Solicitor Karen Walsh answers your legal questions and queries.

I am farming and want a loan to make improvements to the farm and to expand it. I have loan approval from my bank. What is the next step? What needs to done to put the security in place and obtain funds?

Firstly, as this is a commercial mortgage, the bank will appoint their own solicitor to represent their interest in the transaction.

You will need to appoint your own solicitor also.

You may also be responsible for the bank’s solicitor fees.

Ensure that the address and acreage of lands to be charged in favour of your bank, and the folio number, if you hold a land registry title, are correctly referred to in the ‘letter of loan’ offer.

If it is incorrect, the ‘letter of loan’ offer will need to be amended as soon as possible to avoid delays.

Your title to the lands will need to be investigated by your solicitor.

The title deeds to the lands will normally be with your solicitor.

If the property is mortgaged, the title deeds will be with your bank.

It will be necessary to produce evidence that the buildings, if any, on your land, to be given as security, have planning permission and are in compliance with planning permission.

It will also be necessary to ensure that the maps to your lands are in order.

An engineer may have to provide certificates confirming that the buildings are in compliance with planning permission, and to confirm that the boundaries of the property are the same as on your map.

These certificates may already be with your title deeds, and there may be no need to instruct an engineer.

Your family home will be excluded from the property being given as security.

If your family home is on the same folio as your farmlands, the family home will have to be marked by an engineer, to remove it from the title to the lands to be mortgaged, and placed on a separate title.

If you are giving only part of your lands as security, a map may need to be prepared by an engineer marking out the property to be mortgaged.

Do not give the bank more security than they need.

If you wish to gift, or sell, a site at a later stage, do not mortgage these lands, as you will not be able to gift, or sell, part of the land at a later stage without the bank’s written consent.

Think ahead. What are your future requirements and plans?

Is your child planning to build a house on the land in the next few years?

If you access your lands through a right-of-way over neighbours’ lands, a ‘deed of right of way’ must be put in place.

Alternatively, you may enjoy a wayleave to access water from a neighbour’s land, and a ‘deed of wayleave’ will need to be put in place also. In addition to the borrower entering into a ‘deed of charge’ described above, it is common for a lender to insist upon a guarantee, by a third party, to be answerable for the default of another, and, in that instance, it is vitally important that the proposed guarantor obtains independent legal advice.

If a company is taking out the loan, the bank may also seek a guarantee by you, personally, for the default of the loan, and, in that instance, it is vitally important that independent legal advice be offered to the proposed guarantor.

A lender will also generally insist upon a life-assurance policy, on your life, for the value of the loan being taken out. Failure to organise life policies, direct-debit mandates, identification, buildings insurance, etc, as required, in a timely manner, can often cause delays in completing a lending transaction.

In a partnership, a partner has no implied authority to bind the partnership in commercial borrowing, unless it is expressly stated in the partnership deed, so the lender will be anxious to get all partners to sign any guarantee.

While all of the above may seem a little overwhelming, it is important to seek legal advice as soon as you are granted loan approval, and your solicitor can advise you of what is required and guide you through the process.