Isle of Man
Part 1: Isle of Man
Last modified: 01/07/2017
- 1. General
- 2. Communications
- 3. Safeguards
- 4. Valuation of the property
- 5. Title
- 5.1. Surrounding circumstances
- 5.2. Searches and reports
- 5.3. Planning and building regulations
- 5.4. Good and marketable title
- 5.5. Flying freeholds, freehold flats and other freehold arrangements
- 5.6. Restrictions on use and occupation
- 5.7. Restrictive covenants
- 5.8. First ranking deed of conditional bond and security
- 5.9. Other loans
- 5.10. Leasehold property
- 5.11. Management company
- 5.12. Insolvency considerations
- 5.13. Powers of attorney
- 6. The property
- 6.1. Mortgage offer and title documents
- 6.2. Boundaries
- 6.3. Purchase price
- 6.4. Vacant possession
- 6.5. Properties let at completion
- 6.6. New properties - building standards indemnity schemes
- 6.7. Roads and sewers
- 6.8. Easements
- 6.9. Release of retentions
- 6.10. Neighbourhood changes
- 6.11. Rights of pre-emption and restrictions on resale
- 6.12. Improvements and repair grants
- 6.13. Insurance
- 7. Other occupiers
- 8. Separate representation
- 9. Indemnity insurance
- 10. The loan and certificate of title
- 11. The documentation
- 12. Instalment mortgages and mortgage advances released in instalments
- 13. Mortgage indemnity insurance or high LTV fee
- 14. After completion
- 15. Legal costs
- 16. Transactions during the life of the mortgage
- 17. Redemption
- a valid full passport; or
- a valid H M Forces identity card with the signatory's photograph; or
- a valid UK or Isle of Man Photo-card driving licence; or
- any other document listed in the additional list A in part 2.
- Express or Diners Club card, debit or multi-function card (bearing the Switch or Delta logo) issued in the United Kingdom with an original account statement less than three months old; or
- a firearm and shot gun certificate; or
- a receipted utility bill less than three months old; or
- a rates bill less than three months old; or
- a local authority or Local Government Board rent book showing the rent paid for the last three months; or
- a mortgage statement from another lender for the mortgage accounting year just ended; or
- any other document listed in the additional list B in part 2.
4.1.1 Check part 2 to see whether we send you a copy of the valuation report or if you must get it from the borrower. If you are sent, or are required to obtain, a copy of the valuation report:
18.104.22.168 you must take reasonable steps to verify that there are no discrepancies between the description of the property as valued and the title and other documents which a reasonably competent conveyancer should obtain, and, if there are, you must tell us immediately; and
22.214.171.124 you should take reasonable steps to verify that the assumptions stated by the valuer about the title (for example, its tenure, easements, boundaries and restrictions on its use) in the valuation are correct. If they are not, please let us know as soon as possible (see part 2) as it will be necessary for us to check with the valuer whether the valuation needs to be revised. We are not expecting you to assume the role of valuer. We are simply trying to ensure that the valuer has valued the property based on correct information.
4.1.2 We recommend that you should advise the borrower that there may be defects in the property which are not revealed by the inspection carried out by our valuer and there may be omissions or inaccuracies in the report which do not matter to us but which would matter to the borrower. We recommend that, if we send a copy of a valuation report that we have obtained, you should also advise the borrower that the borrower should not rely on the report in deciding whether to proceed with the purchase and that he obtains his own more detailed report on the condition and value of the property, based on a fuller inspection, to enable him to decide whether the property is suitable for his purposes.
Please report to us (see part 2) if the owner or registered proprietor has been registered for less than six months or the person selling to the borrower is not the owner or registered proprietor unless the seller is:
5.1.2 If any matter comes to the attention of the fee earner dealing with the transaction which you should reasonably expect us to consider important in deciding whether or not to lend to the borrower (such as whether the borrower has given misleading information to us or the information which you might reasonably expect to have been given to us is no longer true) and you are unable to disclose that information to us because of a conflict of interest, you must cease to act for us and return our instructions stating that you consider a conflict of interest has arisen.
5.2.1 In carrying out your investigation, you must make all usual and necessary searches and enquiries, including a search in bankruptcy against the borrower and any other owners of the legal estate in the Isle of Man General Registry.
