When a property is subject to a mortgage, the lender should make sure that a bankruptcy search has been made against the buyer before releasing funds. This article explains the process of conducting such a search.
This search is also made through Form K15. A search application is filled by the conveyancing solicitor who acts for the buyer as well as the lender (it may be recalled that when a common solicitor acts for both buyer and lender, it is the lender who makes a search application). And when there is no common solicitor, the lender’s property lawyer should submit a separate Form K16 to the Land Charges Department along with complete details including the full name and address of the borrower.
When an adverse entry is made against the borrower on the Land Charges Registry, instructions from the lender should be sought by the solicitor. The CML Lender’s Handbook instructs the lender to refuse the loan unless the solicitor certifies that the entry is not related to the borrower and the entry on the Register refers to someone else. And in circumstances when the conveyancing solicitor certifies that the search entry does not relate to the client, this is treated as an undertaking. Hence, the conveyancing solicitor should take great care in issuing such a certificate.
To make an instant and free search of current bankruptcies, the government has started the Insolvency Service website, www.insolvency.gov.uk . The date of birth of the person against whom the order has been made shall be displayed. This date of birth can be cross checked with the client’s birth date mentioned in the document. The lender can also be taken into confidence if the conveyancing solicitor has doubts so that the lender may make his own enquiries. Although this search is to be made before exchange, it should also be confirmed before completion to ensure that the buyer has not gone bankrupt after the date on which the last search was conducted.
Photo courtesy: Elliott Brown
