Are CHL’s mortgage terms prohibiting transfer of beneficial interest enforceable?

by Mark Alexander

2 months ago

Are CHL’s mortgage terms prohibiting transfer of beneficial interest enforceable?

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Are CHL’s mortgage terms prohibiting transfer of beneficial interest enforceable?

Over the last 18 months I have had to point out to many of my consultancy clients that CHL “Capital Homeloans” are the only lender we are aware of which specifically prohibits the transfer of beneficial interest in their mortgage T&C’s.

This causes a major headache when it comes to tax planning strategies which rely on the use of Declarations of Trust.

I always make this clear to clients who have mortgages with CHL and point out that whilst the Declaration of Trust is completely invisible to anybody unless they declare it, the risk is that if a lender with such conditions in their T&C’s was to find out that beneficial interest had been transferred, technically, they would be in default. However, there is no history of CHL or any other lender having ever called a loan in on this basis. Nor has there ever been a Court case where a lender has been granted possession or appointed LPA receivers for a breach of such conditions. Given that all conveyancing solicitors have at some point implemented Declarations of Trust you have to wonder why this is?

This also makes me wonder CHL’s conditions precluding the transfer of beneficial interest are legally enforceable?

What business is it of a mortgage lender who gets the benefit of capital appreciation and rental profits if it has no effect on their security whatsoever?

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