Where investment landlords are dealing with their commercial real estate, such as by granting a lease, taking a surrender, or agreeing a deed of variation, and the landlord's interest in the property is charged to a bank or other funder, more often than not the lender's consent will be required.
Depending on the terms of the mortgage, the lender may simply need confirmation of the headline terms and will issue their consent on that basis; alternatively they may require a draft of the proposed document for approval, prior to completion, for comment by their own solicitors.
Not only is it likely to delay completion if there is a last minute application for consent but there may also be an additional cost to pay in obtaining that consent.
Should consent not be obtained there are a number of potential problems that may arise:
- Registration of the transaction at the Land Registry (from both the landlord and tenant's perspective) may not be possible, which results in an incomplete transaction;
- The transaction may be declared invalid;
- There may be liability for the landlord under the mortgage deed for a breach of its terms.
If you are considering dealing with your investment property in the manner described above it is advisable to find out at the outset what consents are required, from lenders or any other third parties with charges against your property, and what procedure you need to follow to ensure the transaction goes as smoothly as possible.