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Taking instructions and other initial matters
Question
Your firm has been instructed to act for Boris Fothergill and his wife Daphne Fothergill in the sale of 'Wisteria Grange' and the related purchase of 'Tall Trees'. Your principal has passed you the two files from which you note the following:
- The sale price of Wisteria Grange is £1,750,000.
- The purchase price of Tall Trees is £1,850,000.
- The clients have an endowment mortgage on Wisteria Grange securing a loan of £1,200,000.
- The clients have received a mortgage offer on Tall Trees of £1,300,000. There is a retention of £300,000 on the mortgage advance until essential repairs have been carried out to the roof and chimney stacks.
- The clients wish to complete the purchase before the sale as Daphne's mother lives with them and they wish to carry out the repairs before they all move.
- The clients' bank has offered them a bridging loan of £300,000 to enable them to complete the purchase before the sale.
- The bank will only release the bridging loan upon receipt of a solicitor's undertaking to pay the net sale proceeds of Wisteria Grange to the bank.
- The estate agents' particulars relating to Wisteria Grange have arrived in this morning's post.
1. What advice will you give your clients in respect of their proposed financial arrangements and what factors should you consider before you give any undertaking to the bank?
2. Explain briefly whether Daphne's mother has an overriding interest and what effect, if any, this may have on the sale.