Shawbrook Bank Limited · DRN-6262623

The complaint D, a limited company, complains about delays and extra costs incurred in relation to properties secured by a bridging loan with Shawbrook Bank Limited, because Shawbrook’s solicitors made errors in registering its charge. What happened D purchased two properties for development purposes, with the purchase part funded by a development finance commercial bridging loan with Shawbrook. The purchase completed in August 2024. D completed renovations and development, and prepared to sell the properties before the mortgage term ended in June 2025. Unfortunately the sale couldn’t be completed in time. D said that prior to its purchase of the properties, there was a charge securing a loan to the previous owner. It said that this charge should have been removed at the time of the purchase, with the freehold being transferred to D and Shawbrook’s charge being registered. D says that Shawbrook’s solicitors (who I’ll call J) were responsible for doing this and failed to do so. D says that the problem came to light in January 2025. It contacted Shawbrook but Shawbrook failed to take any action until March. J then contacted the Land Registry, but took a further eight weeks to find out what the issue was. It was discovered that the problem was due to the previous owner’s solicitor not completing the sale documents correctly. D says that this can only be corrected by Shawbrook or its solicitors, but they acted very slowly, leading to the sale of the properties falling through. Shawbrook agreed an extension of the mortgage term. But D says that it lost the sales, and it’s having to pay additional interest because the mortgage remains outstanding. If the sales had completed, D could have paid off the borrowing in full. D says that Shawbrook has repeatedly failed to engage or recognise the seriousness of the issue. The longer things take the more interest it can charge – which is a clear conflict of interest. Shawbrook has tried to blame others rather than taking responsibility. D said that Shawbrook should refund the additional interest charged. And it said that the issue had caused its director a great deal of stress and worry. Shawbrook said that it accepted that it and J had caused some delays in resolving the problem, but also that there had been delays in obtaining information from other parties and delays at the Land Registry. It paid £200 compensation, and said that it would consider any question of financial loss once the properties were sold and the loan paid off. Our investigator said that Shawbrook was responsible for part, but not all, of the time taken to resolve this issue. She said it should refund 137 days’ worth of interest, and of the additional costs associated with continuing to own the properties. It should also pay £800 plus VAT in additional legal costs D incurred. Shawbrook didn’t agree and asked for an ombudsman to review the complaint. It said that the delay was primarily caused by failings on the part of the seller’s solicitor.

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I agreed that the complaint should be upheld, but I took a different view of what Shawbrook should do to put things right so I issued a provisional decision setting out my thoughts. My provisional decision I said: “Although there are two properties concerned in this complaint, at the time of the purchase both were registered on the same title. So there was only one title to be transferred from the seller to D. The seller’s title included two charges over the property. The first was in favour of a mortgage lender and the second was in favour of a private individual. In order to deal with a property sale, I would generally expect the seller’s solicitor to undertake to use the proceeds of sale to repay any debts secured by charges over the property. Then when the sale completes the seller’s solicitor should repay the debts and obtain a DS1 form signed by the charge holders. The seller’s solicitor should then send the DS1 form to the Land Registry to remove the charges. This will leave the title unencumbered. Generally, these days this is all done electronically rather than with paper forms. Separately, a TR1 form needs to be completed by the seller and purchaser and sent to the Land Registry, along with an AP1 form and a copy of the charge deed. This enables the now unencumbered title to be transferred from the seller to the purchaser and then the new lender’s charge to be registered over the title once it is in the purchaser’s name (in practice, the two changes are done at the same time). It’s generally the lender’s solicitor that sends the TR1, AP1 and charge deed to the Land Registry. Again, this is usually done electronically – any queries the Land Registry raises are also sent electronically. In this case, the purchase completed on 27 August 2024. Shawbrook’s solicitors, J, received the TR1 from D’s solicitors on 6 September and submitted the TR1 and other documents to the Land Registry the same day. D’s solicitors say they had received an undertaking from the seller’s solicitor to discharge the previous charges on completion. Nothing was then heard until 6 January, when the Land Registry contacted J. It said that the application couldn’t proceed until two issues were resolved – the transfer of title was not signed correctly, and in any case the transfer could not proceed because the previous charge was still on the title and no DS1 had been received. The following day J sent the Land Registry another copy of the transfer. But it didn’t respond to the query about the DS1, either to the Land Registry or by raising it with D’s or the seller’s solicitors. Nothing further happened until 3 March, when J contacted D’s solicitors to ask about the DS1. D’s solicitors replied to say that they had received an undertaking from the seller’s solicitors, so understood that the charge should have been removed. Shawbrook says that J therefore took no further action. On 21 March, J asked the Land Registry to expedite dealing with the transfer of title. The Land Registry replied to say it would allow time to deal with the outstanding queries. Again J took no action to respond to the second query about the DS1.

