FLK2 · Property Practice

Mortgages & security in conveyancing

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

PP.09 — Mortgages & Security in Conveyancing

How a lender's security is created, protected and discharged on a purchase, and the solicitor's duties when acting for borrower and lender.

Creating the charge

A first legal mortgage of registered land is a registrable disposition — it must be completed by registration to take effect at law (LRA 2002 ss.23 and 27). Until registered it is only equitable.
The lender usually requires a first legal charge. Where permitted to act for both buyer and lender, the solicitor gives the lender a certificate of title before completion and draws down the advance to complete.

Acting for borrower and lender: conflicts

Trigger: SRA Code para.6.2 prohibits acting on a matter or aspect where duties to clients conflict, or there is a significant risk of that conflict, unless an exception and its safeguards apply. Where neither trigger exists, an exception is not needed; duties to each client still apply.
Two exceptions: clients may share a substantially common interest (a clear common purpose and a strong consensus on how it is to be achieved), or be competing for the same objective. A standard borrower/lender transaction can involve the former: both seek suitable title for the purchase and security. They are not competing bidders for one asset. This is an application of the rule, not automatic permission for every mortgage transaction.
Both exceptions require all safeguards: every client must give informed consent, given or evidenced in writing; where appropriate, effective safeguards must protect the clients' confidential information; and the solicitor must consider acting for all clients reasonable. Consent alone is insufficient.
Keep reassessing: a later dispute, negotiations or disclosure difficulty may mean the conditions no longer hold and the solicitor must stop acting for one or both clients. Para.6.1 separately prohibits acting with an own-interest conflict or significant risk of one, with no exception.

Priority and further advances

Priority of registered charges runs in the order shown on the register, not the order of creation (LRA 2002 s.48).
A lender may tack a further advance so it ranks with the original charge in defined cases (LRA 2002 s.49) — e.g. the further advance is made before the lender has notice of a later charge, or there was an obligation to make it noted on the register.

Occupiers, overriding interests and undue influence

An adult occupier with a beneficial interest who is in actual occupation can hold an overriding interest binding the lender (LRA 2002 Sch 3 para 2; Williams & Glyn's Bank v Boland). Overreaching that interest needs the advance paid to two trustees.
So the lender takes a signed consent / postponement (waiver) from every adult occupier (aged 18+), agreeing their interest ranks behind the charge.
Undue influence: where a non-commercial surety charges their home for another's debts (e.g. a spouse for the other's business), the lender is put on inquiry and must follow the Royal Bank of Scotland v Etridge (No 2) steps — ensure the surety takes independent legal advice — or the charge may be set aside.

Completion and discharge

The seller's existing mortgage is redeemed on completion; the charge is then released electronically by e-DS1 (or paper DS1) and removed from the register.
SDLT/LTT is charged on the purchase, not the mortgage. For a notifiable transaction, the normal return and payment deadline is 14 days after the effective date for SDLT (England), and 30 days beginning with the day after the effective date for LTT (Wales). The effective date is usually completion, but it is earlier if the contract is substantially performed first (e.g. the buyer takes possession of substantially the whole property, or substantially the whole price is paid). Special return and payment rules, including permitted deferral, can apply.

Common traps

Borrower/lender common interest is not the competing-for-the-same-objective exception. Check the conflict/significant-risk trigger and every safeguard, not consent alone.
A legal charge does not bind at law until registered (s.27) — completion alone is not enough.
Priority follows the register order (s.48), not the date of creation.
A single trustee cannot overreach — an occupier's beneficial interest can still bind the lender (Boland); take the consent/postponement from every adult occupier.
Adult occupier means 18+, not 17.
The Etridge inquiry is triggered by the non-commercial surety relationship itself, whether or not the lender suspects anything wrong.

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