Tuesday, 13 September 2016

10 Reasons why Lawyers do not concern themselves with CML Handbook changes



Over the last few years I have visited and spoken with many firms of all shapes and sizes around the country. Given the nature of the technologies that Lexsure implements, it’s inevitable that the conversation turns to the importance of tracking and complying with lender requirements.

Lawyers I speak with often believe they’re on top of the changes but are then shocked to find out the scale and pace of variation. It’s bewildering. In the last 30 days, no fewer than 25 different lenders have made changes. On average, more than 12 section changes have been made to part 2 of the Handbook every single working day for the last seven years.

The truth is that it’s very easy to stay on top of the changes. For as little as £20 plus VAT per month, your firm can receive email LENDERmonitor notifications advising you of changes that take place to lenders’ requirements.

Whilst I am yet to find a law firm that says that CML Handbook requirements don't matter*, property lawyers often suggest reasons why their firms do not track updates or read the CML Handbook for each and every case where a lender is involved:

  1. “My firm receives email updates directly from the CML” Only two firms out of over a thousand have told me this. Both refused to send me copies of the notifications. The CML do not offer such a service.
  2. “If Lexsure could offer me the service for free I would pay for it and use it” Could one not make that argument in relation to every risk management tool?
  3. “I don't need updates. It is for lenders to update me directly and if they don't then that’s their problem. In any event … I have PI insurance.” Try telling that to your insurers.  
  4. “We receive updates directly from lenders.” No lenders offer this service.
  5. “To be honest I don't have time to manually check CML Handbook instructions on all cases and stay up-to-date. Any lawyer that says otherwise is lying.” Several thousand Lexsure firms are not lying - and they find it takes just minutes to keep up to date, with the help of tailored services from Lexsure.
  1. “CML Handbook instructions are common sense … I use my common sense” Would the lawyers who say this also advise their clients to save money on legal fees and just use their common sense, too?  
  1. “The CML Handbook is like the bible for conveyancers is it not? …If the bible has not changed for thousands of years then why should the Handbook?” This particular bible gets changed very frequently. In fact, the pace of change is… biblical.
  1. “I have a clean record and have not been sued in the past” Everyone who has ever been sued was once sued for the first time.
  2. “Part 2 changes are just admin as to whether the Lender will accept less than the rigid part 1 - thus not causing us any negligence issues warranting the service you provide.” This was from the head of conveyancing for a well respected, award-winning solicitors. It's simply not true and it's just as easy to fall into negligence issues with part 2 than part 1.
  3. “I resent having to pay for such a service. Lenders should be offering this service free of charge.” Maybe, but that’s not a great defence if faced with a claim. Perhaps if the lawyer feels this way they should remove themselves from the lender panel. After all, as is the case with many types of client, you don’t have to act for them. Better not to take instructions than it is to ignore them.

What is your excuse?

Feel feel to email me at cmlhandbook@who-gives-a.com

*the exception being firms who tell me that they are not on any lender panels.


Friday, 9 September 2016

HSBC - Change to Conveyancing Panel Instructions

logo icon for HSBC

HSBC have just made important changes to their CML Handbook Part II instructions. An amendment to section 5.8.1 means that they will no longer accept security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.

To see the change click here

It has been a very busy week for lenders making changes to their instructions to lawyers . 

The lenders who have made changes this week include: 

Ipswich Building Society
Skipton Building Society
Aldermore Bank PLC
Cambridge Building Society
HSBC
Monmouthshire Building Society
National Westminster Bank 
Santander 
Alliance & Leicester mortgages 
RBS
West Bromwich Building Society
West Bromwich Mortgage Company
Leek United Building Society

Wednesday, 7 September 2016

Santander add to List of Acceptable New Home Warranty Schemes



By way of and adjustment to their CML Handbook Part 2 instructions Santander have added the following to the list of acceptable new home warranty schemes :


  • Advantage - AHCI Latent Defects Insurance Policy
  • Aedis Warranties - New Build 10
  • Capital Warranties - New Build Structural Warranty
  • International Construction Warranties (ICW) - Residential New Build UK
  • Protek: New Home Warranty and Custom Build Warranty

Santander are just one of seven lenders who have just made changes to their CML Handbook requirements. LENDERmonitor notifications went to over 6000 individual property lawyers yesterday. I hope you were one of the recipients. If not, do consider signing up here.

Tuesday, 6 September 2016

Are Lenders Looking to Shut the Door on Leasehold Property?

logo icon for Leek United BS


Leek United Building Society became the latest lender to to change their requirements concerning the unexpired term of a lease offered as security.

