Do I need confirmation from the mortgagee that I can receive redemption funds?

I am acting for a seller in a conveyancing transaction. There is a mortgage on the property. Do I need written authority from the seller’s mortgagee confirming that I am authorised to receive the redemption monies?

The Code for Completion by Post requires the seller’s solicitor to undertake on completion to have authority of the proprietor of every mortgage or charge that has not been discharged to receive the sum needed to repay it.

Very often, the solicitor will not be instructed formally by the seller’s mortgagee.

However, the course of dealings between the solicitor and mortgagee regarding the money required to redeem a mortgage should be proof of at least implicit authority by the mortgagee to the solicitor to receive the money to repay the charge.

An example of such implicit authority would be if the mortgagee has given its bank details to the solicitor for transmission of the redemption funds.

In Patel v Daybells [2001] EWCA Civ 1229: [2000] All ER (D) 1004, the Court of Appeal stated that it would not be advisable for the buyer’s solicitor to rely on an undertaking given by the seller’s solicitor that he has been appointed to receive the redemption monies where:

• the amount required to redeem the seller’s mortgage exceeds the minimum level of solicitors’ indemnity insurance
• the mortgagee is not a member of the Council of Mortgage Lenders (now UK Mortgage Finance)

In the above cases, the buyer’s solicitor could ask the seller’s solicitor to get written confirmation from the lender that they have been appointed the lender’s agent for the receipt of the redemption money.

If the seller’s solicitor is not on the lender’s panel, the solicitor will need written authorisation from their client to obtain a redemption statement from the lender.

For further information, see the Conveyancing Handbook (25th edition) which is available to purchase from our online bookshop or contact the Practice Advice Service.