5.2.2 In addition, you must carry out any other searches which may be appropriate to the particular property, taking into account its locality and other features.
5.2.3 All searches except where there is a priority period must not be more than six months old at completion.
5.2.4 For local authority searches under paragraph 5.2.1, check part 2 to see if we accept personal searches. If we do accept personal searches, you must ensure a suitably qualified search agent carries out the personal search and has indemnity insurance that adequately protects us. You must be satisfied that you will be able to certify that the title is good and marketable.
You must by making appropriate searches and enquiries take all reasonable steps (including any further enquiries to clarify any issues which may arise) to ensure:
5.3.2 If there is such evidence and the seller (or the borrower in the case of a remortgage) is not providing a sufficient undertaking to satisfy those outstanding conditions by completion, then this must be reported to us (see part 2). Check part 2 to see if copies of planning permissions, building regulations and other consents or certificates should be sent to us.
5.3.3 If the property will be subject to any enforceable restrictions, for example under an agreement (such as an agreement under section 18 of the Town and Country Planning Act 1991) or in a planning permission, which, at the time of completion, might reasonably be expected materially to affect its value or its future marketability, you should report this to us (see part 2).
We will accept a position where a house has been converted into flats without planning permission, provided you are satisfied that:
5.4.1 The title to the property must be good and marketable, free of any restrictions, covenants, easements, charges or encumbrances which, at the time of completion, might reasonably be expected to materially adversely affect the value of the property or its future marketability (but excluding any matters covered by indemnity insurance) and which may be accepted by us for mortgage purposes. Our requirements in respect of indemnity insurance are set out in paragraph 9. You must also take reasonable steps to ensure that, on completion, the property will be vested in the borrower.
Good leasehold title will be acceptable if:
5.4.3 A title based on adverse possession or possessory title will be acceptable if there is satisfactory evidence by statutory declaration of adverse possession for a period of at least 21 years. In the case of lost title deeds, the statutory declaration must explain the loss satisfactorily;
5.4.4 we will also require indemnity insurance where there are buildings on the part in question or where the land is essential for access or services;
5.4.5 we may not need indemnity insurance in cases where such title affects land on which no buildings are erected or which is not essential for access or services. In such cases, you must send a plan of the whole of the land to be mortgaged to us identifying the area of land having possessory title. We will refer the matter to our valuer so that an assessment can be made of the proposed security. We will then notify you of any additional requirements or if a revised mortgage offer is to be made.
5.5.1 If any part of the property comprises or is affected by a flying freehold or the property is a freehold flat, check part 2 to see if we will accept it as security.
5.5.2 If we are prepared to accept a title falling within 5.5.1:
126.96.36.199 (unless we tell you not to in part 2) you must report to us that the property is a freehold flat or flying freehold; and
188.8.131.52 the property must have all necessary rights of support, protection, and entry for repair as well as a scheme of enforceable covenants that are also such that subsequent buyers are required to enter into covenants in identical form; and
184.108.40.206 you must be able to certify that the title is good and marketable; and
220.127.116.11 in the case of flying freeholds, you must send us a plan of the property clearly showing the part affected by the flying freehold. If our requirements in 18.104.22.168 are not satisfied, indemnity insurance must be in place at completion (see paragraph 9).
Other freehold arrangements
Unless we indicate to the contrary (see part 2), we have no objection to a security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.
If the borrower occupying one of the flats also owns the freehold, we will require our security to be:
22.214.171.124 If another flat owner owns the freehold of the building, the borrower must have a leasehold interest in the flat the borrower is to occupy and our security must be the borrower's leasehold interest in such flat.
126.96.36.199 The leases of all the flats should contain appropriate covenants by the tenant of each flat to contribute towards the repair, maintenance and insurance of the building. The leases should also grant and reserve all necessary rights and easements. They should not contain any unduly onerous obligations on the landlord.
5.5.4 Where the security will comprise:
188.8.131.52 one of a block of not more than four leasehold flats and the borrower will also own the freehold jointly with one or more of the other flat owners in the building; or
184.108.40.206 one of two leasehold flats in a building where the borrower also owns the freehold reversion of the other flat and the other leaseholder owns the freehold reversion in the borrower's flat; check part 2 to see if we will accept it as security and if so, what our requirements will be.
