Real Property Section creates toolkit for dealing with mortgage instructions

  • September 13, 2017

If you deal with residential real estate transactions, either as a specialty or as part of a general practice, chances are you’ve noticed in the past few years that the scope of lender instructions has grown – becoming increasingly onerous and sometimes inappropriate.

The members of the CBA Real Property Section have developed a toolkit aimed at helping you if you find yourself being pressured to give opinions or to assume responsibility for matters outside your area of expertise – or in a position where even attempting to have the instructions revised could jeopardize the client’s deal.

“This inappropriately transfers risk to the lawyer, and may jeopardize their professional liability insurance,” the Section says. “Although lenders’ title insurance policies are obtained in most residential mortgage loan closings, title insurance does not cover all elements of a residential transaction or resolve all difficulties with a lender’s instructions.”

The Mortgage Instructions Toolkit, launched on Sept. 15, is an online tool meant to raise awareness about the types of requests made to lawyers by lenders; and provide practice tools to help lawyers respond to some common lender instruction requests in residential real estate transactions.

Section members were asked to provide copies of instructions they’d received from lenders, and comments about requests that had been made of them as well as for their responses to lenders about troublesome requests. Their information was used as the basis for the toolkit.

Key practice tips for lawyers include:

  • When responding to requests, limit the scope of your legal services to matters within your expertise.
  • Restrict opinions to matters of law where you have conducted appropriate due diligence, and do not give opinions on questions of fact.
  • When a request falls outside your expertise, provide the lender with applicable third-party information, identifying the source. Avoid any implication that you have expertise in the matter.

The toolkit can be found on the CBA website and is available to both members and the general public.