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How does a signed occupier consent form protect the mortgage lender?

If you are a homeowner on the move with a property purchase in mind, any person over 18 years of age who will be residing in that house and who is not the legal owner may be asked to sign a consent form. This consent form is to protect the mortgage lender from the person over 18 who is not the legal owner from making a claim of right of occupation if repossession should occur.

It’s important to understand the document

Some mortgage lenders ask the individual who is over 18 to sign the form to state that they will leave the property if repossession occurs. The person whose signature is requested on the consent form should be directed to legal advice prior to signing the occupier consent form. It will be in their interest and they will be able to understand why they are being asked to sign the consent form.

If that person refuses to sign an occupier consent form, the mortgage lender might refuse to go forward with the home loan. According to The Guardian Chancellor Rishi Sunak recently announced a mortgage guarantee scheme, which is aimed at encouraging banks to lend to those who can only afford a 5% deposit for a property. It has been seen as a positive move to enable younger people to access the market.

Form is provided to adult occupiers of the property

The form is provided to all adult occupiers who are not part of the mortgage. The form will outline the fact that the occupier acknowledges that they are unable to make a claim by asserting an interest in the property. It also informs them that they understand that any legal interest will be suspended. The adult occupier cannot claim that they were unaware of the lender’s charge and will not challenge this.

By signing the form which is a legally binding document, they are agreeing to the terms laid out. If another person, such a friend, relative or boyfriend or girlfriend moves into the house along with the legal owner, they could potentially claim a right of occupation in the property, even if the owner was to default on the mortgage payments and repossession was set to proceed.

When a person buys a property, the completion of the purchase means they acquire legal ownership of the place they have bought. The process of signing a consent form is much more complex and detailed so legal advice is paramount. Filling in a consent form is usually a supplementary and mandatory part of the house buying process, and it’s a part of the main mortgage transaction which should not be overlooked.

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