Monday, 11 February 2013

Risk scoring the potential for Money Laundering

When it comes to assessing the risk of money laundering a conveyancing solicitor should adopt common sense approach. Risk factors tend to be cumulative, and often involves that more than one key identifier. I set out below some of the more common risk factors to consider :-

  • Has the client dis-instructed a previous solicitor before retaining your firm?
  • Has the firm conducted conveyancing for this client before?
  • Is this transaction involve a mortgage or is it a cash purchase?
  • Is there a foreign or offshore element to the conveyance such as money coming from abroad?
  • Does the client live far from the office? This is more relevant where most of your clients are local.
  • Are you being asked to act for both buyer and seller ?
  • Will the conveyancing transaction differ materially from the original instructions or from the written record? By way of example are you now being told that the deposit has been paid directly to the seller?
  • Is the conveyancing in some other way unusual or complex?
  • Do you feel uneasy as a result of being placed under pressure or inducement to move the transaction forward? Perhaps there is an unusual sense of urgency that can not be explained by a legitimate deadline?

Clearly the above list is not comprehensive but do consider whether the above questions or others should form part of a checklist. The presence of just one of the above risk factors may be sufficient to trigger suspicion. In each case, a common sense risk based approach must be taken, and the greater the number of risk factors present, then the more due diligence will need to be undertaken. Chances are that if it smells rotten it probably is.

Yorkshire Building Society Solicitors Panel Alert

Various changes took place last Friday to the CML Handbook Part 2 requirements. To access the change click here. The main changes relate to what documents you should send the lender on completion and also a slight but important change to calculating the acceptable minimum lease term.

Sunday, 10 February 2013

The Green Deal ; Yet another example of the 'complexity creep' in conveyancing

On Monday 28th January the government formally launched the Green Deal scheme following its inception in October 2012. The intention behind the legislation is to improve the energy efficiency of the property stock in the UK. I have been asked by a number of conveyancing solicitors about what additional responsibilities there are for conveyancers during the process of selling or buying a property which has been subject to a Green Deal.

By way of background, the Green Deal enables homeowners and others to take out long-term loans to fund energy-efficient home improvement projects such as the installation of loft insulation, solar panels and new boilers. The loan is paid back through the electricity bills for a period of up to 25 years.

Under the scheme approved Energy Assessors will attend the property to assess its energy efficiency and make recommendations on potential improvements, such recommendations taking into account not only the design and age of the property but also the householders’ energy use habits. The homeowner will then be in a position to provide the report to an approved Green Deal Provider who will implement the recommendations and install the appropriate energy-saving measures. The 'golden rule'  is that the loan repayments should be lower than the anticipated savings in energy costs. However, this may not always be the case because different occupiers will use different amounts of fuel.

The debt is effectively attached to the electricity supply of the property. It is not a legal charge (it is an unsecured loan regulated under the Consumer Credit Act) and it is not the personal obligation of the person commissioning the works. If they move the 'benefits' and the debt stay with the property.

The main impact for conveyancing solicitors will arise on the transfer and/or charge of a property when the property has installations that have been financed under the scheme.

Terms and Conditions  and Estimates

Consider changing your Terms and Conditions to cater for the Green Deal. First, make it clear that the obligation rests the seller to disclose whether a Green Deal as applicable to the property. Set out the legal obligations of disclose and the implications of failure. If you have an instruction form add a question as to whether the property is subject to a Green Deal.  As the conveyancing will inevitably be more complex where there is a Green Deal do consider whether you want to reserve the right to charge additional fees. If you have an on-line fee calculator perhaps you can ask the appropriate question and therefore disclose your additional fee

Acting for Sellers

Sellers of properties subject to the Green Deal will be under a duty to disclose the scheme to prospective buyers at least seven days before exchange of contracts and to secure the acknowledgement of the buyer or tenant that they will be bound by the plan.The responsibility for communicating that information rests with the seller or landlord. Agents can fulfil that role; however they are not liable for the responsibility. The buyer will then be required to formally acknowledge that the Deal has been disclosed to them and that they will be bound by the terms of the agreement made between the Buyer and the Green Deal Provider.

