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Solicitor Information - Lenders Handbook for England and Wales

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In addition, you must allow us to conduct such reasonable audit of your information security measures as we require to ensure your compliance with your

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Lenders’ Handbook for England and Wales

    (Last Updated: 02.07.2007)

    Part 2: Ipswich Building Society

    (Last Updated: 11.09.2007)

    1. General 7. OTHER OCCUPIERS

     PART 1 INSTRUCTIONS AND GUIDANCE 8. SEPARATE REPRESENTATION

    2. COMMUNICATION 9. INDEMNITY INSURANCE

    3. SAFEGUARDS 10. THE LOAN AND CERTIFICATE OF TITLE

     A This section relates to solicitors and

     those working in practices regulated by 11. THE DOCUMENTATION

     the Solicitors Regulation Authority only 11.1 The Mortgage

     B This section applies to licensed 11.2 Signing and Witnessing of Documents

     conveyancers practices only

     12. INSTALMENT MORTGAGES AND

    4. VALUATION OF THE PROPERTY MORTGAGE ADVANCES RELEASED IN

     4.1 Valuation INSTALMENTS

     4.2 Re-inspection 12.1 Introduction

     12.2 Applications for Part of the Advance 5. TITLE 12.3 Requests for Intermediate Funds

     5.1 Surrounding Circumstances 12.4 Building Contract as Security

    5.2 Searches and Reports

    5.3 Planning and Building Regulations 13. MORTGAGE INDEMNITY INSURANCE OR

     5.4 Good and Marketable Title HIGHER LENDING CHARGE

     5.5 Flying Freeholds, Freehold Flats, other

     Freehold Arrangements and 14. AFTER COMPLETION

     Commonhold Other freehold 14.1 Registration

     arrangements Commonhold 14.2 Title Deeds

     5.6 Restrictions on Use and Occupation 14.3 Your Mortgage File

     5.7 Restrictive Covenants

     5.8 First Legal Charge 15. LEGAL COSTS

     5.9 Other Loans

     5.10 Leasehold Property 16. TRANSACTIONS DURING THE LIFE OF THE

     5.11 Management Company MORTGAGE

     5.12 Insolvency Considerations 16.1 Request for Title Documents

     5.13 Powers of Attorney 16.2 Further Advances

     5.14 The Guarantee 16.3 Transfers of Equity

     5.15 Affordable Housing: Shared Ownership 16.4 Properties to be let after Completion

     and Shared Equity (other than “buy-to-Let”)

     16.5 Deed of Variation etc. 6. THE PROPERTY 16.6 Deeds of Postponement or Substitution

    6.1 Mortgage Offer and Title Documents

    6.2 Boundaries 17. REDEMPTION

    6.3 Purchase Price 17.1 Redemption Statement

    6.4 Vacant Possession 17.2 Discharge

    6.5 Properties Let at Completion

     6.6 New Properties Building Standards

     Indemnity Schemes

    6.7 Roads and Sewers

    6.8 Easements

    6.9 Release of Retention

    6.10 Neighbourhood Changes

    6.11 Rights of Pre-emption and Restriction on

    Resale

    6.12 Improvements and Repair Grants

    6.13 Insurance

January 2009

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1. General

PART 1 INSTRUCTIONS AND GUIDANCE

Those lenders who instruct using the CML Lenders’ Handbook certify that these instructions have been

    prepared to comply with the requirements of Rule 6(3) of the Solicitors’ Practice Rules 1990 (or when

    applicable the Solicitors’ Code of Conduct 2007).

1.1 The CML Lenders‟ Handbook is issued by the Council of Mortgage Lenders. Your instructions from an

    individual lender will indicate if you are being instructed in accordance with the Lenders‟ Handbook. If you

    are, the general provisions in Part 1 and any specific requirements in Part 2 must be followed.

1.2 References to “we”, “us” and “our” means the lender from whom you receive instructions.

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.

1.4 The standard of care which we expect of you is that of a reasonably competent solicitor or licensed

    conveyancer acting on behalf of a mortgagee.

