are buying your house to contact their solicitor to have this sorted out as quickly as possible.

Thanks for that.

Is there any link that I can look to find out the list of complete legal proceedings that are carried out during house buying process? The problem that my vendor is having now during this selling point, that could happen to me as well in future when I sell the house if I don't make sure all things are carried out promptly.

I can't recommend websites for you I'm afraid.

You are paying your solicitor to do the work on your behalf. It really isn't your responsibility to 'check' their work. Sometimes this is why people prefer to have a solicitor who specialises in conveyancing and/or have a solicitor recommended to them. If future problems occur with the solicitor and/or communication breaks down the Law Society can get involved.