Discharge of commercial mortgages made simple?

The City of London Law Society (CLLS) Land Law Committee has released a protocol for discharging mortgages of commercial property, incorporating input from the Association of the Property Leaders and the CLLS Financial Law Committee. The protocol was produced in order to simplify the very common process of discharging mortgages of commercial property. Surprisingly, lawyers can spend hours debating and negotiating the completion process of discharging the outgoing mortgagor’s charge and completing the incoming funder’s mortgage despite it being something that happens on a regular basis.

The potential gridlock arises on the redemption of a commercial mortgage because buyers will fight over which comes first, the ‘chicken or the egg’, the release or the money?

The buyer’s funder will want the seller’s funder’s (‘releasing funder’) release documents to be signed prior to completion and delivered legally on completion with the original to follow shortly afterwards in line with their solicitor’s undertaking. However, the releasing funder will not want to hand control of the release documents to the buyer’s funder (‘incoming funder’) until it has received the funds to redeem the charge…

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