Case Study- Outstanding Deeds Cases
The issue
A leading high street bank has a number of mortgage accounts where it appears that its charge has not been registered on properties in England and Wales, Northern Ireland and Scotland.
The Solutions
We propose three potential solutions and give further details of the alternatives below:
- To title insure the mortgage accounts.
- To check and report on the registration status of each charge.
- To carry out rectification and arrange registration of each charge.
Title insure the unregistered mortgage accounts
Process - we would issue a policy to cover the bank for any actual loss that it incurs in the event that any of the mortgage accounts are not registered or are registered without the correct priority.
As a further alternative we could also include cover against all normal title insurance risks. This comprehensive cover would additionally protect the bank against any loss it incurs as a result of a defect either in the signing and registration of the mortgage or in the title to the property. The cover would include fraud and forgery including identity fraud, undue influence, access difficulties or planning issues that affect the property.
Timing - the policy could be in place within 5 business days of receiving details of the accounts to be covered. We would propose a separate policy for each jurisdiction and a separate policy for each year of completion, with each policy containing basic details of the accounts being covered (account number, property address, amount of advance, date of completion).
Indicative Cost Range - £50 - £100 plus IPT for each mortgage account to cover lack of registration or lack of priority. £70 - £120 plus IPT for each mortgage account if this includes full title insurance cover. The exact cost will depend upon the volume of mortgage accounts, arrears performance and loan to value ratios.
Checking and reporting on the registration status of each charge
Process - Enact (A First Title Group conveyancing operation based in Leeds) would check the registration status of all mortgage accounts in England and Wales, and manage its usual agents in Scotland (RA Direct) and Northern Ireland (S C Connelly) to check the registration status in each of those jurisdictions.
Enact would combine the results from each jurisdiction into one consolidated report for presentation to the bank.
Timing - assuming 5,000 mortgage accounts we anticipate the report will be ready within one month of receiving the details of the accounts to be checked.
Indicative Costs - the costs will vary for each jurisdiction and in part depend on the number of borrowers on each account, whether the property is leasehold or freehold and whether the property is registered at the Land Registry:
- £10 plus VAT and disbursements for each charge to be checked in England and Wales
- £14 plus VAT and disbursements for each charge to be checked in Scotland
- £22 plus VAT and disbursements for each charge to be checked in N Ireland
Carry out rectification and arrange registration of each charge
Process - Enact would arrange for the rectification and registration of each charge in England and Wales and manage its usual agents in Scotland (RA Direct) and Northern Ireland (S C Connelly) in each of those jurisdictions.
Timing - this will range from a few weeks for more simple cases to many months or even years for more complex cases.
Indicative costs - Enact would charge an hourly rate of approximately £60, but the exact costs of dealing with each case will vary considerably depending upon the reason for the failure and the jurisdiction. It may simply involve getting a new mortgage deed signed and submitting the case for registration (which would cost several hundred pounds to resolve mainly because of Land Registry costs), or could involve transfers of equity, unpaid stamp duty and court costs to obtain the files from the original solicitors, in which case costs could easily rise to several thousand pounds per mortgage account.
Conclusion
As a Group we can uniquely offer 3 solutions to meet the banks' requirements.
The title checking will provide the bank with a definitive report on the status of each account. Enact and its agents could then proceed to carry out rectification work to resolve issues with any unregistered accounts. The rectification process would lead to considerable additional expense and delay to the bank before all issues are resolved and indeed some issues might not be capable of resolution.
The title insurance option would result in a solution being in place quickly, giving the bank the peace of mind that if any registration difficulties resulted in loss they would be financially protected. There would be certainty of the cost to the bank of securing its position and this solution would also save on the additional internal costs the bank would incur from administering the checking and rectification process.
When discussing options with other lenders the insured route has been the preferred option, as it provides a clean, seamless, definitive solution with the benefit of an insurance policy that includes cover for any subsequent legal or equitable owners of the mortgage accounts. As well as resolving back book issues the title insurance solution is also being used by lenders to cover their new lending when registration has not taken place within, say, 6 months of completion.