1.5 The limitations contained in rule 6(3)(c) and (e) of the Solicitors‟ Practice Rules 1990 (and when applicable

    the Solicitors‟ Code of Conduct 2007) apply to the instructions contained in the Lenders‟ Handbook and any

    separate instructions. This does not apply to licensed conveyancers following clause 3B.

1.6 You must also comply with any separate instructions you receive for an individual loan.

1.7 If the borrower and the mortgagor are not one and the same person, all references to “borrower” shall

    include the mortgagor. Check Part 2 to see if we lend in circumstances where the borrower and the

    mortgagor are not one and the same.

1.7- Contact point to see if you will lend when borrower and mortgagor are not one and the same.

    Lending Services

    Ipswich Building Society

    P O Box 547, Ipswich IP3 9WZ

    Tel: 0845 230 9696

    Fax: 01473 278625

1.8 References to “borrower” (and, if applicable, “guarantor” or, expressly or impliedly, the mortgagor) are to

    each borrower (and guarantor or mortgagor) named in the mortgage instructions/offer (if sent to the

    conveyancer). This applies to references in the Lenders‟ Handbook and in the certificate of title.

1.9 References to “mortgage offer” include any loan agreement, offer of mortgage or any other similar

    document.

1.10 If you are instructed in connection with any additional loan (including a further advance) then you should

    treat references to “mortgage” and “mortgage offer” as applying to such “additional loan” and “additional

    loan offer” respectively.

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 or generate 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.

    1.11- Contact point for standard documents. Lending Services (see 1.7)

    1.11- Contact point if standard documents are inappropriate

    Lending Services (see 1.7)

1.12 In order to act on our behalf your firm must be a member of our conveyancing panel. You must also

    comply with any terms and conditions of your panel appointment.

1.13 If you or a member of your immediate family (that is to say, a spouse, civil partner, co-habitee, parent,

    sibling, child, step-parent, step-child, grandparent, grandchild, parent-in-law, or child-in-law) is the borrower

    and you are the sole practitioner, you must not act for us.

January 2009

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1.13.2 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 seller, 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.

1.13.2- May my firm act if the person dealing with the transaction or a member of his immediate family is

    the seller?

    No

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.

1.14- May my firm act if the person dealing with the transaction or a member of his immediate family is

    the borrower?

    No

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.

1.17 In addition to these definitions any reference to any regulation, legislation or legislative provision shall be

    construed as a reference to that regulation, legislation or legislative provision as amended, re-enacted or

    extended at the relevant time.

    2. COMMUNICATION

2.1 All communication between you and us should be in writing quoting the mortgage account or roll number,

    the surname and initials of the borrower and the property address. You should keep copies of all written

    communication on your file as evidence of notification and authorisation. If you use PC fax or email, you

    should retain a copy in readable form.

2.2 If you require deeds or information from us in respect of a borrower or a property then you must first of all

    have the borrower‟s authority for such a request. If there is more than one borrower, you must have the

    authority of all the borrowers.

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. SAFEGUARDS

A This section relates to solicitors and those working in practices regulated by the Solicitors

    Regulation Authority only

    A3.1.1 You must follow the guidance in the Law Society‟s Green Card (mortgage fraud) and Pink Card

    (undertakings).

    A3.1.2 You must follow the Law Society‟s guidance relating to money laundering and comply with the current

    money laundering regulations and the Proceeds of Crime Act 2002 to the extent that they apply.

A3.2 If you are not familiar with the seller‟s solicitors or licensed conveyancers, you must verify that they appear

    in a legal directory or they are currently on record with the Law Society or Council for Licensed

    Conveyancers as practising at the address shown on their note paper. If the seller does not have legal

    representation you should check part 2 to see whether or not we need to be notified so that a decision can

    be made as to whether or not we are prepared to proceed.

A3.2- Contact details if you need to be notified when the seller does not have legal representation.

    Lending Services (see 1.7)

A3.3 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:

    January 2009

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List A a valid full passport; or

    - a valid HM Forces identity card with the signatory‟s photograph; or - a valid UK photo-card driving licence; or

    - any other document listed in the additional list A in part 2.