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On 7 May, J asked the Land Registry how long the process would take and whether there was anything further required. On 19 May the Land Registry said that it had received no response to the second question and without the DS1 the transfer could not be progressed. Over the next couple of weeks, J sent emails to D’s solicitor asking about the discharge documents. The solicitor replied on 5 June to say they were looking into it. It seems the DS1 was submitted around this time, though it’s not clear from the evidence I have exactly when this was. On 10 June the Land Registry contacted J to say that because the charge holder was a private individual not a lender proof of identity would also be required alongside the DS1. J replied to say that proof of identity wasn’t necessary because the DS1 had been signed by a regulated conveyancer. The Land Registry then asked for evidence the signatory was authorised to sign the DS1. On 30 June the Land Registry responded to say that the DS1 needed to be signed by the chargeholder themselves. J passed this on to the other solicitors and the seller’s solicitors arranged for a fresh DS1 to be signed and submitted. On 17 July the Land Registry confirmed that the DS1 was acceptable and it had served notice on the chargeholder. On 8 August, the transfer of title and the registration of the new Shawbrook charge completed. However, by then it was too late. The loan was due for repayment in May. While Shawbrook had extended the term pending resolution of the issues with the title, D’s prospective purchasers were not prepared to wait and the sales had fallen through. D has provided evidence to show that the sale of one property had been agreed for £262,000 and the other for £275,000. Although the properties were on one title originally, the plan was to refurbish and then sell them separately. I’ve seen evidence from the estate agent showing that both sales fell through because of the issues with the title and the resultant delays. D then obtained new buyers, but at lower prices - £258,000 and £266,000 respectively. The sale of one property completed on 24 October, allowing the Shawbrook loan to be repaid. I think the evidence shows that the root of what went wrong here lies with the seller or their solicitor. It was their responsibility to ensure the previous charges were removed, and the solicitors gave an undertaking to ensure that happened. But it seems that the seller’s solicitor didn’t actually send the DS1 to the Land Registry until around June or July 2025 – almost a year after the sale completed in August 2024. And even then the DS1 had to be re-done because it wasn’t correctly completed in line with Land Registry requirements. I don’t know why the DS1 wasn’t sent to the Land Registry any sooner. And I can’t fairly hold Shawbrook responsible for the failings of the seller’s solicitors. However, I do think that Shawbrook’s solicitors – for whom it’s fair to hold Shawbrook responsible – did contribute to the delay. The Land Registry first told J about the missing DS1 in January 2025. J took no action to deal with this query until March. At the beginning of March it checked with D’s solicitor, who said an undertaking had been received. But it seems that neither J nor D’s solicitor actually contacted the seller’s solicitor at this time to check that the undertaking had been complied with and the DS1 submitted. I think it was reasonable to have expected J to check before replying – it wasn’t its responsibility to deal with the seller’s solicitor, but it could have made better enquiries of D’s solicitor. Both seem to have simply assumed that the seller’s solicitor had submitted a DS1 – even though the Land Registry had said

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otherwise. So again J took no action to progress things. It was only in mid-May that J took action in telling D’s solicitor that the missing DS1 was still an issue and asking D’s solicitor to raise it with the seller’s solicitor. Once the problem was actually raised with the seller’s solicitor, the seller’s solicitor submitted the DS1 – but it needed to be re-submitted because it hadn’t been properly completed. On the evidence available to me, I think that all three parties are at fault here: • The seller’s solicitor failed to submit the DS1 in the first place, and then when it did submit it, it had to be re-done. • D’s solicitor didn’t raise the problem with the seller’s solicitor when contacted by J in March or May, only raising it at the beginning of June. • As one of the parties in touch with the Land Registry, and the recipient of its enquiries, J didn’t deal with the second part of the query in January. It only passed this part of the query on to D’s solicitor in March. But it didn’t check whether the seller’s solicitor had actually complied with their undertaking or submitted the DS1 before replying to the Land Registry. J also didn’t pro- actively take action when chased by D’s solicitors before it asked about the DS1 issue in May. As a result of all of this, the problem didn’t begin to be addressed until June. By then it was too late for it to be resolved in time for the property sales to complete, which in turn meant D was unable to repay the loan at the end of the initial term. I’m satisfied that the evidence shows that the property sales fell through as a result – meaning that D incurred additional costs, both in paying extra interest and extra costs associated with continuing to own the properties, as well as financial loss due to reduced prices on the later sales compared to the earlier offers. I see no reason why, but for the title problems, the earlier sales could not have completed as planned. I accept that property sales can go wrong for all sorts of reasons (as this one did), but the later sales proceeded without problem and there’s no evidence of any other factor that would have impacted the earlier ones, so – on the balance of probabilities – I think it’s more likely than not that the earlier sales would have completed had there been no issues with title. Putting things right I therefore need to decide to what extent Shawbrook is responsible for any of the losses D has incurred as a result. In this context, I think it’s relevant to note that it did agree to extend the term of the loan, rather than calling it in or taking recovery action. While that did mean D had to continue paying interest, it also meant that there was time for the problem to be resolved. However, I do think that there’s more Shawbrook needs to do to put things right – not calling in the loan wasn’t enough alone to compensate D for the costs incurred. I’m satisfied it’s fair and reasonable to hold Shawbrook responsible for the failings of its solicitor – while they were not failings of Shawbrook directly, they were failings of a firm to which Shawbrook had delegated part of its responsibility as lender and it’s fair to take that into account. I’ve thought about the outcome proposed by the investigator, but I don’t think it’s possible to say that particular periods of time are or are not the responsibility of Shawbrook alone. I think – from January onwards, at least – all three parties contributed to the unnecessary extra time it took to put right the initial problem in not

