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F E Smith
F E Smith, Advocate
Category: Law
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Experience:  I have been practising for 30 years.
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Myself and my wife have the finances in place to purchase an

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Myself and my wife have the finances in place to purchase an area of land (24 acres) and an adjoining house. They both use the same laneway. Purchase of the land is being financed by one bank and purchase of the house by another. The bank financing the land has concerns about legal right of way given that both properties are to be owned by the same people (us). I understand land registry would also have issues with this situation. Is there a solution regarding a legal basis for right of way that could address this problem ? Ideally we dont want to create a new legal entity such as a company because the banks credit assessment people may not like that - could it be set up that the bank has a say over any proposed change over legal right of way !
Submitted: 7 months ago.
Category: Law
Expert:  F E Smith replied 7 months ago.

Actually owns the lane?

If it’s owned by a third party, is there an existing right-of-way?

Please say if it’s documented.

If it isn’t documented, how long has it been used for?

Customer: replied 7 months ago.
The farmer we are buying both the land and house from owns the lane as both currently exist as one entity - part of the process of sale is to separate the two into two separate deeds. This is because the first bank would only finance the land and we were able to get a separate mortgage offer for the house. The result is that now the bank financing the land want to ensure security re rights of way.
Customer: replied 7 months ago.
I would prefer at to do this by message at this stage
Expert:  F E Smith replied 7 months ago.

The problem here is that if you own both houses and the land, you cannot create an easement/right-of-way over land you own!

It’s not an issue for the land registry, it’s an issue for the bank . It’s not possible to land like a piece of land which is being used for residential purposes if the properties were eventually separated but there was a falling out, it would need a court application. That’s what the bank don’t want particularly if they repossess the property.

If there is an existing right-of-way, and the land with the benefit and the land with the burden come into common ownership, then the right-of-way/easement is extinguished.

This is the problem which the bank are raising.

One common solution would be for the properties to be owned by a limited company and for you to offer personal guarantees. You think that would raise credit issues.

Another solution would be for one property to be owned by two of you and the other property to only be owned by one of you but with the deed of trust in respect of the non-owner share.

About the only other way of doing this would be for the bank to make it a mortgage condition that either property were ever sold, there is a right-of-way entered into as part of the sale agreement. It could be documented on the land registry deeds as a restriction whereby you wouldn’t be able to sell the property unless that restriction had been complied with to the satisfaction of the bank.

To cut a long story short, this can be done but whether the bank will be happy with the situation remains to be seen. It’s perfectly legal and perfectly practical to do so but sometimes, with the bank, you are dealing with someone who is not familiar with the nuances of land law.

Can I clarify any points arising from this?

Please rate the service positive. It’s an important part of the process by which experts get paid.

We can still exchange emails.

Best wishes.

FES.

Customer: replied 7 months ago.
Thanks thats helpful - I think the bank would be thinking about a situation where it is selling the land as a result of failures by us to repay the loan and as such would it be in a position to introduce a right of way as a condition of its own sale of the asset ?
Expert:  F E Smith replied 7 months ago.

Yes the bank could do that but they would just want a clean sale, they would not want the trouble.

F E Smith, Advocate
Category: Law
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Experience: I have been practising for 30 years.
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