Conflict of Interest

DaffyDuck316

Hi, my solicitor just told me she is going to tell my mortgage lender about a conflict of interest.

What has happened is I have applied for a concessionary mortgage.

This happened when the property I am living in went up for sale when my landlord died.

I applied for a concessionary mortgage and received a signed gifted deposit form from the executors.

Is anyone able to give me any advice. Would a conflict of interest be a deal-breaker?

user1977

What exactly do they think the conflict is?

DaffyDuck316

That maybe I am receiving a gift from a beneficiary that I have no relationship with. (Even though they will still receive 96-97% of the asking price)

I have asked for some clarification.

DaffyDuck316

Maybe because the property was up for sale with an estate agent?

user1977

The solicitor hasn’t also acted for the landlord (or the executors)?

DaffyDuck316

I don't think that is the reason, sadly they just closed for the day now. It is reassuring you do not see any problems at least.

DaffyDuck316

So I was told the conflict of interest is that the giftor is the seller.

I told her my mortgage advisor said I could go for this and quoted

"Nationwide Building Society is known for having flexible criteria for concessionary purchase mortgages. A concessionary purchase is when a property is sold below market value, and the discount is usually a gift from the seller."

She now says she will continue forward when an offer comes through.

I appreciate any opinions/comments, I'm a bit on edge now the sale might not go through

user1977

Still can't see why that creates a conflict!

There’s always potential for conflict when (as is normal) the buyer’s solicitor is also acting for their mortgage lender (e.g. there might be a problem you’re prepared to take a view on but don’t want the solicitor to tell the lender about), but this is a point which the lender already knows about and is happy with.

DullGreyGuy

user1977 said:

Still can't see why that creates a conflict!

The only thing that jumps to my mind is the risk that the buyer and seller are in cahoots and the property is being intentionally overvalued eg...

A and B are friends, A wants to sell, B wants to buy but doesn't have any deposit saved. A thinks the house is worth £300,000 but tells B that if they offer £400,000 they will gift them a £100,000/25% deposit and so B can get a 75% mortgage. 

You'd hope that the valuation would identify the value isn't that high and so the plan would fail but it would be the duty of the solicitor to inform the lender of the conflict and the lender can give the valuation greater scrutiny. 

user1977

DullGreyGuy said:

user1977 said:

Still can't see why that creates a conflict!

The only thing that jumps to my mind is the risk that the buyer and seller are in cahoots and the property is being intentionally overvalued 

I would think a lender already assumes a concessionary purchase (which they already know about) means the parties aren’t at arm’s length.

eddddy

From what you've said, it sounds like a fairly straightforward example of a "Concessionary Purchase" as described on Nationwide's website for Intermediaries.

(Maybe send your solicitor a link: https://www.nationwide-intermediary.co.uk/lending-criteria/purchase-types)