Road adoption and mortgage

booboomania

One final hurdle to leap over before we exchange... an issue has come up on our seraches relating to the road adoption. the housing estate was build in 2006 and the roads are still maintained by the developer. Our solicitors have advised they need to inform our mortgage company (see bleow) Nationwide. I just wondered if anyone had come across this before and whether or not it will be an issue? The solicitors are quite non-commital about commenting once way or another, the estate agents say its no problem it always comes up on this estate, and people I know who bought on the estate say it never came up as a query and their lenders were not notified!!

Message from solicitors is as follws:
"We write further to our telephone conversation this morning and wish to advise you that we have now received notification from the sellers solicitors that the reasoning for the lack of the section 38 Agreement is that the Local Authority had been instructed not to enter into one until a section 104/102 Agreement has been entered into.

We have been informed that there are regular meetings between the Local Authority and George Wimpey in this respect.

We have again checked the title documentation provided by the sellers solicitors which contains personal covenants on behalf of the developer to construct the roads and bring the same to adoptable standard. As explained in our telephone conversation, a personal covenant does not run with the land and therefore the liability for the same is extinguished once the property has been sold.

We are faxing your mortgagee explaining the position of the above in accordance with your instructions.

We will contact you in due course once we receive confirmation from your mortgage as to whether they are happy to proceed on this basis."

Senior_Paper_Monitor

Not an uncommon issue (just had one case with a humdinger of an argument over a similar matter with a new build), but it can be an issue with lenders.

Simply put, if the roads are not adopted by the council it will affect the future value of the property - therefore the lender may refuse to accept it as suitable security.

The outcome will depend primarily on the LTV involved, and some lenders are touchier about this issue than others.

Probably outcome is they will contact the original surveyor for a revaluation based on the information now available.

booboomania

Thanks SPM.... LTV is 85% so I guess we may be vunerable on this. Suppose if it has an impact on the value, we could make an attempt to pass this on to our seller.