If the seller (being the original bill payer) fails to give necessary disclosure they may have to repay the value of the loan (and interest).  The purchaser or tenant (if they have not received the necessary disclosure) may challenge the obligation to repay the loan.  They must do so within 90 days of notification by the energy provider that the Green Deal affects the property.  This action by the purchaser would leave the debt with the outgoing seller.

Acting for the Buyer

Precedent documents will need to be amended to reflect the changes, in particular the Contract for Sale, Reports on Title, Lease and License, and advice will need to be provided to buyers in understanding the terms of the Green Deal as part of the usual title investigations.

Whilst it important to make sure that the investigative work about any Green Deal is covered I would include a paragraph (as a fallback position) within the ROT making sure that the buyer gets in touch with you if they receive any bill one they move in which indicates a Green Deal being in place - point to the fact that there is a 90 day limitation period to push the debt back to the seller. I would not consider it overkill in your letter confirming completion to reiterate the necessity to check the utility bills and reinforcing the 90 day limitation period (obviously such paragraphs should be deleted if the where the Green Deal has been identified as part of the conveyancing process).

The ROT should also set out the disclosure obligations should the buyer decide to let out the property.

As a buyer’s conveyancer you need to ensure that your client understands the terms of the agreement, but you will also want confirmation that all appropriate building regulations and, in certain circumstances, planning obligations have been fulfilled by the scheme provider as required under the Deal. For certain properties restrictive covenant consent or the a license for alteration from a landlord or freeholder may also have been needed. Please also note that if part of the work involves a lease of the roof for solar panels there will be CML handbook requirements to consider.

If you would like to see precedent wording to go in your Terms and Conditions, Reports, Sale Contract and other appropriate documents please contact me.

Thursday, 7 February 2013

Santander Solicitor Panel - how does a conveyancer join?

As with most lenders Santander will only instruct conveyancers or firms that are on their conveyancing panels. The CML does not maintain a central conveyancing panel for lenders. If you want to be admitted onto a Santander's conveyancing panel you must write to Santander directly at Carlton Park, Narborough, Leicester, LE19 0AL

How long does a conveyancing client have to register a complaint with the Legal Ombudsman?

There are two relevant time limits; The Legal Ombudsman will accept complaints up to six years from the date of act/omission, or three years from when the complainant should have known about the complaint. However, this new limit will be introduced gradually so at the moment the problem must have happened on or after 6 October 2010. Or, if the problem happened earlier than that, the client must not have been aware of it before 6 October 2010.

Most Popular P2 Changes to the CML Handbook for 2012

num changessectionnamequestion
636.7.1What new home warranty schemes are acceptable to the lender?
585.20.1Does the lender require me to report to them where the lease does not meet the CML minimum requirements for leases of roof space for solar PV panels?
555.20.3Does the lender have additional requirements relating to leases of roof space for solar PV panels, and if so, what are they?
445.2.1If different from 1.11, the contact point if the seller is not the owner or registered proprietor and is not listed in the exceptions above:
1814.2.1Where should the title deeds and documents be sent?
155.8.5 Does the lender accept security which comprises one of two leasehold flats in a building where the borrower also owns the freehold reversion of the other flat and the other leaseholder owns the freehold reversion in the borrower's flat? If so, are there any specific requirements?
1416.1.1If different from 1.11, contact point for title documents:
13 10.7On a delayed completion, when and how is advance to be returned?
1314.1.5Does the lender need to be sent the original mortgage deed?
136.7.4Will the lender proceed if the property does not have the benefit of a new home warranty scheme?
126.4.4Does the lender require me to report incentives?
1014.2.2Which documents must I send after completion?
1017.2.1bDoes the lender send the discharge via a DS 1 form or direct with the Land Registry?
1016.3.2If different from 1.11, contact point for finding out the debt amount:
916.3.4 Does the lender need to be sent the transfer of equity?
916.3.7aIf different from 1.11, contact point for obtaining execution of transfer equity:
81.11aContact point for standard documents.
73.1.4 Does the lender require notification of the name and address of the solicitors firm or licensed conveyancers firm acting for the seller?
75.4.6 Does the lender accept search insurance and, if yes, what are the lender's specific requirements?
76.2.1If different from 1.11, contact if any discrepancies in property's description:

