Mortgage repayments started after solicitor requested draw down but before draw down.

I went sale agreed on a house in January.

Signed contracts and my solicitor requested the draw down of the mortgage.
Searches then revealed that there are 2 judgement mortgages against the property.
This has of course delayed everything and the sale has not closed.

However, my first mortgage payment has started. I contacted my mortgage provider and they stated that technically the mortgage has been drawn down. The money will remain in the mortgage provider’s solicitor account and it will not be released until the searches are cleared (nobody knows how long this will take). My solicitor is fighting this but getting nowhere.

To date:

• The mortgage funds have not been transferred to my solicitor.
• I have not taken legal ownership or possession of the property.
• However, repayments have begun to be debited from my account.

Has anyone else had experience of this?

Seems very odd.

Are you sure that the money was not drawn down by your solicitor?

If the bank paid the money to your solicitor and it's in their account, of course, you should be paying interest on it.

But if it has not been transferred, then you should not be paying interest.

There is nothing "technical" about it. The mortgage has either been drawn down or it has not.

If your account is correct, this would seem like a systemic error on behalf of your mortgage lender and you should report it to the Central Bank after everything is sorted.

Cmann031 said:

Signed contracts and my solicitor requested the draw down of the mortgage.
Searches then revealed that there are 2 judgement mortgages against the property.

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Has your solicitor clarified if/why they requested drawdown before searches were completed? Seems premature?

Cmann031 said:

The money will remain in the mortgage provider’s solicitor account

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That sounds odd. As far as I know the mortgage funds usually go from the lender directly to the borrower's solicitor on drawdown - not into some other intermediate account.

Cmann031 said:

My solicitor is fighting this but getting nowhere.

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"Fighting" what exactly?

Cmann031 said:

The money will remain in the mortgage provider’s solicitor account

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Ah, I missed this.

Is this normal practice?

Cmann031 said:

Signed contracts and my solicitor requested the draw down of the mortgage.
Searches then revealed that there are 2 judgement mortgages against the property.

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Is this the correct sequence of events?
The purpose of search's is to avoid the exact situation you are in.

So firstly, your solicitor has cocked up by requesting drawdown without checking if there were judgement mortgages in place. Hence I would take anything they are saying with a pinch of salt.

there is a good summary of what should happen here from Bank of Ireland

Who are the mortgage providers?

Also do you have mortgage protection in place (a pre-req for any drawdown of funds) and have your repayment gone direct to the bank.

It's not beyond the bounds of possibility here that 2 sides of the banks haven't spoken to each other but it all seems rather odd.

Closing the sale​

Requisitions on Title and Deed of Conveyance​

After signing the contract and before the completion date of the sale, your solicitor raises some general queries about the property with the seller's solicitor. Requisitions on Title are a standard set of questions relating to the sale of a property that deal with such things as whether fixtures and fittings are included in the sale.

When your solicitor gets a satisfactory reply to Requisitions on Title, they will draft a Deed of Conveyance which is then approved by the seller's solicitor.

Your solicitor will check that there are no judgements against the seller (for example, bankruptcy or sheriffs' searches). Your solicitor should also find out where the title to the property is held (either in the Land Registry or the Registry of Deeds) to ensure that there is nothing unusual relating to the property, for example, an outstanding mortgage.

Once the Deed of Conveyance is approved by the seller's solicitor, your solicitor will contact your mortgage provider to request the approved loan cheque. This is the remaining balance of the purchase price. It is paid to the seller's solicitor and all documentation, and keys to the premises are handed over to your solicitor.

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'So firstly, your solicitor has cocked up by requesting drawdown without checking if there were judgement mortgages in place. Hence I would take anything they are saying with a pinch of salt.'

Closings are always precarious.
The Vendor has to leave the property empty and should have disclosed the judgment mortgages to his own solicitor.
The purchaser has to have all their own closing funds lodged with their solicitor.
The mortgage funds have to be in the purchaser's solicitor's account ready to transfer to enable the sale to close.
Generally, the closing funds are transferred the day before to the Vendor's solicitor to be held 'in trust' pending clear searches.

While searches are often done in advance, especially if there are suspicions about the Vendor, searches (Judgment, Bankruptcy and Title) must be done on the actual day of the closing just in case something shows up.

If the judgment mortgages are nominal only and can be paid out of the closing funds, it would be usual to close on the Vendor's solicitors undertaking to discharge them.

It may here that the JM's are for sums exceeding the sale price which blows the transaction out of the water.

It may be the case that the parties are trying to work out a solution?
And, in the alternative, the OP could , with his solicitor, cancel the mortgage funds/process with the lender. But that would probably mean a fresh mortgage application.

mf

@mf1, do the mortgage funds ever go from the lender to their solicitor's account and rest there before being released to the buyer's solicitor? I thought that they simply went directly from the lender to the buyer's solicitor without any detour along the way?

Pretty much always from the lender to the purchaser's solicitor's client account.
I think an exception might be some of the less well known lenders who may appoint their own solicitor.
So that might be the case here?

mf

Thanks @mf1.