Prior to exchange of contracts on 5 Star Road, which matters will you check on behalf of Framer Bank UK PLC?

• A. Offer received and accepted
• B. Identity checks satisfied
• C. Buildings insurance arranged to take effect from exchange
• D. All of the above

Answer: (D)

When a lender looks at a file before exchange, the important guardrails are that there is a binding purchase arrangement, the borrower's identity has been verified, and the property will have insurance from the moment exchange happens. Each piece protects the lender’s position.

First, confirming that an offer has been received and accepted shows there is a binding contract to purchase and that the purchaser is committed to proceed. Without a concluded agreement, there’s no enforceable basis to lend against the property, so this check is essential before moving forward.

Second, completing identity checks satisfies anti-money laundering and fraud-prevention obligations. Verifying who you’re dealing with helps ensure the funds come from a legitimate source and that the borrower is who they say they are, reducing risk to the lender.

Third, arranging buildings insurance to take effect from exchange ensures the property is protected from day one of the risk. If something happens to the property after exchange but before completion, the lender’s security could be jeopardized if there’s no insurance in place. Lenders typically require that the policy be in force from exchange and name the lender as interested party or mortgagee.

Because each of these elements addresses a different risk—contractual certainty, identity and AML compliance, and property protection—the correct approach is to check all of the above.