Historical mortgage lender requirements: absentee freeholder

It establishes what your own lender’s written Part 2 instructions required on the date your transaction completed. Part 1 of the Handbook requires the conveyancer to report to the lender if it becomes apparent that the landlord is either absent or insolvent, notes that the lender may require indemnity insurance if it is to lend, and directs the reader to Part 2 for that lender’s requirements. The Part 2 answer is therefore the lender-specific half of the instruction. Two things should be established before a difference in outcome is attributed to lender policy: whether the two transactions concerned materially comparable circumstances, since the landlord’s position, the enquiries made and the evidence available may all have changed; and what each lender’s requirements actually were on the relevant dates.

Not by itself. An indemnity policy does not produce a landlord. It covers specified financial risks arising from the situation, and it does not itself provide someone to insure or repair the building, receipt the ground rent or enforce the lease, though particular policy terms may assist in specified circumstances.

Whether a lender will accept cover is a separate question again, and the answers differ: some published answers to the standing question decline indemnity insurance for this situation outright, while others accept it on conditions, commonly that the conveyancer is satisfied the insurance answers the difficulty identified, that an unqualified certificate of title can be given, and that a copy of the policy is retained on the file. Whether a particular policy met a particular lender’s published requirements on a particular date is a question the dated record can be checked against.

Notice of mortgage. These are separate general obligations that an absent landlord makes difficult, and notice involves three distinct steps that should not be run together: serving notice, being able to evidence it, and sending that evidence to the lender. Part 1 requires notice of the mortgage to be served on the landlord and any management company immediately following completion, whether or not the lease requires it. It then requires the conveyancer to be able to provide either suitable evidence of the service of notice or a receipt of notice, and directs them to Part 2 to see whether a receipted copy or evidence of service must be sent to the lender after completion. An absent landlord may make an acknowledgment impossible to obtain, but the absence of an acknowledgment does not by itself establish that notice was not served.

Payment receipts. The ground rent and service charge receipt is a separate requirement. Part 1 requires a clear receipt or other appropriate written confirmation for the last payment, from the landlord or from managing agents on the landlord’s behalf, and directs the conveyancer to Part 2 to see whether it must be sent to the lender after completion. Where confirmation of payment from the landlord cannot be obtained, the lender is prepared to proceed provided that the conveyancer is satisfied that the absence of the landlord is common practice in the district where the property is situated, that the seller confirms there are no breaches of the terms of the lease, that the conveyancer is satisfied the lender’s security will not be prejudiced by the absence of such a receipt, and that a clear certificate of title is provided. Each of those is a condition, and the local-practice qualification attaches to the absence of the landlord in that district, not to the absence of the receipt generally. What a particular lender required, and where, is established from its dated record.

You receive the complete Part 2 record as in force on your chosen date whether or not it contains express wording on this topic. If it does not, the record evidences that too: what the lender’s published Part 2 instructions did and did not expressly address on that date. Part 2 is the lender-specific component of the instruction framework: a transaction investigation must also consider the general Part 1 instructions applicable at the time, the mortgage offer and its conditions, and any case-specific correspondence. The report establishes what the retained Part 2 record contains; it is not the complete instruction file. Where no express topic wording is identified, that should not be treated as establishing that the lender accepted the circumstance without restriction.

The Market Context Report reproduces, for the single date you specify, the recorded requirements on this topic of every other lender for which Lexsure holds an applicable record. Some will have addressed an absent or insolvent landlord expressly on that date; others will not, and for some lenders no applicable record exists for that date. The report shows each lender’s own recorded wording as it stood; it does not classify, grade or interpret it, and where no express wording is identified that is reported as such. Assessing what the contemporaneous market position means for a particular transaction is analysis, and is undertaken within the Tier 3 and Tier 4 reports.

Yes. The general obligations in Part 1 have been stable, while the lender-specific answers beneath them have been amended over time: whether indemnity insurance is accepted, the conditions attached to acceptance, and the contact point for reporting. Around a third of recorded amendments are provisionally classified as having changed the practical requirement, and the remainder as non-substantive. Which applies to a given amendment is established from the dated record. What can be said generally is that a lender’s current published policy is not evidence of what it required on an earlier transaction date.