Source: https://www.cml.org.uk/lenders-handbook/iofm/
Timestamp: 2017-09-21 01:37:55
Document Index: 423579720

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Part 1: Isle of Man
5.5.3. Other freehold arrangements
5.8. First ranking deed of conditional bond and security
6.11. Rights of pre-emption and restrictions on resale
6.12. Improvements and repair grants
14.1. Application to HM Land Registry
16.1. Requests for deeds
16.5. Deeds for variation, rectification, easement or option agreements
1.3 The Lenders’ Handbook does not affect any responsibilities you have to us under the general law or any practice rule or guidance issued by your professional body from time to time.
1.5 The limitations contained in Practice Rule 7 of the Advocates Practice Rules 2001 of the Isle of Man as amended from time to time apply to the instructions contained in the Lenders’ Handbook and any separate instructions. of Man as amended from time to time apply to the instructions contained in the Lenders’ Handbook and any separate instructions. of Man as amended from time to time apply to the instructions contained in the Lenders’ Handbook and any separate instructions.
1.7 If the borrower and the mortgagor are not one and the same person, all references to "borrower" shall include the mortgagor.
1.11 In any transaction during the lifetime of the mortgage when we instruct you, you must use our current standard documents in all cases and must not amend them without our written consent. We will send you all the standard documents necessary to enable you to comply with our instructions, but please let us know if you need any other documents and we will send these to you. Check part 2 to see who you should contact. If you consider that any of the documentation is inappropriate to the particular facts of a transaction, you should write to us (see part 2) with full details and any suggested amendments.
1.13 If you or a member of your immediate family (that is to say, a spouse, co-habitee, parent, sibling, child, step-parent, step-child, grandparent, grandchild, parent-in-law, or child-in-law) is the borrower and you are a sole practitioner, you must not act for us.
1.14 Your firm or company must not act for us if the partner or fee earner dealing with the transaction or a member of his immediate family is the borrower, unless we say your firm may act (see part 2) and a separate fee earner of no less standing or a partner within the firm acts for us.
1.15 If there is any conflict of interest, you must not act for us and must return our instructions.
1.16 Nothing in these instructions lessens your duties to the borrower.
2.3 If you need to report a matter to us, you must do so as soon as you become aware of it so as to avoid any delay. If you do not believe that a matter is adequately provided for in the Handbook, you should identify the relevant Handbook provision and the extent to which the issue is not covered by it. You should provide a concise summary of the legal risks and your recommendation on how we should protect our interest. After reporting a matter you should not complete the mortgage until you have received our further written instructions. We recommend that you report such matters before exchange of contracts because we may have to withdraw or change the mortgage offer.
3.1 You must follow the guidance given by the Law Society or the Isle of Man Financial Supervision Commission on mortgage fraud, undertakings and, to the extent that it applies, comply with the Anti-Money Laundering Code.
3.2 If you are not familiar with the seller's advocates, you must verify that they are currently on record with the Law Society as practicing at address shown on their notepaper.
3.3 Unless you personally know the signatory of a document, you must ask the signatory to provide evidence of identity, which you must carefully check. You should check the signatory's identity against one of the documents from list A or two of the documents in list B:List A
a valid UK or Isle of Man Photo-card driving licence; or
Express or Diners Club card, debit or multi-function card (bearing the Switch or Delta logo) issued in the United Kingdom with an original account statement less than three months old; or
a rates bill less than three months old; or
a local authority or Local Government Board rent book showing the rent paid for the last three months; or
4.1.1 Check part 2 to see whether we send you a copy of the valuation report or if you must get it from the borrower. If you are sent, or are required to obtain, a copy of the valuation report:
4.2 Re-inspection Where the mortgage offer states that a final inspection is needed, you must ask for the final inspection at least 10 working days before the advance is required (see part 2). Failure to do so may cause delay in the issue of the advance. Your certificate of title must be sent to us in the usual way (see part 2).
5.2.1 In carrying out your investigation, you must make all usual and necessary searches and enquiries, including a search in bankruptcy against the borrower and any other owners of the legal estate in the Isle of Man General Registry.
