Limited company deals require conveyancers with a lot of knowledge
Buy-to-let mortgage advisers may have seen a noticeable uptick in borrowers seeking to use limited companies to purchase property.
As one of the relatively few but growing number of lenders active in this sector, we have a significant level of experience and recently warned advisers and their clients to use conveyancing firms with similar levels of specialist expertise.
The reason is simple. Choosing the wrong conveyancer will cause undue delay and could ultimately result in the purchase not completing. Since launch, we have dealt with a number of conveyancers that simply do not understand the specific requirements that come with purchasing via a limited company, which can be very different from the ‘normal’.
Here are a few of the regular problems we encounter with conveyancers on limited company loans:
- Company guarantors not receiving any, or sufficient, independent legal advice
- Conveyancers overlooking the fact that documents have to be executed differently by limited companies
- Conveyancers registering the purchase only at the Land Registry but not at Companies House
- Missing the 21-day deadline from completion for registration at Companies House
- Overlooking the existence of a pre-existing charge in favour of another lender containing a negative pledge – breach of which, by lending, can mean the existing lending takes priority over the first legal charge
- Not understanding how to deal with a pre-existing negative pledge. You must get the lender’s consent to release the security from the terms of its charge by a deed of release.
These may seem very technical but that is the nature of limited company lending/purchasing. So it is crucial that the adviser recommends a conveyancer with the knowledge and know-how to get these things right first time. Otherwise, we are talking about a considerable amount of extra work (and expense) for all concerned.
Bob Young, Fleet Mortgages
Network interference impedes members’ claim to independence…
Last week, Mortgage Strategy’s leader column criticised networks that refused to let their appointed representatives choose whether to advise on second charges, and thereby whether they could retain the ability to call themselves independent.
We regularly get phonecalls from advisers wishing to use one of our products, only for them to be told by their network principal: “That company is not on our panel.”
How anyone can purport to be independent when a third party limits the range of companies they can recommend is anyone’s guess.
When we approached one company, it said it was a few years in to a five-year deal with a particular provider of our product.
How can it be best advice to recommend only one product simply because it is the only one in your portfolio?
The sooner that networks allow their members to be the ones to decide which products and providers to recommend, the better.
…but the lines are blurred on what the term actually means
In response to Mortgage Strategy’s leader column on networks, the reality is that the lines are blurred on what the term ‘independent’ really means.
Just because an adviser does not advise on seconds, it does not mean he will not consider the importance of them as a viable solution for the client.
I consider the seconds market where it is appropriate to do so and will refer clients to a specialist in that market when the need arises.
In that way, the client gets the best possible advice from me and from the broker advising on the second.
Regardless of whether I advise on seconds myself, my client will continue to be looked after properly.
Clayton Hulme, Chris Hulme