5.7.1 You must enquire whether the property has been built, altered or is currently used in breach of a restrictive covenant. We rely on you to check that the covenant is not enforceable. If you are unable to provide an unqualified certificate of title as a result of the risk of enforceability you must ensure (subject to paragraph 5.7.2) that indemnity insurance is in place at completion of our mortgage (see paragraph 9).
We will not insist on indemnity insurance:
5.10.1 Our requirements on the unexpired term of a lease offered as security are set out in part 2.
5.10.2 There must be no provision for forfeiture on the insolvency of the tenant or tenant (whether contained in the lease itself or implied into it by statute).
5.10.3 The only situations where we will accept a restriction on the mortgage or assignment (whether by a tenant or a mortgagee) of the lease is where the person whose consent needs to be obtained cannot unreasonably withhold giving consent. The necessary consent for the particular transaction must be obtained before completion. If the lease requires consent to an assignment or mortgage to be obtained, you must obtain these on or before completion. You must not complete without them.
You must take reasonable steps to check that:
You should ensure that responsibility for the insurance, maintenance and repair of the common services is that of:
5.10.6 Where the responsibility for the insurance, maintenance and repair of the common services is that of one or more of the tenants;
220.127.116.11 the lease must contain adequate provisions for the enforcement of these obligations by the landlord or management company at the request of the tenant.
18.104.22.168 In the absence of a provision in the lease that all leases of other flats in the block are in, or will be granted in, substantially similar form, you should take reasonable steps to check that the leases of the other flats are in similar form. If you are unable to do so, you should effect indemnity insurance (see paragraph 9). This is not essential if the landlord is responsible for the maintenance and repair of the main structure.
22.214.171.124 We do not require enforceability covenants mutual or otherwise for other tenant covenants.
5.10.7 We have no objection to a lease which contains provision for a periodic increase of the ground rent provided that the amount of the increased ground rent is fixed or can be readily established and is reasonable. If you consider any increase in the ground rent may materially affect the value of the property, you must report this to us (see part 2).
5.10.8 You should enquire whether the landlord or managing agent foresees any significant increase in the level of the service charge in the reasonably foreseeable future and, if there is, you must report to us (see part 2).
5.10.9 If the terms of the lease are unsatisfactory, you must obtain a suitable deed of variation to remedy the defect. We may accept indemnity insurance (see paragraph 9). See part 2 for our requirements.
5.10.10 You must obtain on completion a clear receipt or other appropriate written confirmation for the last payment of ground rent and service charge from the landlord or managing agents on behalf of the landlord. Check part 2 to see if it must be sent to us after completion. If confirmation of payment from the landlord cannot be obtained, we are prepared to proceed provided that you are satisfied that the absence of the landlord is common practice in the district where the property is situated, the seller confirms there are no breaches of the terms of the lease, you are satisfied that our security will not be prejudiced by the absence of such a receipt and you provide us with a clear certificate of title.
5.10.11 Notice of the mortgage must be served on the landlord and any management company immediately following completion, whether or not the lease requires it. If you cannot obtain receipt of the notice then, as a last resort, suitable evidence of the service of the notice on the landlord should be provided. Check part 2 to see if a receipted copy of the notice or evidence of service must be sent to us after completion.
5.10.12 We will accept leases which require the property to be sold on the open market if re-building or reinstatement is frustrated provided the insurance proceeds and the proceeds of sale are shared between the landlord and tenant in proportion to their respective interests.
5.10.13 You must report to us (see part 2) if it becomes apparent that the landlord is either absent or insolvent. If we are to lend, we may require indemnity insurance (see paragraph 9). See part 2 for our requirements.
5.10.14 If the leasehold title is registered but the lease has been lost, we are prepared to proceed provided you have checked an Isle of Man Land Registry produced copy of the registered lease. Whilst this will not be an office copy of the lease you may accept it as sufficient evidence of the lease and its terms when approving the title for mortgage purposes provided it is, on its face, a complete copy.
5.11.1 In paragraph 5.11 the meanings shall apply: - "management company" means the company formed to carry out the maintenance and repair of the common parts; - "common parts" means the structure, main walls, roof, foundations, services grounds and any other common areas serving the building or estate of which the property forms part. If a management company is required to maintain or repair the common parts, the management company should have a legal right to enter the property; if the management company's right to so enter does not arise from a leasehold interest, then the tenants of the building should also be the members of the management company. If this is not the case, there should be a covenant by the landlord to carry out the obligations of the management company should it fail to do so.