Monday, 4 February 2013

Why conveyancers should join e-DRS

The Land Registry has recently introduced a new registration system allowing conveyancing lawyers to submit applications and documents electronically.There are a number of benefits our conveyancers can expect from e-DRS such as:

  • The e-submission of applications and the removal of postal delivery will reduce average end-to-end processing time
  •  All applications will be received and responded to electronically, creating an audit trail. This will provide a useful tool in the prevention of fraud.
  • The e-service will support your efforts to slim down on your bulky paper files. It will also provide an opportunity to reduce costs such as DX, postal and manual processing
As well as the above benefits, e-DRS will also provides a number of services that will make the application process easier.

  • e-DRS builds on the e-lodgement and e-delivery application types already available through the Land Registry.
  • It enables you to electronically lodge a suite of applications that are currently submitted through paper–based systems.
  • The service will allow substantive registration applications and transaction types (form AP1 and scanned versions of accompanying documents) to be submitted by a signed-up organization with legally qualified supervision.
  • Applications will be registered by Land Registry and the completed application returned to electronically.
As mentioned in previous blogs please note that lenders may have specific instruction set out in their CML Handbook requirements when it comes to e-DRS.

Which lenders changed their CML Handbook P2 the most in 2012?

The table below shows "most change events" rather than "most sections changed". 

# change eventslenderName
10HSBC Bank plc
9The Royal Bank of Scotland plc
8National Westminster Bank plc
6Virgin Money plc
6The Royal Bank of Scotland plc One Account
6Darlington Building Society
6The Royal Bank of Scotland plc First Active
6The Royal Bank of Scotland plc Direct Line Mortgages
6The Royal Bank of Scotland plc Virgin One
6The Royal Bank of Scotland plc Natwest One Account
6The Royal Bank of Scotland plc Direct Line One
5Bank of Scotland Beginning A
5Lloyds TSB Bank plc-C&G accounts beginning 500000
5Principality Building Society
5Lloyds TSB Bank plc-non-C&G mortgages
5Santander UK plc for Alliance & Leicester mortgages only
4Lloyds TSB Bank plc-C&G branded roll numbers pre-fixed 20/
4Lloyds TSB Scotland plc

Halifax Solicitors Panel - Requirements for e-Document Registration

Solicitors on the Halifax Solicitors Panel should take note of an important change concerning sending the lender the original mortgage deed post completion of registration of their charge.  Ordinarily Halifax's Part 2 retirements dictate that the Land Registry should retain the original deeds. As of today I have been notified via LENDERmonitor of the following Halifax addition :  'where you make your application for registration through the e-Document Registration Service, HMLR will not accept any original deeds; accordingly, you should forward the original signed mortgage deed to us together with the title deeds in any such cases, clearly indicating that you have done so on the Deeds Schedule'.

Friday, 1 February 2013

Are you a conveyancing solicitor facing a claim by a lender ?

If so consider the following four points after notifying your insurers :

  • Was the valuation report was negligent? If so, and the valuer has insurance or assets, bring contribution proceedings against the valuer.
  • Is this a no transaction case or a reduced transaction case? Lenders frequently try to argue the former without any proper regard to the factual matrix.
  • It is always worth remembering to check which practice rule or conduct rule applies and which version of the Lender’s Handbook is relevant. To access the relevant Part 2s make use of the LENDERmonitor Litigation Service. The same point can be made in respect of the Conveyancing Handbook, Land Registry leaflets and practice notes.
  • In a claim for negligence or breach of contract or even breach of trust consider if there is a possibility of arguing contributory negligence on the part of the lender. Check if there is an unduly high loan to value? Has the lender made any enquiries about the purchaser’s creditworthiness? Was this a self-certified mortgage? Has the lender followed its own lending criteria?