If you’re buying a property to live in, or re-mortgaging your existing home, and you’re intending to live with another adult who will not themselves be a joint-owner of the property, you might be surprised to learn that this person will often be required to be involved in the conveyancing process.
However, in legal terms, mortgage lenders are under a duty to ask their prospective borrowers whether there will be any third-party occupiers living at the mortgaged property. If anyone other than the borrower is intending to occupy, the mortgage lender will generally require, as a condition of making the mortgage loan, that the occupier signs legal documents ‘postponing’ their rights of occupation in the property to rank below the rights of the lender, to enable the mortgage lender to repossess the mortgaged property if the mortgage loan falls into arrears.
The requirement for an adult occupier to waive rights of occupation before a mortgage loan is made doesn’t apply to tenants or lodgers who are letting the property, or part of it, but most other adult occupiers can acquire a right to occupy a property that could potentially prevent a mortgage lender from repossessing a property if the correct formalities haven’t been observed.
The requirement for occupiers to waive their rights of occupation where a property is being mortgaged has been termed differently by various different mortgage lenders, and there’s inconsistency as to the names used for the documents the lenders ask occupiers to sign, which often causes confusion. Your lender may refer to the documentation as:-
- An ‘Occupier’s Waiver’ form;
- A “Deed of Waiver”
- A Deed of Postponement;
- A ‘Deed of Consent’; or
- By some other similar itineration of the above.
The common thread, however, is that a proposed mortgage lender will be asking an adult occupier who will be living at a property they will not own, which will be mortgaged to the lender, to sign a document stating they will vacate the property if the mortgage falls into arrears and the lender wishes to repossess, and if the occupier has acquired any financial interest in the property, that it is acknowledged that the lender must rank in priority in being repaid its mortgage loan.
Why does Independent Legal Advice need to be sought?
The mortgage lender will need to be able to prove that the occupier signing the Occupiers Waiver form was aware of the effect of the document they were signing, failing which, the signing of an Occupiers Waiver form could be deemed ineffective by the Courts.
The Courts have laid down guidance to the effect that mortgage lenders are under a duty to make reasonable enquiries into whether there are adult occupiers who should be required to waive their rights of occupation, and that independent legal advice from a solicitor or licensed conveyancer, who advising them on the effect of waiving their rights of occupation, is appropriate in order to ensure that the occupier understands the effect of the documents they’re asked to sign. Once independent legal advice has been given, it will usually be inferred that the occupier is aware of the effect of the waiver of their rights of occupation as well as any other rights (such as acquiring a financial interest in the property), and the Courts will then be satisfied that the occupier will then be bound by the terms of the Occupiers Waiver.
However, if clear independent legal advice is not given on the occupier’s waiver form, the mortgage lender may be left in a position where it is prevented from repossessing a property by a cohabitee of the borrower in the event that the mortgage loan falls into arrears.
How can I obtain Independent Legal Advice?
Finding a solicitor who offers independent legal advice on Occupiers Waivers forms can prove challenging.
Our extensive experience places us in an excellent position to understand your requirements and your circumstances, and to arrange a cost-effective ILA appointment for your occupier at a convenient time with our panel solicitors, either via online video conferencing or with a local solicitor providing ILA. They will then certify to your mortgage lender that the formalities have been dealt with, thereby enabling you to complete your mortgage.
At ILA-Connect, we’ve made it quick, easy and convenient for you to get an appointment for independent legal advice at a moment’s notice. Get in touch with us on firstname.lastname@example.org or call our office on 0333 300 1879 to arrange an appointment.