Where a property is in negative equity and the lender is not willing to write off the debt, they may require the applicant to enter into a Deed of Shortfall to give the lender a right to recover their debt in the future. This can be achieved in various ways but is usually either through an agreed repayment plan or a future charge on property owned by the applicant.

There have been cases where the lender asks the Registered Provider or the Citizens Advice Bureau advising the applicant to witness the shortfall agreement. As this deed has future consequences for the applicant, they should be given independent legal advice before signing it and have it witnessed by an independent person. Whilst the lender may require the deed to be agreed before proceeding, it is important the applicant has the deed fully explained to them and to avoid any liability on the Registered Provider or Citizens Advice Bureau, they must make sure that independent legal advice is taken by the applicant.