List B a cheque guarantee card, credit card (bearing the Mastercard or Visa logo) American 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 firearm and shot gun certificate; or

    - a receipted utility bill less than three months old; or

    - a council tax bill less than three months old; or

    - a council rent book showing the rent paid for the last three months; or

    - a mortgage statement from another lender for the mortgage accounting year just ended; or

    - any other document listed in the additional list B in part 2.

    A3.3- What other documents are acceptable for verifying identity? None

A3.4 You should check that any document you use to verify a signatory‟s identity appears to be authentic and

    current, signed in the relevant place. You should take a copy of it and keep the copy on your file. You

    should also check that the signatory‟s signature on any document being used to verify identity matches the

    signatory‟s signature on the document we require the signatory to sign and that the address shown on any

    document used to verify identity is that of the signatory.

    B This section applies to licensed conveyancers practices only

B3.1 You must follow the professional guidance of the Council for Licensed Conveyancers relating to money

    laundering and comply with the current money laundering regulations and the Proceeds of Crime Act 2002

    to the extent that they apply and you must follow all other relevant guidance issued by the Council for

    Licensed Conveyancers.

    B3.2 If you are not familiar with the sellers solicitors or licensed conveyancers, you must verify that they appear

    in a legal directory or they are currently on record with the Law Society or Council for Licensed

    Conveyancers as practising at the address shown on their note paper. If the seller does not have legal

    representation you should check part 2 to see whether or not we need to be notified so that a decision can

    be made as to whether or not we are prepared to proceed.

B3.2- Contact details if you need to be notified when the seller does not have legal representation.

    Lending Services (see 1.7)

B3.3 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 must satisfy yourself that the person signing the document

    is the borrower, mortgagor or guarantor (as appropriate). If you have any concerns about the identity of the

    signatory you should notify us immediately.

    B3.4 You should check that any document you use to verify a signatory‟s identity appears to be authentic and

    current, signed in the relevant place. You should take a copy of it and keep the copy on your file. You

    should also check that the signatory‟s signature on any document being used to verify identity matches the

    signatory‟s signature on the document we require the signatory to sign and that the address shown on the

    document used to verify identity is that of the signatory.

4. VALUATION OF THE PROPERTY

4.1 Valuation

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.

4.1.1- Is there a valuation report?

    Yes, if a mortgage valuation has been undertaken. No, if an AVM/Drive by has been undertaken.

    4.1.1- If so do you provide it?

    Yes

January 2009

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4.1.2 You must take reasonable steps to verify that there are no discrepancies between the description of the

    property as valued and the title and other documents which a reasonably competent conveyancer should

    obtain, and, if there are, you must tell us immediately. The requirements in this clause and clause 4.1.3

    apply to valuation reports and home condition reports. Where there is both a valuation report and a home

    condition report the requirements apply to both.

4.1.3 You should take reasonable steps to verify that the assumptions stated by the valuer (and where applicable

    a home inspector) about the title (for example, its tenure, easements, boundaries and restrictions on its use)

    in the valuation and home condition report are correct. If they are not, please let us know as soon as

    possible (see part 2) as it will be necessary for us to check with the valuer whether the valuation needs to

    be revised. We are not expecting you to assume the role of valuer. We are simply trying to ensure that the

    valuer has valued the property based on correct information.

4.1.3- Contact point if assumptions stated by the valuer are incorrect.

    Lending Services (see 1.7)

4.1.4 When a home condition report is not provided we recommend that you should advise the borrower that

    there may be defects in the property which are not revealed by the inspection carried out by our valuer and

    there may be omissions or inaccuracies in the report which do not matter to us but which would matter to

    the borrower. We recommend that, if we send a copy of a valuation report that we have obtained, you

    should also advise the borrower that the borrower should not rely on the report in deciding whether to

    proceed with the purchase and that he obtains his own more detailed report on the condition and value of

    the property, based on a fuller inspection, to enable him to decide whether the property is suitable for his

    purposes.