5.2.3 All searches except where there is a priority period must not be more than six months old at completion.
5.2.4 For local authority searches under paragraph 5.2.1, check part 2 to see if we accept personal searches. If we do accept personal searches, you must ensure a suitably qualified search agent carries out the personal search and has indemnity insurance that adequately protects us. You must be satisfied that you will be able to certify that the title is good and marketable.
5.3.2 If there is such evidence and the seller (or the borrower in the case of a remortgage) is not providing a sufficient undertaking to satisfy those outstanding conditions by completion, then this must be reported to us (see part 2). Check part 2 to see if copies of planning permissions, building regulations and other consents or certificates should be sent to us.
5.3.3 If the property will be subject to any enforceable restrictions, for example under an agreement (such as an agreement under section 18 of the Town and Country Planning Act 1991) or in a planning permission, which, at the time of completion, might reasonably be expected materially to affect its value or its future marketability, you should report this to us (see part 2).
5.3.4 We will accept a position where a house has been converted into flats without planning permission, provided you are satisfied that:
the conversion began before 5 July 1934; and;
the use as flats has continued since then without challenge.
5.4.3 A title based on adverse possession or possessory title will be acceptable if there is satisfactory evidence by statutory declaration of adverse possession for a period of at least 21 years. In the case of lost title deeds, the statutory declaration must explain the loss satisfactorily;
5.5.3 Other freehold arrangements
Unless we indicate to the contrary (see part 2), we have no objection to a security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.
5.8 First ranking deed of conditional bond and security On completion, we require a fully enforceable first charge by way of legal mortgage over the property executed by all owners of the legal estate. All existing charges must be redeemed on or before completion, unless we agree that an existing charge may be postponed to rank after our mortgage. Our standard deed or form of postponement must be used. Where the mortgage and the purchase are completed on the same day, the mortgage deed must have the same date as the document vesting the property in the borrower.
5.10.2 There must be no provision for forfeiture on the insolvency of the tenant or tenant (whether contained in the lease itself or implied into it by statute).
5.10.3 The only situations where we will accept a restriction on the mortgage or assignment (whether by a tenant or a mortgagee) of the lease is where the person whose consent needs to be obtained cannot unreasonably withhold giving consent. The necessary consent for the particular transaction must be obtained before completion. If the lease requires consent to an assignment or mortgage to be obtained, you must obtain these on or before completion. You must not complete without them.
5.10.14 If the leasehold title is registered but the lease has been lost, we are prepared to proceed provided you have checked an Isle of Man Land Registry produced copy of the registered lease. Whilst this will not be an office copy of the lease you may accept it as sufficient evidence of the lease and its terms when approving the title for mortgage purposes provided it is, on its face, a complete copy.
5.11.1.1 For leases granted before 1 September 2000: If the lease does not satisfy the requirements of paragraph 5.11.1 but: you are nevertheless satisfied that the existing arrangements affecting the management company and the maintenance and repair of the common parts are sufficient to ensure the adequate maintenance and repair of the common parts; and you are able to provide a clear certificate of title, then we will rely on your professional judgement.
5.11.2 You should make a company search and verify that the company is in existence and registered at the Companies Registry. You should also obtain the management company's last three years' published accounts (or the accounts from inception if the company has only been formed in the past three years). Any apparent problems with the company should be reported to us (see part 2). If the borrower is required to be a shareholder in the management company, check part 2 to see if you must arrange for the share certificate, a blank stock transfer form executed by the borrower and a copy of the memorandum and articles of association to be sent to us after completion (unless we tell you not to). If the management company is limited by guarantee, the borrower (or at least one of them if two or more) must become a member on or before completion.
5.12.1 You must obtain a clear bankruptcy search against each borrower (and each mortgagor or guarantor, if any). You must fully investigate any entries revealed by your bankruptcy search against the borrower (or mortgagor or guarantor) to ensure that they do not relate to them.
