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Certificates in title in commercial lending

1 June 03

Problem of variations in forms of certificate of title requested by banks lending over commercial property

by Stewart Brymer

From time to time the Society's Conveyancing Committee receives representations from commercial property solicitors who have been instructed to provide certificates of title in respect of their clients' commercial property to the solicitors acting for the perspective lenders. The forms of certificate provided by banks etc proposing to take a standard security over the property show considerable variation in the amount and substance of matters which the solicitor giving the certificate is required to provide.  

The Committee are of the view that this inconsistency can give rise to risk management implications for the solicitor and increases the possibility of exposure to claims for damages on the ground of professional negligence. This in turn may have implications for the level of premiums payable in respect of the Society's Master Policy for professional indemnity insurance.  In the circumstances the Conveyancing Committee is of the opinion that there could be considerable benefit both for lenders and the profession if a pro forma certificate of title could be adjusted and agreed among the Society, the Committee of Clearing Bankers and the CML for use in all secured commercial loans.  It would also speed up the preparation of certificates, which would be readily available on all firms' word processing databases.

We have tried informally to take this matter forward with the Committee of Clearing Bankers but are not making an enormous amount of headway and therefore my purpose in writing this article is to enquire as to whether or not the profession consider there is any merit in this suggestion.  If we receive a positive response from you then we will try to take the matter further.  If you do think that the Committee could usefully take on this matter I would be grateful if you would contact the Committee Secretary, Linsey Lewin at linseylewin@lawscot.org.uk or telephone her on 0131 476 8174.

Professor Stewart Brymer