The change to the lender’s BSA mortgage instructions took place yesterday. The significant adjustment is as follows :

Former requirement : '50 years plus mortgage term'

New requirement : '75 years plus mortgage term'

Based on an average mortgage term of 25 years Leek United Building Society are essentially setting the bar at 100 years remaining on a lease.


Leek United are just one an increasing number lenders to amend their minimum lease term requirements in 2016. Twenty lenders changed their lease term requirements in 2015.

Monday, 5 September 2016

Nationwide Building Society - Changes to Conveyancing Panel Instructions

Image result for 6 months

Nationwide Building Society have just made important changes to their CML Handbook Part II instructions. One of the changes that caught my eye relates to the lender's requirements where the seller has owned the property for less than 6 months.

The new answer to 5.1.1 reads :

We will not normally lend where there is a sub-sale or back to back transaction and we will not lend where the contract for sale is to be assigned to a third party. All circumstances where the owner/registered proprietor has owned the property for less than 6 months from purchase should be referred to the issuing office, ensuring that the following details are provided:

The name and address of the person who sold, or will be selling, the property to the applicant`s vendor;
The amount paid for the property by the applicant`s vendor;
Details of any connection between the original and the applicant`s vendor, or between either vendor and the mortgage applicant;
Details of any work carried out to the property between the two transactions;
When the two transactions took place or will take place.

This was just one of the latest changes by Nationwide who have made 12 section changes so far in 2016 (more than double 2015). If you are on the Nationwide conveyancing panel and wish to receive notifications of changes you do so by subscribing to LENDERmonitor.

Thursday, 1 September 2016

Should Insurers and Lenders be Demanding guardrails?


Left to our own devices, most of us get attracted to things that are bad for us. I am in my mid-40s and trying to improve my general health and fitness, yet I often find myself making short-term decisions such as eating a bar of chocolate or having an extra beer. ‘The diet and fitness regime can always start next week’.
We all get caught up by temptations and falling into a short-term trap.
Over the last 20 years I have witnessed many in the conveyancing industry knowingly sacrifice proper risk management in pursuit of making legal work fractionally cheaper for the client or indeed their firm.
We know that that drinks pumped full of sugar are bad for us but it is likely to take a sugar tax to have a big impact in the same way that the plastic bag tax has.
Guardrails seem like an unwanted intrusion on personal freedom. Until we get used to them. Then we wonder how we coped without them.
In the most risk-laden work law firms undertake, conveyancing,’guard rails’ such as lawyer checker, Jet, COMPLETIONmonitor and Safemove exist, yet many firms fail to use those services even though few lawyers would ever deny that they have a crucial role to play when managing risk. After all,  each move to reduce risk in conveyancing has costs either in time or money and sometimes both.

It is wrong to think that we are all always rational, have complete access to the information we need, have plenty of time and never make errors. If all that were true, PI insurance would be a lot cheaper - and lenders would not need to constantly prune their panels.
Instead, lawyers with some degree of humility understand that sometimes they can make errors and that cultural guardrails such as intelligent checklists not only help us avoid mistakes, but give us the reinforcements we need to get back to productive work and ultimately a healthier business.
Even more rationally, the small amounts of time saved by not investing in risk prevention are enormously outweighed by the costs of making mistakes. Just think: inflated PI premiums, barrister fees, reputation damage or going out of business .
As one of the architects behind a conveyancing risk management tool I do have a vested interest in arguing that law firms should use ‘guardrails’. Does that mean I am wrong though?

Monday, 29 August 2016

Flying Freehold Enquiries Take Off Post Brexit

CML post Brexit figures already indicate a slowdown in housing market. Perhaps it’s not surprising that so called ‘problematic properties’ i.e. those with more unusual characteristics are more difficult to sell.

Specialist website www.flying-freehold.com has reported a ten-fold increase in enquires concerning flying freehold this August. This includes calls from a number of sellers who expressed surprise that their lawyer had not given them any context enabling them to understand the extent to which lenders as a whole react to such properties. Potential for claims? Time will tell.

In January this year Lexsure reported that during 2015 changes to the CML Handbook focused on problematic properties such as flying freeholds, properties with absentee freeholders as well as properties with short leases.

Examples of recent queries to  www.flying-freehold.com  in the last few days include :

I am buying two adjoining cottages which have a shared archway that runs under the rooms above. So there is a flying freehold, which is fine for me as I will own both, but how do I protect myself during the purchase so that in the future I can sell the individually without problems?

‘I inherited a property from my father which has a flying freehold but I don't have very much documentation. I have been told that it is "unmortgageable" because of this but I want to investigate further. What documentation would I expect to have for a flying freehold? The property is in South Wales.

I was just wondering if details of a flying freehold have to be added in sales details when selling the property


I am interested in a property which has a garage below which has been sold. this has created a flying freehold, would it be possible to get a mortgage?