126.96.36.199 For leases granted before 1 September 2000: If the lease does not satisfy the requirements of paragraph 5.11.1 but: you are nevertheless satisfied that the existing arrangements affecting the management company and the maintenance and repair of the common parts are sufficient to ensure the adequate maintenance and repair of the common parts; and you are able to provide a clear certificate of title, then we will rely on your professional judgement.
5.11.2 You should make a company search and verify that the company is in existence and registered at the Companies Registry. You should also obtain the management company's last three years' published accounts (or the accounts from inception if the company has only been formed in the past three years). Any apparent problems with the company should be reported to us (see part 2). If the borrower is required to be a shareholder in the management company, check part 2 to see if you must arrange for the share certificate, a blank stock transfer form executed by the borrower and a copy of the memorandum and articles of association to be sent to us after completion (unless we tell you not to). If the management company is limited by guarantee, the borrower (or at least one of them if two or more) must become a member on or before completion.
5.12.1 You must obtain a clear bankruptcy search against each borrower (and each mortgagor or guarantor, if any). You must fully investigate any entries revealed by your bankruptcy search against the borrower (or mortgagor or guarantor) to ensure that they do not relate to them.
5.12.2 Where an entry is revealed against the name of the borrower (or the mortgagor or guarantor):
188.8.131.52 you must certify that the entry does not relate to the borrower (or the mortgagor or guarantor) if you are able to do so from your own knowledge or enquiries; or
184.108.40.206 if you are unable to certify that the entry does not relate to the borrower (or the mortgagor or guarantor) you must report this to us (see part 2). We may as a consequence need to withdraw our mortgage offer.
5.12.3 If you are aware that the title to the property is subject to a deed of gift or a transaction at an apparent undervalue completed within ten years of the proposed mortgage then you must be satisfied that we will acquire our interest in good faith and will be protected at law against our security being set aside. If you are unable to give an unqualified certificate of title, you must arrange indemnity insurance (see paragraph 9).
5.12.4 You must also obtain clear bankruptcy searches against all parties to any deed of gift or transaction at an apparent undervalue.
5.13.1 If any document is being executed under power of attorney, you must ensure that the power of attorney is, on its face, properly drawn up, that it appears to be properly executed by the donor and that the attorney knows of no reason why such power of attorney will not be subsisting at completion. Where there are joint borrowers the power should comply with section 24 of the Trustee Act 1961, as amended by section 2 of the Law Reform Miscellaneous Provisions Act 1996. In the case of joint borrowers, neither borrower may appoint the other as attorney.
5.13.2 We will accept a power of attorney in proper form created under legislation of a country other than the Isle of Man, if you are satisfied that it is valid for use in relation to the transaction.
Check part 2 to see if:
6.1.1 The loan to the borrower will not be made until all relevant conditions of the mortgage offer which need to be satisfied before completion have been complied with and we have received your certificate of title.
6.1.2 You must check your instructions and ensure that there are no discrepancies between them and the title documents and other matters revealed by your investigations.
6.1.3 You should tell us (see part 2) as soon as possible if you have been told that the borrower has decided not to take up the mortgage offer.
The purchase price for the property must be the same as set out in our instructions. If it is not, you must tell us (unless we say differently in part 2). You must tell us (unless we say differently in part 2) if the contract provides for:
6.3.2 You must report to us (see part 2) if you will not have control over the payment of all of the purchase money (for example, if it is proposed that the borrower pays money to the seller direct) other than a deposit held by an estate agent or a reservation fee of not more than £500 paid to a builder or developer.
6.5.1 Where the property, or part of it, is already let, or is to be let at completion, then the letting must comply with the details set out in the mortgage offer or any consent to let we issue. If no such details are mentioned, you must report the position to us (see part 2).
6.5.2 Check part 2 for whether counterparts or certified copies of all tenancy agreements and leases in respect of existing tenancies must be sent to us after completion.
