An undertaking given by a firm in relation to the redemption of an existing mortgage is binding on the firm and must be complied with even if there is a shortfall from the sale proceeds. What is the correct consequence?

• A. It is optional for the firm to comply.
• B. It binds the client rather than the firm.
• C. It binds the firm and must be complied with, even if there is a shortfall in sale proceeds.
• D. It does not relate to redemption.

Answer: (C)

The key idea is that undertakings given by a solicitor’s firm in conveyancing are binding promises to act in a particular way for the client or lender. When a firm undertakes to redeem an existing mortgage, that promise creates a binding obligation on the firm itself. It must be carried out regardless of what the sale proceeds happen to be. So even if the sale money falls short of what’s needed to redeem the mortgage, the firm remains obliged to complete the redemption as promised. If the firm fails to do so, it would be in breach of its undertaking and liable to the lender (and possibly to the client) for that shortfall or for breach of duty. This is why the undertaking is described as binding on the firm and requiring compliance despite any shortfall in the sale proceeds.