‘You must not act for both lender and borrower on the grant of a mortgage of land:

(a) if a conflict of interests exists or arises;
(b) on the grant of an individual mortgage of land at arm’s length;
(c) if, in the case of a standard mortgage of property to be used as the borrower’s private residence only, the lender’s mortgage instructions extend beyond the limitations contained in r3.19 and r3.21, or do not permit the use of the certificate of title required by r3.20; or
(d) if, in the case of any other standard mortgage, the lender’s mortgage instructions extend beyond the limitations contained in r3.19 and r3.21.’

The key point is the distinction between an individual mortgage and a standard mortgage. Anything that is not a standard mortgage will be an individual mortgage. A standard mortgage is defined as being one where:

(a) ‘it is provided in the normal course of the lender’s activity;
(b) a significant part of the lender’s activities consist of lending; and
(c) the mortgage is on standard terms.’ © Practical Lawyer

Rule 3.17(2) says a mortgage will not be on standard terms if material terms are negotiated between the lender’s and borrower’s lawyers contemporaneously with effecting the mortgage. Note that in commercial transactions, the element of negotiation will often relate to the facility letter (rather than the mortgage itself), but that will be sufficient to mean that the mortgage is not on standard terms (and thus is an individual mortgage). Note also r3.17(3) which says that if there has been no contemporaneous negotiation of material terms, then a mortgage will be on standard terms if the lender uses a prescribed form of mortgage deeds. Minor variations (eg the usual clause limiting the liability of trustee mortgagors) are not regarded as material and will not prevent it being a standard mortgage.

What the rules say:

(1) You cannot act for both the lender and the borrower if either (i) there is a conflict of interest, or (ii) when there is an individual mortgage.

(2) You can act for both lender and borrower if it is a standard mortgage. This assumes that there is (i) no conflict of interest; (ii) the mortgage instructions do not go beyond the limits in r3.19; (iii) in the case of property to be used solely as the borrower’s private residence, the approved certificate of title set out in the annex to r3 is used.

(3) If you are acting for both lender and borrower in a standard mortgage of property to be used as the borrower’s private residence then (a) you must use the certificate of title set out in the annex to r3, and (b) unless the lender has certified that its mortgage instructions are subject to the limitations contained in r3.19 and r3.20, you must notify the lender on receipt of instructions that the approved certificate will be used and that your duties to the lender are limited to the matters contained in the approved certificate.

(4) Note also that r3.19 also applies to a standard mortgage where the lender and the borrower are separately represented. If a solicitor is acting for the borrower on the grant of a standard mortgage, the solicitor may have to give the lender a certificate or report on title. If the property is not to be used solely as the borrower’s private residence, then a recognised certificate (eg City of London Law Society) can be used.

(5) If a mortgage is an individual mortgage the borrower and lender must be separately represented. But, the solicitor acting for the borrower is not restricted as to what information can be given in a certificate of title to the lender (eg the City of London Law Society certificate can be used, or even the short-form version of that certificate, or any other form of certificate or report).