If the property is newly built, or newly converted, or to be occupied for the first time, you must ensure that it was built or converted under whichever of the following is acceptable to us (see part 2):
6.6.2 Check part 2 to see what new home warranty documentation should be sent to us after completion.
6.6.3 We do not insist that notice of assignment of the benefit of the new home warranty agreement be given to the builder in the case of a second and subsequent purchase(s) during the period of the insurance cover. Check part 2 to see if any assignments of building standards indemnity schemes which are available should be sent to us after completion.
Check part 2 to see if we will accept the monitoring of a newly built or newly converted property to be occupied for the first time by a professional consultant. You should ensure that the professional consultant properly completes the lender's Professional Consultant's Certificate or such other form as the instructing lender may provide. The professional consultant should also confirm to you that he has appropriate experience in the design or monitoring of the construction or conversion of residential buildings and has one or more of the following qualifications:
At the time he issues his certificate of practical completion, the consultant must have professional indemnity insurance in force for each claim for the greater of either:
6.6.6 Check part 2 to see if the consultant's certificate must be sent to us after completion.
6.7.1 If the roads or sewers immediately serving the property are not adopted or maintained at public expense, there must be a suitable agreement and bond in existence or you must report to us (see part 2 for who you should report to).
6.7.2 If there is any such agreement, it should be secured by bond or deposit as required by the appropriate authority to cover the cost of making up the roads and sewers to adoptable standards, maintaining them thereafter and procuring adoption.
6.7.3 If there is an arrangement between the developer and the lender whereby the lender will not require a retention, you must obtain confirmation from the developer that the arrangement is still in force.
6.8.1 You must take all reasonable steps to check that the property has the benefit of all easements necessary for its full use and enjoyment. This would include, for example, rights of way (both vehicular and pedestrian), the use of services and any necessary rights of entry for repair. All such rights must be enforceable by the borrower and the borrower's successors in title. If they are not, you must report to us (see part 2).
6.8.2 If the borrower owns adjoining land over which the borrower requires access to the property or in respect of which services are provided to the property, this land must also be mortgaged to us.
6.9.1 If we make a retention from an advance (for example, for repairs, improvements or road works) we are not obliged to release that retention, or any part of it, if the borrower is in breach of any of his obligations under the mortgage, or if a condition attached to the retention has not been met or if the loan has been repaid in full. You should, therefore not give an unqualified undertaking to pay the retention to a third party.
6.9.2 Check part 2 to see who we will release the retention to.
6.13.1 report to us (see part 2) if the property is not insured in accordance with our requirements (one of our requirements, see part 2, will relate to whether the property is insured in the joint names of us and the borrower or whether our interest may be noted);
6.13.2 arrange that the insurance cover starts from no later than completion;
6.13.3 check that the amount of buildings insurance cover is at least the amount referred to in the mortgage offer (if the property is part of a larger building and there is a common insurance policy, the total sum insured for the building must be not less than the total number of flats multiplied by the amount set out in the mortgage offer for the property);
6.13.4 ensure that the buildings insurance cover is index linked;
6.13.5 ensure that the excess does not exceed the amount set out in part 2;
Check part 2 to see if we require you to confirm that all the following risks are covered in the insurance policy:
6.13.7 Check part 2 to see if we require you to obtain before completion the insurer's confirmation that the insurer will notify us if the policy is not renewed or is cancelled or if you do not obtain this, report to us (see part 2).
6.13.8 Check part 2 to see if we require you to send us a copy of the buildings insurance policy and the last premium receipt to us.
Unless we otherwise state (see part 2), you must not advise:
You must effect an indemnity insurance policy whenever the Lenders' Handbook identifies that this is an acceptable or required course to us to ensure that the property has a good and marketable title at completion. This paragraph does not relate to mortgage indemnity insurance. The draft policy should not be sent to us unless we ask for it. Check part 2 to see if the policy must be sent to us after completion. Where indemnity insurance is effected:
12.1.1 If the cost of the building is to be paid by instalments as work progresses (for example, under a building contract) the amount of each instalment which we will be able to release will be based on a valuation made by our valuer at the time. Whilst we will not be bound by the terms of any building contract we will meet the reasonable requirements of the borrower and the builder as far as possible.
12.1.2 The borrower is expected to pay for as much work as possible from his own resources before applying to us for the first instalment. However, we may, if required, consider advancing a nominal sum on receipt of the certificate of title to enable the mortgage to be completed so long as the legal estate in the property is vested in the borrower.
