Are there any specific legal obligations when selling a house with a mortgage?

Yes. A mortgaged property must be sold through a legally compliant conveyancing process, with accurate information given to the buyer, the lender and the conveyancer. The mortgage does not prevent a sale, but it creates additional requirements concerning the lender’s rights, the property title, the sale contract and how completion is handled.

You must provide accurate property information. The seller is expected to answer the relevant property information forms honestly and completely. This can include details of boundaries, disputes, alterations, guarantees, notices, utilities, flooding, access rights and planning or building regulations approvals. Deliberately concealing a material problem or giving a misleading answer can lead to a claim for misrepresentation after completion.

Documents supporting the information supplied should be provided where available. Depending on the property, these may include:

• planning permissions and building regulations certificates for alterations;
• electrical, gas, window, roofing or other relevant guarantees;
• documents relating to rights of way, covenants, easements or boundary agreements;
• permissions for a conservatory, extension, loft conversion or change of use; and
• tenancy agreements, deposit information and prescribed notices where the property is let.

You must comply with energy performance requirements. A valid Energy Performance Certificate is generally required when a property is marketed for sale, subject to legal exemptions. The seller should arrange the certificate or confirm whether an existing one remains valid. Additional rules can apply to rented property, so landlords should take advice if the property is occupied.

You must establish who has authority to sell. Every registered owner normally needs to consent to the transaction and sign the required documents. If the property is jointly owned, the legal ownership arrangements should be checked before contracts are exchanged. A sale may require further authority where an owner has died, lacks mental capacity, is subject to bankruptcy proceedings or is involved in divorce or financial remedy proceedings. Probate, a power of attorney, a court order or another formal document may be needed before the transaction can proceed.

Leasehold sellers have extra obligations. They may need to provide the lease, details of ground rent and service charges, buildings insurance information, planned major works, notices affecting the flat and information about any breaches. The freeholder or managing agent may also require a management information pack, and the lease may contain restrictions requiring consent or notice before a transfer. These requirements should be identified early because missing leasehold information can delay exchange or completion.

The sale contract must be followed once exchanged. Before exchange, the buyer and seller can usually withdraw subject to any separate agreement. After exchange, the contract becomes legally binding. The seller must then complete on the agreed date, leave the property in the contractually agreed condition and comply with any undertakings given by their conveyancer. Removing fixtures, failing to disclose a change or leaving belongings contrary to the agreement can create a breach of contract.

The lender’s conditions still apply until completion. The mortgage terms may require the lender to be informed of the sale and may contain provisions about early repayment, changes to the property or letting it to tenants. The conveyancer will deal with the lender’s requirements as part of the transaction. If the sale price will not cover the secured borrowing and transaction costs, the seller must address the shortfall with the lender before completion; the property cannot simply be transferred free of the lender’s security without the necessary arrangement.

Identity and source-of-funds checks are also part of the legal conveyancing process. The seller will normally need to provide identification and evidence of address, and may be asked to explain the source of money used to cover any shortfall or other completion payment. These checks arise from anti-money-laundering rules and apply even where the purchaser is a cash buyer.

Tax and insolvency issues may require separate advice. A seller should consider whether Capital Gains Tax could apply, particularly where the property has not been the seller’s only or main residence, and should notify an adviser about a second home, investment property or business use. Someone facing bankruptcy, an individual voluntary arrangement or serious arrears should obtain specialist advice before signing a contract, because the sale may be affected by insolvency rules or creditor action.

The detailed procedure differs between England and Wales, Scotland and Northern Ireland. Scotland generally uses a different system involving missives and a disposition, while the other UK jurisdictions use their own conveyancing rules and documents. A solicitor or licensed conveyancer in the relevant jurisdiction should review the title, contract and mortgage position before the property is committed to sale. A cash sale can remove the buyer’s mortgage process, but it does not remove the seller’s legal obligations or the need for properly completed conveyancing.