Is a Written Contract Necessary for Mortgages?
A mortgage contract is a legally binding agreement between a lender and borrower that outlines the loan’s terms. Mortgage contracts differ from most other contracts because many terms are written down in the agreement. So, to begin, do you truly need a written contract for your mortgage to hold up in a court of law when inconvenience strikes?
This article beneath will expand upon the definition for your understanding, and help you realize how essential they are to have in writing.
The Basics of a Mortgage.
Mortgages, along with marriage, are one of the most important contracts in a person’s life. As mortgages involve large sums of money, hiring a lawyer or notary is an important asset to assist with drawing up the contract. In addition, mortgages are unique in that they are among the only contracts that must be in writing and signed to be considered valid by law.
There are many factors that decide the terms and conditions of your mortgage contract. This can include the type of mortgage and property, your deposit amount, fees, and more. For example, if you’re buying a buy-to-let property from a council, there are extra conditions before you’re able to sell.
If I Don’t Have It In Writing?
The popularly named “Statute of Frauds” was created to reduce perjury in judicial proceedings. The Statute of Frauds states that contracts for the sale of land must be in writing. Part of that statute is the requirement for agreements (like mortgages) to be written, signed, and stored to provide evidence when necessary. Therefore, for a mortgage to be valid, it must follow this same regulation.
However, a mortgage can be created without a formal contract under the part performance doctrine. When an equitable mortgage does not arise by operation of law; rather, created as an exception to the Statute of Frauds. This can be a complex matter, and not one easily covered by a brief synopsis like this.
Yes, You Need A Written Contract.
Lenders should always obtain a written mortgage, preferably on a standard form. Recording the mortgage is essential to protect the lender’s interests. If your mortgage is contested in a court of law, one of the primary methods of protection for your asset is the written contract it was drafted beneath. Oral testimony of witnesses to a written mortgage is subject to human error and can be inaccurate. A written document, by contrast, speaks for itself and is less likely to produce contradictory accounts of an agreement in court. Furthermore, because unwritten mortgages are unrecordable, they cannot be foreclosed upon in court.
If you find yourself in an unfavorable situation wherein your contemporary piece of real estate is being litigated against, finding the proper defense today should be your top priority. Our experts at Dowd Law would be more than happy to mitigate your losses and help you find peace of mind despite the situation. Contact us today for a consultation. We have the experience and resources to ensure a favorable outcome for your estate.