5.12.2.1 you must certify that the entry does not relate to the borrower (or the mortgagor or guarantor) if you are able to do so from your own knowledge or enquiries; or
5.12.2.2 if you are unable to certify that the entry does not relate to the borrower (or the mortgagor or guarantor) you must report this to us (see part 2). We may as a consequence need to withdraw our mortgage offer.
5.12.3 If you are aware that the title to the property is subject to a deed of gift or a transaction at an apparent undervalue completed within ten years of the proposed mortgage then you must be satisfied that we will acquire our interest in good faith and will be protected at law against our security being set aside. If you are unable to give an unqualified certificate of title, you must arrange indemnity insurance (see paragraph 9).
5.13.1 If any document is being executed under power of attorney, you must ensure that the power of attorney is, on its face, properly drawn up, that it appears to be properly executed by the donor and that the attorney knows of no reason why such power of attorney will not be subsisting at completion. Where there are joint borrowers the power should comply with section 24 of the Trustee Act 1961, as amended by section 2 of the Law Reform Miscellaneous Provisions Act 1996. In the case of joint borrowers, neither borrower may appoint the other as attorney.
5.13.2 We will accept a power of attorney in proper form created under legislation of a country other than the Isle of Man, if you are satisfied that it is valid for use in relation to the transaction.
6.6.1 If the property is newly built, or newly converted, or to be occupied for the first time, you must ensure that it was built or converted under whichever of the following is acceptable to us (see part 2):
the National House-Building Council (NHBC) Buildmark scheme; or
any other new home warranty schemes.
6.6.2 Check part 2 to see what new home warranty documentation should be sent to us after completion.
fellow or member of the Association of Building Engineers (FB.Eng or MB.Eng); or
6.9.1 If we make a retention from an advance (for example, for repairs, improvements or road works) we are not obliged to release that retention, or any part of it, if the borrower is in breach of any of his obligations under the mortgage, or if a condition attached to the retention has not been met or if the loan has been repaid in full. You should, therefore not give an unqualified undertaking to pay the retention to a third party.
6.9.2 Check part 2 to see who we will release the retention to.
6.10 Neighbourhood changes The local search or the enquiries of the seller or the seller's conveyancer should not reveal that the property is in an area scheduled for redevelopment or in any way affected by road proposals. If it is, please report this to us (see part 2).
6.11 Rights of pre-emption and restrictions on resale You must ensure that there are no rights of pre-emption, restrictions on resale, options or similar arrangements in existence at completion which will affect our security. If there are, please report this to us (see part 2).
6.12 Improvements and repair grants Where the property is subject to an improvement or repair grant which will not be discharged or waived on completion, check part 2 to see whether you must report the matter to us.
6.13 Insurance Where we do not arrange the insurance, you must:
6.13.1 report to us (see part 2) if the property is not insured in accordance with our requirements (one of our requirements, see part 2, will relate to whether the property is insured in the joint names of us and the borrower or whether our interest may be noted);
6.13.2 arrange that the insurance cover starts from no later than completion;
6.13.3 check that the amount of buildings insurance cover is at least the amount referred to in the mortgage offer (if the property is part of a larger building and there is a common insurance policy, the total sum insured for the building must be not less than the total number of flats multiplied by the amount set out in the mortgage offer for the property);
6.13.4 ensure that the buildings insurance cover is index linked;
6.13.5 ensure that the excess does not exceed the amount set out in part 2;
6.13.6 Check part 2 to see if we require you to confirm that all the following risks are covered in the insurance policy:
falling trees and branches and aerials;
landslip;
accidental damage to underground services;
professional fees, demolition and site clearance costs; and
public liability to anyone else.
6.13.7 Check part 2 to see if we require you to obtain before completion the insurer's confirmation that the insurer will notify us if the policy is not renewed or is cancelled or if you do not obtain this, report to us (see part 2).
6.13.8 Check part 2 to see if we require you to send us a copy of the buildings insurance policy and the last premium receipt to us.