4.2 Re-inspection

4.2 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).

4.2- Contact point if re-inspection required.

    Lending Services (see 1.7) 4.2- Where should the certificate of title be sent?

    Lending Services (see 1.7)

5. TITLE

5.1 Surrounding Circumstances

5.1.1 Please report to us (see part 2) if the owner or registered proprietor has been registered for less than six

    months or the person selling to the borrower is not the owner or registered proprietor unless the seller is:

5.1.1.1 a personal representative of the registered proprietor; or

    5.1.1.2 an institutional mortgagee exercising its power of sale; or

    5.1.1.3 a receiver, trustee-in-bankruptcy or liquidator; or

    5.1.1.4 developer or builder selling a property acquired under a part-exchange scheme.

5.1.2 If any matter comes to your attention which you should reasonably expect us to consider important in

    deciding whether or not to lend to the borrower (such as whether the borrower has given misleading

    information to us or the information which you might reasonably expect to have been given to us is no

    longer true) and you are unable to disclose that information to us because of a conflict of interest, you must

    cease to act for us and return our instructions stating that you consider a conflict of interest has arisen.

5.1.1- Contact point if the seller has owned the property for less than 6 months.

    Lending Services (see 1.7)

5.2 Searches and Reports

5.2.1 In carrying out your investigation, you must ensure that all usual and necessary searches and enquiries

    have been carried out. You must report any adverse entry to us but we do not want to be sent the search

    itself. We must be named as the applicant in the Land Registry search.

5.2.2 In addition, you must ensure that any other searches which may be appropriate to the particular property,

    taking into account its locality and other features are carried out.

    January 2009

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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 You must advise us of any contaminated land entries revealed in the local authority search. Check part 2

    to see if we want to receive environmental or contaminated land reports (as opposed to contaminated land

    entries revealed in the local authority search). If we do not, you do not need to make these enquiries on

    our behalf.

5.2.4- Do you want to receive environmental or contaminated land reports?

    Yes

    5.2.4 Check part 2 to see if we accept:

5.2.5.1 personal searches; or

5.2.5.1- Do you accept personal searches?

    Yes, subject to indemnity insurance.

    - all personal searches without limitations

    - only personal searches carried out by firms registered under particular codes of practice

    Yes

    - If “yes”, please specify which code(s)

    Search Code monitored by Property Codes Compliance Board (PCCB). No

5.2.5.2 search insurance

If we do accept personal searches or search insurance, check part 2 to see our requirements as to such

    searches.

5.2.5.2- Do you accept search insurance, if so what are your requirements?

    Yes, subject to the Search firm subscribing to the Search Code monitored by PCCB.

    5.2.6 If no requirements are specified in part 2 and we do not indicate that we do not accept personal searches

    or search insurance you must ensure:

5.2.6.1 a suitably qualified search agent carries out the personal search and has indemnity insurance that

    adequately protects us; or

    5.2.6.2 the search insurance policy adequately protects us.

5.2.7 You must be satisfied that you will be able to certify that the title is good and marketable.

5.3 Planning and Building Regulations

5.3.1 You must by making appropriate searches and enquiries, take all reasonable steps (including any further

    enquiries to clarify any issues which may arise) to ensure the property has the benefit of any necessary

    planning consents (including listed building consent) and building regulation approval for its construction

    and any subsequent change to the property (see part 2) and its current use; and

    5.3.1- Do you limit your requirements in terms of time for: - planning consents?

    Yes

    - building regulation consents?

    Yes

    If so, please specify your requirements

    Contact Lending Services (see 1.7)

5.3.2 there is no evidence of any breach of the conditions of that or any other consent or certificate affecting the

    property; and

5.3.3 that no matter is revealed which would preclude the property from being used as a residential property or

    that the property may be the subject of enforcement action.

5.3.4 if there is such evidence and all outstanding conditions will not be satisfied 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.

    January 2009

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    5.3.4- Contact point for reporting if evidence of breach and all outstanding conditions will not be satisfied by completion.

