OBJECTIVE 02

Mortgagee Protection Clauses

A confusion of lender requirements that is causing entirely avoidable delays, and we think it’s time for a universal approach.

Why this is holding transactions up?

When a leasehold property is being purchased with a mortgage, conveyancers are increasingly running into a wall of inconsistency. Some lenders will not proceed unless the lease includes a mortgagee protection clause. Others require a Deed of Variation. Others place the burden squarely on the conveyancer to make a judgement call. And some will consider an indemnity policy, though whether that policy is actually worth anything is a serious question in itself.

The result is delays, aborted transactions and conveyancers caught in the middle – trying to satisfy requirements that differ from lender to lender, and that in many cases have no clear legal foundation.

Read the full analysis

This briefing document was prepared by Rob Hailstone, CEO of Bold Legal Group, and sets out the legal position in full, including the statutory protections already available to lenders, the practical difficulties of residential lease forfeiture, and why the current inconsistency of lender requirements is causing unnecessary delays.

Our objective

CiC is working with lenders and other stakeholders to reach universal agreement on what lenders actually need, why they need it, and what they want conveyancers to do when a mortgagee protection clause is absent from a lease.

The current situation, where each lender takes a different position and conveyancers are left to navigate the inconsistency case by case, is not acceptable. It causes delays, increases costs and adds friction to transactions that should be straightforward.

We believe a clear, consistent and legally grounded position is achievable. And we are going to work towards it.

Has this affected your practice?

Have you had a transaction delayed or complicated by mortgagee protection clause requirements? Have you encountered lenders taking positions that seem inconsistent with the legal reality? Do you have views on what a universal approach should look like?

The collective wants to hear from practitioners across all firm types. Your experience will directly inform our work with lenders and stakeholders on this issue.

All submissions are read by the collective. Nothing is published without your permission.