Strange ICS loan offer condition - is it even legal?

[LDFerguson]

I've just noticed the following condition in a formal ICS loan offer arranged for a client.

"The Borrower shall notify the Lender in the event of any change in the Borrowers' financial circumstances at any stage through the life of the Mortgage."

This seems odd and impractical to me. It's a 30-year loan. My client (a couple) can hardly be expected to be contacting ICS every time either one gets a pay rise, pay cut, moves job, takes unpaid leave, quits their job etc.

I presume the client will be expected to exercise discretion in the application of this condition, but if I understood why it's there I'd be better able to advise what's relevant and what's not.

Naturally, I'll be querying this with ICS themselves, but I'd be curious to hear if anyone else has seen this or has a view on it. In particular I'd love to hear if any of the legal professionals on AAM have a view if such a condition in a loan offer is even enforceable. It strikes me as being so vague as to be meaningless.

 

[MrEarl]

Hello,

May I suggest you commence by asking the ICS to clearly define the condition, set some limits on what triggers a requirement to notify the ICS (to include how the ICS should be notified, if the ICS will cover costs associated with the notification etc) and also to confirm in writting what impact a positive or negative change in the Borrowers' circumstances may have ?

In isolation, a request to be notified of any significant change in financial circumstances is probably not unreasonable for the lender's own purposes...

 

[Brendan Burgess]

If the borrower is adhering to the terms of the mortgage, there is no need for them to notify the bank of anything.

If the borrower's position deteriorates but they are still making their full repayments, it's in the borrower's interest to notify the lender that there may be a difficulty.

I doubt if it's of any significance. If the borrower fails to notify ICS , what would be penalty be?