    Lending Services (see 1.7)

    5.3.4- Do you require the following documents to be sent to you:

    - original copy/planning permission? Yes

    - original copy/building regulation consents?

    Yes

    - certificates of lawful use or development/established use certificate?

    Yes

5.3.5 If the property will be subject to any enforceable restrictions, for example under an agreement (such as an

    agreement under section 106 of the Town and Country Planning Act 1990) 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).

5.3.5- Contact point if the property is subject to restrictions which may affect its value or marketability.

    Lending Services (see 1.7)

    5.4 Good and Marketable Title

5.4.1 The title to the property must be good and marketable free of any restrictions, covenants, easements,

    charges or encumbrances which, at the time of completion, might reasonably be expected to materially

    adversely affect the value of the property or its future marketability (but excluding any matters covered by

    indemnity insurance) and which may be accepted by us for mortgage purposes. Our requirements in

    respect of indemnity insurance are set out in Section 9. You must also take reasonable steps to ensure

    that, on completion, the property will be vested in the borrower.

5.4.2 Good leasehold title will be acceptable if:

5.4.2.1 a marked abstract of the freehold and any intermediate leasehold title for the statutory period of 15

    years before the grant of the lease is provided; or

    5.4.2.2 you are prepared to certify that the title is good and marketable when sending your certificate of title

    (because, for example, the landlord‟s title is generally accepted in the district where the property is

    situated); or

    5.4.2.3 you arrange indemnity insurance. Our requirements in respect of indemnity insurance are set out in

    Section 9.

5.4.3.1 A title based on adverse possession or possessory title will be acceptable if the seller is or on

    completion the borrower will be registered at the Land Registry as registered proprietor of a possessory

    title or there is satisfactory evidence by statutory declaration of adverse possession for a period of at

    least 12 years. In the case of lost title deeds, the statutory declaration must explain the loss

    satisfactorily;

    5.4.3.2 We will also require indemnity insurance where there are buildings on the part in question or where the

    land is essential for access or services;

    5.4.3.3 We may not need indemnity insurance in cases where such title affects land on which no buildings are

    erected or which is not essential for access or services. In such cases, you must send a plan of the

    whole of the land to be mortgaged to us identifying the area of land having possessory title. We will

    refer the matter to our valuer so that an assessment can be made of the proposed security. We will

    then notify you of any additional requirements or if a revised mortgage offer is to be made.

5.5 Flying Freeholds, Freehold Flats, other Freehold Arrangements and Commonhold

5.5.1 If any part of the property comprises or is affected by a flying freehold or the property is a freehold flat,

    check part 2 to see if we will accept it as security.

    5.5.1- Do you lend on flying freeholds? Yes, if only part of the title is a „flying‟ or „creeping‟ freehold. If the Offer conditions do not refer to a

    flying/creeping freehold please report to Lending Services (see 1.7).

    5.5.1- Do you lend on freehold flats? No.

5.5.2 If we are prepared to accept a title falling within 5.5.1:

5.5.2.1 (unless we tell you not to in part 2) you must report to us that the property is a freehold flat or flying

    freehold; and

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5.5.2.1- Contact point of the property comprises a flying freehold/freehold flat.

    Lending Services (see 1.7)

5.5.2.2 the property must have all necessary rights of support, protection, and entry for repair as well as a

    scheme of enforceable covenants that are also such that subsequent buyers are required to enter into

    covenants in identical form; and

    5.5.2.3 you must be able to certify that the title is good and marketable; and

    5.5.2.4 in the case of flying freeholds, you must send us a plan of the property clearly showing the part

    affected by the flying freehold. If our requirements in 5.5.2.2 are not satisfied, indemnity must be in

    place at completion (see Section 9).

Other freehold arrangements

5.5.3 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.

    5.5.3- Do you lend in these circumstances? Yes

5.5.3.1 If the borrower occupying one of the flats also owns the freehold, we will require our security to be:

5.5.3.1.1 the freehold of the whole building subject to the long leases of the other flats; and

    5.5.3.1.2 any leasehold interest the borrower will have in the flat the borrower is to occupy.

