Following backlash from the conveyancing community, Nationwide have clarified its position regarding recent updates to Part II enquiries which have caused consternation amongst practitioners. In fact, said the building society, the changes to Part IIs was in response to the increasing number of referrals it receives from conveyancers around restrictive covenants and mortgage protection clauses. It has since updated the wording further.
The furore erupted when Nationwide Building Society (NBS) made revisions to their Part II UK Finance Handbook instructions including appearing to need a deed of variation if the lease doesn’t include a Mortgagee Protection Clause and an updated requirements to report when there has been a breach of a restrictive covenant.
NBS have published a clarification in which they say the updated wording was designed to proactively outline information required from the conveyancer in the event they referred a breach a covenant. They add conveyancers can still use their professional judgement to arrange either an indemnity policy (Part I section 5.11) or confirm the title is good and marketable (Part I section 5.11.2)
The statement adds
We are also proactively providing and clarifying what information we need from conveyancers when they are reporting breaches of restrictive covenants to help them progress their cases quicker. This includes:
-
A description of what has occurred to breach the covenant
-
How long ago did the breach occur
-
What potential enforcement actions could be taken
On the issue around mortgage protection clauses, NBS say a deed of variation is one option for a lease without a mortgagee protection clause where the conveyancer deems one is necessary. There is also the option of a side letter or an indemnity policy which allows the conveyancer to let a case proceed. The building society have received a number of enquiries about this, which is why they have clarified its policy.
A Nationwide spokesperson said:
“Nationwide continually looks for ways to support the conveyancing community and ensure they have all the relevant and up-to-date information to avoid any last-minute issues with completions. In this case, we have published policy to clarify the most commonly asked questions from conveyancers ahead of the upcoming changes to stamp duty. As is the case with any updates, they are not applicable to cases where contracts have already exchanged”.
The clarification comes following a meeting set up by Bold Legal Group CEO Rob Hailstone, alongside two members Alex Snow and Nicola Maskell, who sought to understand the changes and convey the concerns of members to NBS. Commenting on the meeting Hailstone added
I was appreciative that Nationwide Building Society were able to talk through their recent handbook changes with myself and two of the Bold Legal Group members, Alex Snow and Nicola Maskell this week. The hour-long discussion was open, constructive and proved fruitful and has resulted in some very helpful new changes being put in place already.
One Response
I hope they also intend to clarify the position with regard to Rentcharge provisions where a mortgage protection clause already exists but, perhaps, doesn’t meet their specific time requirements. I recently had a transaction where the buyer’s solicitor insisted the rentcharge was varied so that the timing requirements matched the CML requirements set out by Nationwide, which delayed the transaction completing and added additional costs to my client.