INVESTIGATION OF TITLE

Prudent practice requires a solicitor acting for the lender to investigate the genuineness of the borrower’s title over the property proposed to be used as security for a loan. Method of investigation here is similar to the method a purchaser’s solicitor adopts in investigating a vendor’s title in conveyancing. There is a difference however in that the mortgagee has a stronger bargaining power and is in a better position than the purchaser; there is yet no existing contract between the proposed mortgagor and the mortgagee and so there is no obligation on the part of the mortgagee to advance money, but a purchaser may sometimes be compelled under the contract to complete the purchase. The mortgagee may therefore at any time withdraw from the transaction if it is not satisfied with the mortgagor’s title.

Credit - duffylawct.com

Two major issues that must be properly investigated before loan is approved on the security of a building or land are:

a)the title of the borrower; and

b)the value of the property – this must accommodate the credit proposed by the borrower.

To be continued with Reasons for Investigating Borrower’s Title

Source: www.lawrepository.com.ng

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