5.5.3.2 If another flat owner owns the freehold of the building, the borrower must have a leasehold interest in

    the flat the borrower is to occupy and our security must be the borrower‟s leasehold interest in such flat.

5.5.3.3 The leases of all the flats should contain appropriate covenants by the tenant of each flat to contribute

    towards the repair, maintenance and insurance of the building. The leases should also grant and

    reserve all necessary rights and easements. They should not contain any unduly onerous obligations

    on the landlord.

5.5.4 Where the security will comprise:

5.5.4.1 one of a block or not more than four leasehold flats and the borrower will also own the freehold jointly

    with one or more of the other flat owners in the building; or

    5.5.4.2 one of the two leasehold flats in a building where the borrower also owns the freehold reversion of the

    other flat and the other leaseholder owns the freehold reversion in the borrower‟s flat; check part 2 to

    see if we will accept it as security and if so, what our requirements will be.

    5.5.4.2- Do you lend in these circumstances? Yes, subject to a suitable form of Trust Deed, to be approved by you, to be in existence which contains

    procedures for the joint owners legal and beneficial interests in the freehold to be transferred with the leasehold

    interest if a mortgagee exercises its power of sale.

Commonhold

5.5.5 If any part of the property comprises commonhold, check part 2 to see if we will accept it as security.

    5.5.5- Do you lend on commonhold? No

5.5.6 If we are prepared to accept a title falling within 5.5.5, you must:

5.5.6.1 ensure that the commonhold association has obtained insurance for the common parts which complies

    with our requirements (see 6.13);

    5.5.6.2 obtain a commonhold unit information certificate and ensure that all of the commonhold assessment in

    respect of the property has been paid up to the date of completion;

    5.5.6.3 ensure that the commonhold community statement does not include any material restrictions on

    occupation (see 5.4 and 5.6);

    5.5.6.4 ensure that the commonhold community statement provides that in the event of a voluntary termination

    of the commonhold the termination statement provides that the unit holders will ensure that any

    mortgage secured on their unit is repaid on termination;

5.5.6.5 make a company search to verify that the commonhold association is in existence and remains

    registered, and that there is no registered indication that it is to be wound up; and

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5.5.6.6 within 14 days of completion, send the notice of transfer of a Commonhold unit and notice of the

    mortgage to the Commonhold association.

5.6 Restrictions on Use and Occupation

5.6 You must check whether there are any material restrictions on the occupation of the property as a private

    residence or as specified by us (for example, because of the occupier‟s employment, age or income), or

    any material restrictions on its use. If there are any restrictions, you must report details to us (see part 2).

    In some cases, we may accept a restriction, particularly if this relates to sheltered housing or to first-time

    buyers.

5.6- Contact point if there is a restriction on use.

    Lending Services (see 1.7)

5.7 Restrictive Covenants

5.7.1 You must enquire whether the property has been built, altered or is currently used in breach of a restrictive

    covenant. We rely on you to check that the covenant is not enforceable. If you are unable to provide an

    unqualified certificate of title as a result of the risk of enforceability, you must ensure (subject to Section

    5.7.2) that indemnity insurance is in place at completion of our mortgage (see Section 9).

5.7.2 We will not insist on indemnity insurance:

5.7.2.1 if you are satisfied that there is no risk to our security; and

    5.7.2.2 the breach has continued for more than 20 years; and

    5.7.2.3 there is nothing to suggest that any action is being taken or is threatened in respect of the breach.

    5.8 First Legal Charge

5.8 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.

5.9 Other Loans

5.9 You must ask the borrower how the balance of the purchase price is being provided. If you become aware

    that the borrower is not providing the balance of the purchase price from his own funds and/or is proposing

    to give a second charge over the property, you must report this to us if the borrower agrees (see part 2),

    failing which you must return our instructions and explain that you are unable to continue to act for us as

    there is a conflict of interest.

    5.9- Contact point if borrower is not providing balance of purchase price from funds/proposing to give a second charge.

