This is a real problem, as one of the crucial factors of a bridging loan is the ability of the lender to provide the customer with funds quickly and without unnecessary delay.
Often the customer will be faced with high costs accruing on a daily basis if a deadline has been breached, or risks not achieving what the funds were to be used for. It’s difficult to assess the opportunity cost, but it can be considerable.
Some conveyancing solicitors are used to a relaxed and protracted procedure which may be in order when standard property purchasing or financing is required, but this is not the case when bridging is involved. Speed does not mean cutting corners and it is essential that the needs of the customer and the lender are met.
Here are a few examples where solicitors can (and have) caused delays:
• Not having funds on account of costs to start acting/dealing with the lender’s requisitions
• Seeking information (for example local search results) that have not been requested (most bridging firms rely on Title Indemnity Insurance)
• Not being up to date with relevant issues surrounding mortgage fraud; using outdated procedures and not carrying out checks which would be considered prudent in the current climate
• Not using online search facilities – for example the Land Registry online portal, Companies House online
• Not having an appreciation that the lender needs to be confident that they will be able to dispose of the property without issue should the loan not be repaid
• Not appreciating that all of the requisitions forwarded need to be responded to and that they should not pick and choose the requisitions that they respond to
• Not understanding the issues surrounding a borrower who has a bankruptcy petition or bankruptcy order against him
• Not appreciating that the lender’s solicitors must be confident that they will be able to register the legal charge without issue – all potential land registry requisitions must be anticipated and the lender’s solicitors must be confident that they will be able to deal with them without undue delay
It is essential that solicitors understand what is required; so that every bridging loan can be completed as quickly and accurately as possible to meet the client’s needs – however tight the timescale.
Benson Hersch is CEO of the ASTL (and illustrator extraordinaire)