12.1.3 The borrower is responsible for our valuer's fees for interim valuations as well as the first and final valuations.
You are reminded to tell the borrower that we (and not the borrower) are the insured under any mortgage indemnity or similar form of insurance policy and that the insurer will have a subrogated right to claim against the borrower if it pays us under the policy. Different lenders call the various schemes of this type by different names. They may not involve an insurance policy.
14.2.1 All title deeds, searches, enquiries, consents, requisitions and documents relating to the property in your possession must be held to our order and you must not create or exercise any lien over them. Unless otherwise instructed (see part 2) you must send to us as soon as possible after completion a certified copy of the mortgage over the property and the original certificate of its recordal or registration in the general Deeds Registry or the Land Registry. Where the borrower is a company, you must also file the mortgage at the Companies Registry within 28 days of its date and, unless otherwise instructed, you must send to us as soon as possible after completion the original certificate of such filing.
14.2.2 You must only send us documents we tell you to (see part 2). You should obtain the borrower's instructions concerning the retention of documents we tell you not to send us.
14.2.3 You must only send us documents we tell you to (see part 2). You should obtain the borrower's instructions concerning the retention of documents we tell you not to send us.
For evidential purposes you must keep your file for at least six years from the date of the mortgage before destroying it. Microfiching or data imaging is suitable compliance with this requirement. It is the practice of some fraudsters to demand the conveyancing file on completion in order to destroy evidence that may later be used against them. It is important to retain these documents to protect our interests. Where you are processing personal data (as defined in the Data Protection Act 2002 of the Isle of Man) on our behalf, you must;
14.3.2 Subject to any right of lien or any overriding duty of confidentiality, you should treat documents comprising your file as if they are jointly owned by the borrower and the lender and you should not part with them without the consent of both parties. You should on request supply certified copies of documents on the file or a certified copy of the microfiche to either the borrower or the lender, and may make a reasonable charge for copying and certification.
Your charges and disbursements are payable by the borrower and should be collected from the borrower on or before completion. You must not allow non-payment of fees or disbursements to delay the stamping and registration of documents.
16.2.1 Our mortgage secures further advances. Consequently, when a further advance is required for alterations or improvements to the property we will not normally instruct a member of our conveyancing panel.
16.2.2 If additional land is to be mortgaged or the further advance is required for some other purpose (for example, to purchase a spouse's equitable or other interest in the property), you may receive instructions to act for us in connection with that transaction.
16.4.1 You should advise the borrower that any letting of the property is prohibited without our prior consent. If the borrower wishes to let the property after completion then an application for consent should be made to us (see part 2). Check part 2 to see whether it is necessary to send to us a copy of the proposed tenancy when making the application.
16.4.2 If the application for our consent is approved and we instruct you to act for us, you must approve the form of tenancy agreement on our behalf.
Please also note that:
16.5.1 If we consent to any proposal for a deed of variation, rectification, easement or option agreement, we will rely on you to approve the documents on our behalf.
16.5.2 Our consent will usually be forthcoming provided that you first of all confirm in writing to us (see part 2) that our security will not be adversely affected in any way by entering into the deed. If you are able to provide this confirmation then we will not normally need to see a draft of the deed. If you cannot provide confirmation and we need to consider the matter in detail then an additional administration fee is likely to be charged.
16.5.3 Whether we are a party to the deed or give a separate deed or form of consent is a matter for your discretion. It should be sent to us (see part 2) for sealing or signing with a brief explanation of the reason for the document and its effect together with your confirmation that it will not adversely affect our security.
17.1.1 When requesting a redemption statement (see part 2) you should quote the expected repayment date and whether you are acting for the borrower or have the borrower's authority to request the redemption statement in addition to the information mentioned in paragraph 2.1. You should request this at least five working days before the expected redemption date. You must quote all the borrower's mortgage account or roll numbers of which you are aware when requesting the repayment figure. You must only request a redemption statement if you are acting for the borrower or have the borrower's written authority to request a redemption statement.
17.1.2 To guard against fraud please ensure that if payment is made by cheque then the redemption cheque is made payable to us and you quote the mortgage account or roll number and name of borrower.