Can I go on the deeds but not on the mortgage?

davidmcn

SDLT_Geek wrote: »

Or perhaps get them to look at the HSBC guidance notes for form A2e and they will not need to write to the Land Registry at all.

I don't understand why they're even in correspondence with the Land Registry. Obviously the LR will be familiar with the major banks' standard forms of deeds.

kingstreet

SDLT_Geek wrote: »

Some earlier postings had said this type of mortgage is only available to Premier Account holders and not through an intermediary.

It's not available via an intermediary.

legseleven192000

So we have an update from our solicitor,

You will see that they stand by their original advice and will not provide any further advice until an application is lodged (this is done after the completion of the purchase). I am not prepared to ‘take a chance’ that the application will go through as if it does not HSBC will claim against my firm for not being able to register their Charge.

Fair point, but now she wants to pull out because of the above. How would we know if this would definitely work without completing?

Land_Registry

Apologies as very late to this thread although I did pick it up at the time but it read as if it was an SDLT issue (HMRC) rather than one affecting the legal ownership/legal charge which is in fact the crux of the issue.

Whilst I understand the loose wording' posts it may help, I hope, to clarify the response we gave. If you look at form CH1 it will further explain what our position is alongside what some posters have already sought to explain.

Form CH1 is a legal charge and used by private individuals to secure loans against a registered title/property. Major lenders have their own 'approved' forms of legal charge as others have also mentioned. Most have several to cover a wide variety of circumstances.

Panels 4 and 7 of the CH1 are key to understanding our reply to the original Enquiry. In 99% of cases the registered owner, A, would be the named Borrower. Hence the use of that term in our reply.

As you see from panel 7 the named borrower 'charges' the property. The registered owner has to charge the property as they are the legal owner. The 'charging clause' is an essential feature if any legal charge.

If that is not fulfilled then you don't have a registerable legal charge and to protect the lender's interest you woukd refer to PG19 which explains how they could register a notice or a restriction.

As also posted you can have 'extra' borrowers but you must have the registered owner included within that definition. More is fine, less is not.

Lenders will, as mentioned, have a variety of loans/mortgages/charges available and it seems clear that HSBC offer a very specific type for this kind if scenario. That's good and we would never be privy to such details/arrangements so have no say in how the lender wishes to lend. However we do have a say in whether it can be secured as a legal charge against the legal title.

So, if HSBC provide a legal charge which defines A as the borrower and it charges the property then it should be registerable as such. B and C may be included as 'borrowers' or defined in some other way. Additional parties are often referred to as 'guarantors' for example but that all depends on their role. But as mentioned that's a matter for you and HSBC.

So 'loose words' perhaps but in the context of the Q raised by the solicitor I'd argue not. The key is Registered Proprietor = Borrower (plus others if needed) who then 'charges the property'. Yes 'All parties' to it but how they are defined in terms of 'Borrower' is crucial

Both HSBC and the Solicitor should be fully aware of that requirement but something appears to have got in the way. It's not a case of proving HMLR 'wrong' but a case of being able to secure the loan as a legal charge and IF the executed deed does not do that then it's a case of ensuring you have one that does and everyone's needs/responsibilities are covered

legseleven192000

Thank you for clarifying, this is also clear as the previous posts were.
Earlier in the posts there was some ABC confusion I believe when I re read them.

A will be the sole proprietor, with B and C on the mortgage, A will NOT be on the mortgage, B and C will not be on the house. Some of the posts suggested there would be 1 person at least on both. This is not the case here. Can you confirm that this can not be done therefore as the below applies as A must also be a borrower.
The key is Registered Proprietor = Borrower (plus others if needed) who then 'charges the property'
Therefore A would have to go on the mortgage or B or C or B + C on the house.

Land_Registry

legseleven192000 wrote: »

Thank you for clarifying, this is also clear as the previous posts were.
Earlier in the posts there was some ABC confusion I believe when I re read them.

A will be the sole proprietor, with B and C on the mortgage, A will NOT be on the mortgage, B and C will not be on the house. Some of the posts suggested there would be 1 person at least on both. This is not the case here. Can you confirm that this can not be done therefore as the below applies as A must also be a borrower.
The key is Registered Proprietor = Borrower (plus others if needed) who then 'charges the property'
Therefore A would have to go on the mortgage or B or C or B + C on the house.

If A is the sole proprietor then they have to 'charge the property'. That means they must be a party to the legal charge and defined as the party who 'charges the property'. That would normally be as 'borrower'.

So A must be on the mortgage and you can add B or C or both as well. Or you can add B or C or both as registered owners.

The way the thread has panned out suggests that all that is required is to add A to the terms of the mortgage and ensure that they are included as the defined party who charges the actual property.

It is basic lending/conveyancing albeit a less common scenario re buyer/borrower so I do hope there's not some other missing reason for why it has hit the rails

legseleven192000

Hello, We have had a letter from HSBC stating the below. This came a while ago to the solicitor, to confirm the terms of the Mortgage.

"we would like to inform you that the borrowers are B and C and the consentor is A
"the borrowers are A and the depositors are B and C". Here I assume when they say borrower they mean a depositor is a borrower also. Therfore all 3 are borrowers but not all paying the morgage specifically.
The it states:
"a borrower who is not a depositor (B and C being the depositor), is a consentor (A as still a borrower)

Sorry to push but is this clarifying what you mean when you say:
The way the thread has panned out suggests that all that is required is to add A to the terms of the mortgage and ensure that they are included as the defined party who charges the actual property.
And that our situation is now possible to do through land registry?

