Do I need written authority from a mortgagee to receive redemption funds?

I act for the seller of a mortgaged property. Do I need written authority from the seller's mortgagee confirming I am authorised to receive the redemption monies?

The Code for Completion by Post 2019 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.

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 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, the Court of Appeal stated it would not be advisable for the buyer’s solicitor to rely on an undertaking given by the seller’s solicitor that they have 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 UK Finance (then the Council of Mortgage Lenders)

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 more information, you can:

• buy the Conveyancing Handbook (30th edition) from our online bookshop
• contact the Practice Advice Service