Claim Case Study: Mortgage enforceability
Background The insured lender advanced the borrower a large loan, secured by a charge over the property. The transaction was processed and completed with the benefit of a title insurance policy in favour of the insured lender.
Challenge
way as to avoid stamp duty. Some of those transactions completed and were registered by the Property Registration Authority (PRA). However, the PRA stated that the transfer of the property to the borrower was materially defective, and a fresh transfer document would be required.
The loan transaction was completed and the monies advanced before the borrower’s title to the property had been registered. The conveyancer received an undertaking from the borrower’s solicitor (X&Y) to complete the title registration. X&Y was subsequently wound up, and its principal struck off, with the undertaking unfulfilled. The insured lender notified First Title of a claim as the loan was in arrears with no payment having been made to the mortgage account. To make matters worse, a serious fire had also occurred at the property, for which there was no insurance in place.
Unfortunately, the borrower could not be found and, in any event, would have little incentive to co-operate. He would merely be facilitating the insured lender’s repossession of the property as there had been no payments to the mortgage account. Additionally, First Title’s investigations revealed that the borrower’s predecessor in title had died since executing the transfer, and his heirs had emigrated to Australia. It was, therefore, highly unlikely that a fresh transfer document would be executed.
First Title established that the transfer to the borrower was one of a series of connected transactions between various parties, which appeared to have been structured in such a
First Title, having exhausted all avenues for resolving this transfer of equity to the borrower’s name, therefore agreed to settle with the insured lender for the value of the property plus interest.
Solution
Call: +44 (0)207 160 8218 Email: online@firsttitle.co.uk Visit: www.firsttitleresidential.co.uk First Title Insurance plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. First Title Insurance plc is registered in England under company number 01112603. Registered office: First Title Insurance plc, ECA Court, 24-26 South Park, Sevenoaks, Kent TN13 1DU.
Leading Title Insurance 1061-0219