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The purpose of Section 18 of the Housing Act, 1988 was to extend the procedure already available to Building Societies of endorsing Receipts on Mortgages in lieu of formal releases or reconveyances to all of the lending institutions. Under this Section a Statutory Receipt can now be endorsed on or annexed to the back of an original Mortgage and it is unnecessary to have either a Deed of Release and Memorial in the case of unregistered land or a Discharge in the case of registered land executed under the seal of the lending institution.

A Receipt under this Section shall operate to vacate the mortgage and shall without any reconveyance or resurrender vest the Estate of and in the property comprised in the mortgage in the person for the time being entitled to the equity of redemption.

The Receipt shall be sufficient for the purposes of registration both in the Registry of Deeds and in the Land Registry.

Section 18 will only apply however, where all monies secured by a mortgage or charge have been fully repaid irrespective of whether the mortgage or charge is for all sums due or for a limited amount. Unless the mortgagor or chargor repays everything that is owed to the Bank by him on every account, it is not appropriate for the Bank to execute a form of receipt under Section 18 for two reasons:

(a) the fact that all monies have not been repaid and may interfere with the statutory operation of Section 18 and,

(b) execution of such a receipt might prejudice the Bank in recovering the balance of what is owing.

To ensure that all monies secured by a mortgage/charge will be included in the redemption figures provided by a lending institution, a Solicitor’s letter requesting redemption figures from a lending institution should include the following:

(1) A request for up-to-date redemption figures, indicating the amount necessary to redeem the loan in question and all other monies secured quoting the loan account number.

(2) A request for confirmation that the lending institution does not hold any other mortgage or other security on the property in question.

(3) A request for confirmation that on payment of the sum indicated by the lending institution as the amount necessary to redeem the loan and all other monies secured the lending institution will release the property from all encumbrances and execute an appropriate Deed of Discharge/Vacate/Receipt as appropriate.

Unless a solicitor receives confirmation of the above points in writing from the lending institution concerned, then he is not properly in a position to give an Undertaking to provide a release of a mortgage. Some lending institutions may have more than one charge on the property. A request for redemption figures quoting one loan account number only may result in redemption figures for that account only being furnished. Also, as with some Bank mortgages, the Deed of mortgage may secure not only the monies due in respect of the home loan but also monies outstanding on foot of an overdraft facility/credit card.

It is essential to obtain the correct figures from the lending institution. A simple request for the amount due on the home loan is not enough. A simple request for the amount due to redeem one loan is not adequate, if there is more than one. The lending institution must be made aware that the request is for redemption figures, which if paid, will entitle the borrower to a release of the property from all security held.

It is felt that if solicitors adhere to the above guidelines, the pitfalls experienced by some solicitors in redeeming loans will be avoided.