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10. DISCLOSURES
10.1 Disclosures to the COT
If the Client's Solicitor wishes to disclose any issues, then the Client's Solicitor should set out such issues in a disclosure letter appended to the COT. The Bank's solicitor will then refer these matters to the valuer for confirmation that the valuation remains unaffected considering the disclosures.
10.2 Disclosure of Incentives
Please ensure you report on all incentives and provide a disclosure form substantially similar to the UK Finance Disclosure Form to be referred to the valuer.
10.3 Environmental Reporting
If the contents of the environmental report or contamination report you have commissioned is likely to affect the Bank's security, the Bank's solicitors will require a copy to be provided to them as a disclosure to the COT.
10.4 EPC Ratings
All the security properties must meet minimum EPC rating threshold of ‘E’.
10.5 Licences
a) Buy-to-Let Purchase
Your Client is responsible for ensuring any mandatory, additional/discretionary, selective or other licence required to let the Property is in place before the Property is occupied by tenants.
b) Buy-to-Let Refinance
You must satisfy yourself that either:
i) Any licence required to let the Property is in place on completion, or
ii) Where a licence other than an HMO licence is required but is not currently in place, you are satisfied an appropriate application for the required licence has been made by your Client before completion.
10.6 HMO Licenses – Refinance
Bank solicitors will require a confirmation that the property has a valid HMO license before completion.
10.7 Title Guarantee
The Property must be transferred to the Bank with full title guarantee. Limited title guarantee is acceptable in some instances whereby the seller cannot provide full title guarantee (e.g., where probate sale or the seller lacks capacity or is a mortgagee in possession), provided an indemnity policy in place protecting the Bank's interest.
10.8 Unencumbered Title
On completion, the Bank must obtain unencumbered title to the property and to any other Bank's interest forming part of the Bank’s security under the Transaction.
Accordingly, any existing charge affecting the property (including under a debenture, or a fixed or floating charge) must be released on or before completion. Mere confirmation of non-crystallisation of an existing charge and/or an arrangement for the Bank to jointly hold the title or interest (even if in priority to a third party), is not acceptable.
10.9 Flying Freehold Conditions
If the Property is a flying freehold, please advise the Bank's solicitors immediately.
The Bank will require the following conditions to be met:
a) the Client's solicitor or the valuer should confirm what percentage of the floor area will be affected by the flying freehold – this will determine whether the Bank can agree to lend or not;
b) assuming the Property is not yet split, the transfer of the freehold property must have all necessary rights of support, protection, and entry for repair. The Client's solicitor must also provide confirmation of how the Property is accessed, i.e. does it have a separate access way, etc.;
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c) the Property must have enforceable restrictive and positive covenants that are also such that subsequent buyers are required to enter into covenants in identical form (since positive covenants do not run with the land). This will include ensuring that there is an adequate restriction placed on both freehold titles for Deeds of Covenant to be entered into by successors in title;
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d) the Client's solicitor should provide flying freehold indemnity insurance to the Bank's solicitors for approval; and
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e) the Client's solicitor will need to certify that the Property has good and marketable title.
10.10 Crisscross Leases (Sometimes known as “Tyneside Leases”)
In circumstances where the Bank is financing one of two leasehold flats in a building where the Client holds the leasehold to one flat and the freehold reversion of the second flat and the other leaseholder owns the leasehold to the other flat and the freehold reversion in the Client’s flat, we require both the leasehold and freehold titles held by the client to be transferred to the Bank.
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