Buying a home brings piles of paperwork. You may be asked to complete an occupier waiver form during the conveyancing process.
This article breaks down everything you need to know about occupier waivers in simple terms: what they are, why your lender needs one, who should sign, and what's at stake if you refuse.
In a nutshell
An occupier waiver form is a legal document wherein an adult occupier of a property, who isn’t the mortgage borrower, acknowledges that they will leave the property if the mortgage lender repossesses it.
Your mortgage lender may refer to the form they require in several ways. It may be called an occupiers waiver form, an occupiers consent form, a deed of postponement, a letter of consent, or an occupier consent form. All are essentially the same thing.
This document contains several components:
- Acknowledgement of the lender's rights: The form clarifies that the lender may repossess the property if the borrower fails to adhere to the terms of the mortgage.
- Consent to leave: The occupier agrees to leave the property, without causing any obstruction, if the lender exercises its right to repossess.
- Waiver of any legal rights: By signing the waiver form, the occupier agrees not to assert any legal rights or claims against the lender in relation to their occupation of the property.
- Advice clause: Most mortgage lenders include a recommendation or a requirement for the occupier to obtain independent legal advice before signing, ensuring they fully understand its implications.
The difference between a waiver and consent
Giving consent and waiving rights are technically two different things, but in the context of what the lender is trying to achieve by asking the form to be signed is the same.
From a psychological point of view, perhaps it is easier to give consent than agree to waive your rights.
A consent form might focus on obtaining the occupier's agreement to the mortgage conditions, acknowledging that they might need to vacate if the lender claims possession.
On the other hand, the occupier waiver form might emphasises the relinquishing of any rights the occupier may have over the mortgaged property, placing the lender's rights first.
Why your mortgage lender requires adult occupiers to sign
Mortgage lenders have a vested financial interest in the property.
If the borrowers default on their loan, the bank or building society giving the mortgage needs a clear path to take possession of the property, sell it, and recover the sums payable.
By obtaining an occupier waiver form, lenders ensure that there are no hindrances to the process, like an adult occupier asserting their rights to stay in the property.
Who signs an occupier waiver form?
Every adult occupier, that is a person over the age of 18 who is living in the property as their main residence, but who is not named on the mortgage or deed is usually asked to sign.
In signing the mortgage deed and the contract for sale, the legal owner of the property enters into a binding agreement with the mortgage provider. Under those agreement, in certain circumstances, the mortgage provider can assert their rights over the owner.
However, as well as the registered owner of the property, other people with their own rights might live at the property. While an adult occupier doesn't have a legal stake in the property, they might have rights to live there.
The only way that a mortgage provider can obtain rights over such a person is with their consent, where by signing a deed (a special type of legal document where a person gives up rights without being given any consideration in return) the adult occupier waives their rights.
Implications for family members and other occupants
Family members, partners, or friends residing in a property but who are not part of the mortgage agreement are typical examples of non-legal occupants.
If you're sharing your home with someone who is over 18 but not on the mortgage, they fall into this category.
Potential risks and challenges
What happens if an adult occupier refuses to sign?
When an adult occupier is unwilling to sign the occupier's waiver form, complications arise.
The reason is that anyone over the age of 18 who has lived at an address for at least a certain amount of time acquires legal rights to stay, even if they don't contribute to the mortgage.
The lender may see this as a potential risk. After all, the lender's primary concern is ensuring they can claim vacant possession of the property without obstruction if the need arises.
A refusal to sign could indicate potential hindrance in this process should it arise.
As a result, the lender might withhold the mortgage loan or request additional terms to safeguard their interests.
Scenarios leading to the lender seeking possession
But lenders don't request vacant possession without cause. In fact, if they think they can avoid it and come up with another solution, they'll try.
The most common triggers are defaulting on the mortgage for a prolonged period or seriously breaching the terms of the mortgage agreement.
In such scenarios, the lender seeks to recover their loan by taking possession of and subsequently selling the property.
The occupier's waiver form, once signed, makes this process smoother for the lender.
With a signed consent form, each occupier acknowledges the lender's right to the property and, if necessary, agrees to leave to enable the sale. If they don't then do that, the lender may sue them.
Requirement for independent legal advice
For any legal document to be binding, the person signing it must be fully aware of what they are signing, and in particular, of the rights that they give up by signing it.
One of the most common reasons a court order may not be given is that the adult occupier didn't freely give their consent.
In response, most lenders now require that all people who sign an occupier consent form take independent legal advice in advance of doing so. Having taken advice, there is evidence that a knowledgable person (a solicitor) informed the person, so it removes the possible later arguments of ignorance or pressure.
Often such advice can be given via video conference. The advantages with this is that the meeting can be recorded and that travel is not required. The cost of this advice can also be lowered - a solicitor will often charge a fixed fee.