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submitting the DS1, which was the fault of the seller’s solicitors. Without those later failings, I think it’s likely the initial failure to submit the DS1 could have been resolved in early 2025, when it was first raised with the Land Registry, and the earlier sales would not have been impacted. So even though the initial failing was that of the seller’s solicitor, the later failings were a significant cause of the losses D experienced. That said, I don’t think it’s possible to take a mathematical or day by day approach to a situation where, at any given time, more than one of the parties was contributing to the delay. I think the better route is to take a step back and look at things in the round. It seems to me that, because of what went wrong, D has four main categories of loss – the extra interest, the extra costs of continuing to own the properties, the extra costs of having to go through two sales processes, and the reduced sale prices. The additional interest was around £2,350 per month, for the period from the end of the loan term in May 2025 to when it was paid back in October. The loss on the sale of the properties was around £13,000. The additional costs D incurred include legal fees of around £1,000, insurance of around £1,500, and utility and other bills. As I say, I think the fair way to resolve things is to take a step back and look at things in the round rather than to try to mathematically apportion costs to individual periods of time. While J, and therefore Shawbrook, was not responsible for the initial failure to submit the DS1, it was in my view the party mainly (but not wholly) at fault for the delay in resolving the problem from January 2025 onwards. I think the fairest way to put things right is for Shawbrook to refund the additional interest it charged following the original term expiry date. The amount concerned, relative to the overall losses D incurred, fairly represents J’s overall role in what went wrong. And continuing to charge interest, knowing what it did about the reason for the delay in repaying, was a choice Shawbrook made at the time. I think refunding that interest is, in all the circumstances, a fair way to resolve this complaint. I recognise this doesn’t fully compensate D for all its losses. But I don’t think I can fairly hold Shawbrook responsible for all the losses. And I have no jurisdiction over any of the other parties involved. Shawbrook has also paid £200 compensation for non-financial loss. As a limited company, D cannot suffer distress – I appreciate this was a very stressful time for its director, but I have no power to compensate a director of a limited company when the limited company itself is the complainant. It’s clear that D was caused significant problems by the delay. But I’m satisfied that the compensation for financial loss I intend to award fairly addresses that.” The responses to my provisional decision D’s director, Mr T, said that until my provisional decision he hadn’t realised J had known about the Land Registry problem as early as January. It only took steps to deal with it in March, and then only after being chased by D. Even then, things were only finally resolved because of D chasing all parties to keep them moving. He said that the final resolution was in spite of J, not because of it. He said that D would accept my provisional decision. Shawbrook said that while it didn’t agree with everything I said, in particular the extent to which I attributed responsibility to Shawbrook or J, it wouldn’t challenge my provisional findings any further.

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What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve also considered again what I said in my provisional decision. I note that neither party has put forward any further arguments or evidence for me to consider. I see no reason to change my mind about the fair way to resolve this complaint. My final decision For the reasons I gave in my provisional decision, reproduced above, my final decision is that I uphold this complaint. I require Shawbrook Bank Limited to refund all interest charged after the expiry date of the original loan term. It should also add simple annual interest of 8% on each payment of that interest D made, running from the dates D made payments to the date of the refund. Under the rules of the Financial Ombudsman Service, I’m required to ask D to accept or reject my decision before 28 April 2026. Simon Pugh Ombudsman

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