8.3 anyone intending to occupy the property who is to execute a consent to the mortgage, and you must arrange for them to see an independent conveyancer. If we do allow you to advise any of these people, you must only do so after recommending in the absence of any other person interested in the transaction that such person obtains independent legal advice. Any advice that you give any of these people must also be given in the absence of any other person interested in the transaction. You should be particularly careful if the matrimonial home is being charged to secure a business debt.
10.2 We shall treat the submission by you of the certificate of title as a request for us to release the mortgage advance to you. Check part 2 to see if the mortgage advance will be paid electronically or by cheque and the minimum number of days notice we require. See part 2 for any standard deductions which may be made from the mortgage advance.
10.3 You are only authorised to release the loan when you hold sufficient funds to complete the purchase of the property and pay all recordal and registration fees to perfect the security as a first legal mortgage or, if you do not have them, you accept responsibility to pay them yourself. You must hold the loan on trust for us until completion. If completion is delayed, you must return it to us when and how we tell you (see part 2).
11.3 Signing and witnessing of documents It is considered good practice that the signature of a document needs to be witnessed by an advocate, solicitor, legal executive or licensed conveyancer. All documents required at completion must be dated with the date of completion of the loan.
14.1 Application to HM Land Registry You must register our mortgage at the Deeds Registry (and the Companies Registry if appropriate) within the Isle of Man General Registry. Before making your application for registration, you must place certified copies of the transfer, mortgage deed and any receipt from a previous mortgagee on your file.
14.2.1 All title deeds, searches, enquiries, consents, requisitions and documents relating to the property in your possession must be held to our order and you must not create or exercise any lien over them. Unless otherwise instructed (see part 2) you must send to us as soon as possible after completion a certified copy of the mortgage over the property and the original certificate of its recordal or registration in the general Deeds Registry or the Land Registry. Where the borrower is a company, you must also file the mortgage at the Companies Registry within 28 days of its date and, unless otherwise instructed, you must send to us as soon as possible after completion the original certificate of such filing.
14.2.3 You must only send us documents we tell you to (see part 2). You should obtain the borrower's instructions concerning the retention of documents we tell you not to send us.
14.3.1 For evidential purposes you must keep your file for at least six years from the date of the mortgage before destroying it. Microfiching or data imaging is suitable compliance with this requirement. It is the practice of some fraudsters to demand the conveyancing file on completion in order to destroy evidence that may later be used against them. It is important to retain these documents to protect our interests. Where you are processing personal data (as defined in the Data Protection Act 2002 of the Isle of Man) on our behalf, you must;
take such security measures as are required to enable you to comply with obligations equivalent to those imposed on us by the seventh data protection principle in the 2002 Act; and
14.4 For evidential purposes you must keep your file for at least six years from the date of the mortgage before destroying it. Microfiching or data imaging is suitable compliance with this requirement. It is the practice of some fraudsters to demand the conveyancing file on completion in order to destroy evidence that may later be used against them. It is important to retain these documents to protect our interests. Where you are processing personal data (as defined in the Data Protection Act 2002 of the Isle of Man) on our behalf, you must;
16.1 Requests for deeds All requests for deeds should be made in writing and sent to us (see part 2). In making such a request you must have the consent of all of the borrowers to apply for the deeds.
16.3 Transfers of equity Please refer to the lender for the lender's individual requirements.
16.4.1 You should advise the borrower that any letting of the property is prohibited without our prior consent. If the borrower wishes to let the property after completion then an application for consent should be made to us (see part 2). Check part 2 to see whether it is necessary to send to us a copy of the proposed tenancy when making the application.
16.5 Deeds for variation, rectification, easement or option agreements
16.6 Deeds of postponement or substitution If we agree to enter into an arrangement with other lenders concerning the order of priority of their mortgages, you will be supplied with our standard form of deed or form of postponement or substitution. We will normally not agree to any amendments to the form. In no cases will we postpone our first charge over the property.
17.1.2 To guard against fraud please ensure that if payment is made by cheque then the redemption cheque is made payable to us and you quote the mortgage account or roll number and name of borrower.
17.2 Discharge On the day of completion you should send the discharge and your remittance for the repayment to us (see part 2).