SDLT_Geek

legseleven192000 wrote: »

Hello, We have had a letter from HSBC stating the below. This came a while ago to the solicitor, to confirm the terms of the Mortgage.

"we would like to inform you that the borrowers are B and C and the consentor is A
The term "the consentor" is a odd one! I had understood from what you said that A is to be the sole owner of the property to be bought and so would be the person acting in the mortgage to grant HSBC the security (so to avoid confusion best called the "mortgagor").
"the borrowers are A and the depositors are B and C".
I thought you had been clear before in saying that A is not a borrower, and that only B and C are borrowing money from HSBC? Is that not right? And here is another odd expression: "depositors". What does that mean? Is there more background that you have not explained? Are B and C providing the deposit / cash / equity to A for the property to be bought as well as agreeing to be liable to HSBC for the loan? Or does "depositor" mean something else? That B and C have money deposited with HSBC which is taken into account too?
Here I assume when they say borrower they mean a depositor is a borrower also. Therfore all 3 are borrowers but not all paying the morgage specifically.
But I thought we had established that the "borrowers" (the people who borrow the money from HSBC and who HSBC could claim the money from) are B and C only, with A not being liable for the loan, but just putting up the security. Is that right still?
The it states:
"a borrower who is not a depositor (B and C being the depositor), is a consentor (A as still a borrower)
This terminology is very confusing and ambiguous. If that is what HSBC are saying, no wonder your solicitor is seeking clarification! Is it not a straightforward third party mortgage situation with A (to be the registered proprietor and sole beneficial owner) acting as mortgagor to provide the security over the property with the borrowers being B and C?

Sorry to push but is this clarifying what you mean when you say:
The way the thread has panned out suggests that all that is required is to add A to the terms of the mortgage and ensure that they are included as the defined party who charges the actual property.
The user notes for the HSBC form of mortgage confirm that section for the Mortgagor needs to be filled in with the name of the owner of the property. This is consistent with the helpful post from the Land Registry (though it is a shame that they mix up the concept of "borrower" and "mortgagor" and refer to the simple standard form of charge CH1 rather than the A2 form of Mortgage Deed). So yes, if A is named there as mortgagor, being the sole proprietor of the property, and if A signs the mortgage deed, the document should be accepted.
And that our situation is now possible to do through land registry?

I suggest that OP needs to explain more about how B and C are helping A buy a house. So for example:
(a) Does A have capital to put in?
(b) Are B and C providing capital towards the purchase?
(c) Is so, is that by way of gift as A is to be sole owner?
(d) So B and C are borrowing the money from HSBC and C is not to be a borrower. But who will make the repayments in practice? Do B and C expect to pay the money out of their own resources or will A meet all or some of them / reimburse B and C?
(e) Any idea why HSBC refer to B and C as the depositors??
(f) Any idea why HSBC refer to A as the consentor??
(g) Will it just be A living in the house?
(h) Where does A live now? With B and C?
(I) Has there been a requirement that A take independent advice?

SDLT_Geek

Land_Registry wrote: »

If A is the sole proprietor then they have to 'charge the property'. That means they must be a party to the legal charge and defined as the party who 'charges the property'.
Spot on.
That would normally be as 'borrower'.
Not in this case though. We are told A is not a borrower and this is a third party charge. It causes confusion to call A a borrower when they are not a borrower!

So A must be on the mortgage
Yes, A must be named on the mortgage deed as mortgagor or HSBC will not get good security.
and you can add B or C or both as well.
The form of HSBC charge adds them as "Borrower".
Or you can add B or C or both as registered owners.
That would be possible, but does not seem to be the plan here.

The way the thread has panned out suggests that all that is required is to add A to the terms of the mortgage and ensure that they are included as the defined party who charges the actual property.
Yes, the A2 Mortgage Deed needs to be filled out in accordance with the notes HSBC provide.

It is basic lending/conveyancing albeit a less common scenario re buyer/borrower so I do hope there's not some other missing reason for why it has hit the rails
It seems to me likely to have hit the rails because of the loose use of language causing confusion all around.

Things become much clearer when one distinguishes properly between:
(a) Borrowers from whom HSBC can claim repayment and
(b) The Mortgagor who is the registered proprietor of the property and so can provide the security for the loan
and recognising that in this case they are different people.

It is standard third party mortgage stuff and should not be causing such difficulties!

Land_Registry

SDLT Geek I agree that it's standard stuff so should not be causing confusion

The 'loose words' is probably best solved by not using any specific terms. I refer to 'borrower' merely in the context of the form CH1 and the vast majority of approved legal charges which use that word to define who is 'charging the property' - that's all, so not loose in that context. The word 'mortgagor' is rarely used in the form of legal charge most lenders require but is used in the wider Lender/conveyancing/registration context. Confusion may be less if we focus on the actual 'legal charge' deed and it's wording which will define A B and C's roles/responsibilities and which then 'charge the property'

Borrower/Mortgagor/Consentor etc etc are just words used in the lending/conveyancing context but It's the charging context that counts from the legal charge perspective

The word 'consentor' in this context is not a word I have ever seen used BUT legseleven192000 this type of purchase/mortgage seems a rarity as others have posted.

For emphasis and clarity we register the legal charge which 'charges the property' - if the registered owner (to be A) charges it, with or without others, then that should be fine.