Rule 4.01 says ‘you and your firm must keep the affairs of clients and former clients confidential except where disclosure is required or permitted by law or by your client (or former client)’. What this means, of course, is that the buyer/borrower can waive confidentiality and some lenders therefore get borrowers to sign a standard form of release at the time of the mortgage application. If that is the case, then you may well have to disclose the whole file to the lender (but do inspect the signed authority and check that it does authorise the release of the specific documents requested).

If the borrower has not given authority for the release of the file, you cannot send the whole file to the lender (without the borrower’s consent) ‘unless the lender can show to your satisfaction that there is a prima facie case of fraud’ (Para 9(C), r4.01). If there is no fraud, you will have to split the file and only disclose documents listed in annex 16C of the old Guide to Professional Conduct (typically: lender’s instructions; copy mortgage deeds; copy report on title; correspondence with the lender; other correspondence written for the lender; contract; property information/enquiries before contract; official copies; requisitions; draft transfer; draft licence to assign; LR forms; correspondence with LA and LR). Other papers (eg your letters to the buyer/borrower) should not be disclosed and, needless to say, nor should internal papers (eg the firm’s ledger card).

Finally, do make sure you take copies of any documents you supply to the lender. Source: Zurich@risk. © Practical Lawyer