Here is the process:
Vendor wants to sell. Instructs solicitor (VS) . Completes a questionnaire where confirms there are no judgments against him/her. Authorises solicitor to take up Deeds from Bank.
If title is a registered title ( Land Registry) VS orders up to date folio. That will show all charges, including any judgment mortgage.
If title is unregistered , VS does not ordinarily do pre Contract searches - clients don't want that expense.
VS issues contracts. Contract confirms that Vendor will furnish clear , charge free property - unless there is some other arrangement.
Purchasers solicitor (PS) investigates whats been furnished and, if all in order, Purchaser signs Contract, returns to VS and pays balance of 10% deposit. Vendor then signs the Contract. Once they have both signed, one part contract goes back to the PS and the contract is now binding.
There is a gap between the day contracts becoming binding and the actual completion/closing. On the closing day, PS pays balance of agreed price to VS to be held in trust pending clear searches and organises the searches . If the searches are clear, the deal is concluded and keys are released to the purchaser. If the searches are not clear, the questions start.
So:
When was the judgment mortgage registered? If before contracts became binding, the judgment mortgage stands. If after, technically it is not valid - but try telling that to a purchasers bank.
Assuming the judgment mortgage is valid, what can the Vendor do? If they can clear it, problem sorted. If they can't, purchaser will pull out but cue lots of argy bargy about deposits and the like.
"It was on the day that the seller was signing that the purchaser was informed by their solicitor. "
I find this hard to follow- surely, if the seller now knows there is a judgment mortgage on the property, they should not be signing contracts until they have sorted it out?
Depending on the dynamics of the situation ( how badly any of the parties want the deal to close, or not to close ( as appears to be the case from the Purchaser here), the capacity of the Vendor to clear the JM- deal or no deal etc.,etc) , its just a shed load of grief for all concerned
Suppose the vendor wants to finalise the deal but it will take time? Purchasers need to decide do they stick with it or try and pull out or serve a completion notice which will put a timeline on it.
mf