    Lending Services (see 1.7)

5.10 Leasehold Property

5.10.1 Our requirements on the unexpired term of a lease offered as security are set out in part 2.

5.10.1- What minimum unexpired lease term do you accept?

    70 years.

5.10.2 There must be no provision for forfeiture on the insolvency of the tenant or any superior tenant.

5.10.3 The only situation 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 (this is particularly important if the lease is a

    shared ownership lease). You must not complete without them.

5.10.4 You must take reasonable steps to check that:

5.10.4.1 there are satisfactory legal rights, particularly for access, services, support, shelter and protection; and

    January 2009

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5.10.4.2 there are also adequate covenants and arrangements in respect of the following matters, building

    insurance, maintenance and repair of the structure, foundations, main walls, roof, common parts,

    common services and grounds (the “common services”).

5.10.5 You should ensure that responsibility for the insurance, maintenance and repair of the common

    services is that of:

5.10.5.1 the landlord; or

    5.10.5.2 one or more of the tenants in the building of which the property forms part; or

    5.10.5.3 the management company see Section 5.11.

5.10.6 Where the responsibility for the insurance, maintenance and repair of the common services is that of

    one or more of the tenants;

5.10.6.1 the lease must contain adequate provisions for the enforcement of these obligations by the landlord or

    management company at the request of the tenant.

    5.10.6.2 In the absence of a provision in the lease that all leases of other flats in the block are in, or will be

    granted in, substantially similar form, you should take reasonable steps to check that the leases of the

    other flats are in similar form. If you are unable to do so, you should effect indemnity insurance (see

    Section 9). This is not essential if the landlord is responsible for the maintenance and repair of the

    main structure.

    5.10.6.3 We do not require enforceability covenants mutual or otherwise for other tenant covenants.

5.10.7 We have no objection to a lease which contains provision for a periodic increase of the ground rent

    provided that the amount of the increased ground rent is fixed or can be readily established and is

    reasonable. If you consider any increase in the ground rent may materially affect the value of the

    property, you must report this to us (see part 2).

5.10.7- Contact point for matters connected with the lease.

    Lending Services (see 1.7)

5.10.8 You should enquire whether the landlord or managing agent foresees any significant increase in the

    level of the service charge in the reasonably foreseeable future and, if there is, you must report to us

    (see part 2).

    5.10.8- Contact for service charge matters. Lending Services (see 1.7)

5.10.9 If the terms of the lease are unsatisfactory, you must obtain a suitable deed of variation to remedy the

    defect. We may accept indemnity insurance (see Section 9). See part 2 for our requirements.

5.10.9- Do you accept indemnity insurance where the terms of the lease are unsatisfactory?

    Yes

5.10.10 You must obtain on completion a clear receipt or other appropriate written confirmation for the last

    payment of ground rent and service charge from the landlord of managing agents on behalf of the

    landlord. Check part 2 to see if it must be sent to us after completion. If confirmation of payment from

    the landlord cannot be obtained, we are prepared to proceed provided that you are satisfied that the

    absence of the landlord is common practice in the district where the property is situated, the seller

    confirms there are no breaches of the terms of the lease, you are satisfied that our security will not be

    prejudiced by the absence of such a receipt and you provide us with a clear certificate of title.

5.10.10- Do you require a clear ground rent/service charge receipt to be sent to you?

    No

5.10.11 Notice of the mortgage must be served on the landlord and any management company immediately

    following completion, whether or not the lease requires it. If you cannot obtain receipt of the notice

    then, as a last resort, suitable evidence of the service of the notice on the landlord should be provided.

    Check part 2 to see if a receipted copy of the notice or evidence of service must be sent to us after

    completion.

5.10.11- Do you require a receipted copy of notice or evidence of service to be sent to you?

    Yes

5.10.12 We will accept leases which require the property to be sold on the open market if pre-building or

    reinstatement is frustrated, provided the insurance proceeds and the proceeds of sale are shared

    between the landlord and tenant in proportion to their respective interests.

January 2009

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