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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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We granted a mortgage to enable a company to purchase some

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We granted a mortgage to enable a company to purchase some property. The company’s solicitor undertook to register the purchase but some 9 months later has failed to do so, has been asked to do so failed and has been reported to the SRA. We have not received any payments under the mortgage and now wish to enforce our security, but how? The land has never been owned in law by the company which only has, we think and equitable interest, how on earth do we take possession as mortgagees or appoint a receiver under the LPA 1925 over an equitable interest? We have never had to enforce a security before as we seldom lend – it seems for very good reason!
Submitted: 2 years ago.
Category: Property Law
Expert:  Joshua replied 2 years ago.
Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.

Joshua :

May I ask if the solicitor you mention was also acting for you or did you have a separate solicitor acting for you please?

Customer:

The solicitor did not act for us we engaged no independent solicitor as the loan was at the behest of a contacts recommendation!

Joshua :

Thanks. So who prepared the loan agreement and mortgage deed for you? Did you do this yourself or did the solicitor acting for the company do this on your behalf?

Customer:

We did it - it is pretty comprehensive and allows e.g. all LPA powers plus those under the IA1986 to be exercised by the LPA Receiver and if we enter as a mortgagee we have similar powers of sale etc.

Joshua :

Thanks. Do you have a signed copy of the loan agreement and mortgage deed or an undertaking that these will be registered by the solicitor acting for the company and copies provided to you once registration is complete?

Customer:

We do.

Joshua :

Thank you. Sorry may I confirm which of the above you have? An undertaking or signed copies or both?

Customer:

We have signed Loan Agreement, undertakings to hold the signed Mortgage to order (return requested but the solicitors have "mislaid" it) and an undertaking to register the mortgage once the purchase has been register - which it has not.

Joshua :

Thank you. In these circumstances the solicitor is in breach of his undertakings which are legally enforceable. This means the solicitor (and his insurers) are liable for any loss that you suffer as a result of the breaches of undertakings. That is the starting point. As to what you do from here:

Joshua :

Without the signed mortgage deed nor the signed transfer deed transferring the property into the companies name, you cannot register your security and therefore the present position is you have no security to enforce.

Joshua :

Accordingly the first step which you have presumably already undertaking is to give notice to the solicitor that you consider him to be in rbeach of his underakings and put him on notice that you reserve your position in respet of costs you may incur as a result.

Joshua :

How you proceed from there would depend on whether the company is prepared to cooperate with you or not. Are they prepared to cooperate?

Customer:

No the company is not cooperative and has refused to make payment.

Joshua :

Thank you. You therefore have two options; you can either simply sue the company on the force of your loan agreement or you can serve a statutory notice if the arrears are more than £750 which would lead to the company being wound up and would transfer control of assets to an administrator. If you decide to issue proceedings in court you can add the solicitor to the proceedings as a joint defendant for breach of undertaking and recover from the company and solicitor as necessary.

Joshua :

One particular area of concern is the failure to register the land at the land registry because you cannot claim what he company does not own. However providing there is evidence of payment for the land then the company will have an equitable interest in the land which should be sufficient to register their interest in due course though you cannot directly facilitate this.

Joshua :

The obvious step to me would be to retain a solicitor to assist you because on the basis that you can call in the loan on the basis of the default and the amount in question is over £10,000 then you can seek costs. On the basis of breach of undertaking you can consider pursuing the solicitor and his insurers for losses or you can consider pursuing the company as above or both for your losses. How is best to recover your monies will be based on an assessment of whether in the circumstances it is likely to be easier to receover from the company or the solicitor. If the land has not been registered, it may be simpler to go after the solicitor for breach of undertaking

Joshua :

The particular concern is to satisify yourself that the company did in fact pay the owner of the land for the land. If this is the case then you can for now consider registering a unilateral notice against the title to protect your interest whilt you decide how to proceed which should prevent any sale of the land. From there it is a decision for you (and your solicitor if you appoint one) as to whether to pursue the solicitor or company or both and whether it is better to sue in the county court or seek to wind the company up

Joshua :

Is there anything above I can clarify for you?

Customer:

Thank you, ***** ***** about where we suspected, we are seeking to wind the company up and pursue the solicitors.

Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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