Thursday, 23 May 2013

Santander : Ahead of the Q

Santander have became the first bank to add the Q Policy to the acceptable warranty schemes listed in it’s Part 2s of the CML Handbook.

The Q Policy is no ordinary warranty scheme. In fact it is a an alternative to the traditional 10-year warranty scheme. In essence it is  New Build property insurance for latent defects. More information of the Q Policy can be found here.

There is still a quality assurance element to the scheme as before issuing the policy as the company guarantees developers and builders  that they will provide a minimum of eight site visits during the build phase.

Key features for the The Q Policy for Residential Properties include :

  • Insurance Product offering Lifetime Property Cover
  • 6-month Developer Liability Period
  • Single point of recovery for Policyholders - they deal with Q direct from Day One of cover
  • Minimum of 8 inspections per plot
  • Loss of Deposit Cover available
  • Snagging Service available
  • Cover automatically included for loss of rent or alternative accommodation (including pets), additional costs, removal of debris, removal & storage of property & professional fees
  • Structural extensions & modifications can be included in cover

Although Santander may be the first to change it’s Part 2s to allow for the the Q Policy, other lenders are likely to follow their lead so please do track the changes via LENDERmonitor.

Tuesday, 21 May 2013

The problem with the race to be the cheapest conveyancer is that you might win.

As the big name brands barge their way into the legal sector they will seek to squeeze every penny out of every client. Can the smaller firms compete? Of course they can as long as they don't compete on price alone.

Some firms in an effort to compete can extort workers to show up and work harder for less, in order to underbid a competitor. You might make a few more bucks for now, but not for long and not with pride. Another firm or conveyancing broker will always find a way to be cheaper or more brutal than you.

When I was completing my articles (yes I am showing my age as it was pre-’training contracts’) the senior partner would tell me every so often ‘push up you prices...don't be scared’. It was wise advice and regrettably not always adhered to by me. What the senior partner was telling me back then was that the race to the top makes more sense. The race to the top is focused on quality and respect and dignity and guts and innovation and sustainability and yes, generosity when it might be easier to be selfish. It's also risky, filled with difficult technical and emotional hurdles, and requires patience and effort and insight. The race to the top is the long-term path with the best outcome.

It’s so easy to forget whilst you fight for survival that clients actually appreciate a lawyer who cares about them. Why not be different to the supermarket law firms with their bitter cash register jockeys? A smiling face, a social chat, a don't-worry-about-the-pennies sort of interaction.

There is a side benefit when you win the race to the top. You end up with a healthy, motivated lawyers focused on a quality service. The result is increased profits,market share and a community of clients that are glad you're there.

Have I been watching too much Mary Portas? 

Monday, 20 May 2013

A post completion nightmare - difficulties with a restriction

It is not unusual in a dealing with leasehold transaction to be faced with a restriction on the title in favor of a management company.

Many leases for new developments in the 80s and 90’s imposed obligations on a management company formed by the residents of to ensure that responsibility for the upkeep and management of the block. More often than not this resulted in a restriction on the leasehold titles along the following lines:

“RESTRICTION: No disposition of the registered estate (other than a charge) by the proprietor of the registered estate is to be registered without a certificate signed on behalf of ABC Management Company of [address] by a director, its secretary or its conveyancer that the provisions of clause 5 of the Lease dated [ ] 1995 referred to in the charges register have been complied with.”

Hundreds of thousands of titles (including freehold - where there is a management estate) have a similar restriction.

The pressure to supply lenders with evidence of title registration  as soon as possible after drawdown of funds is increasing. I spoke with the mortgage fraud team of a major lender recently and was surprised to be advised that firms start going on their radar as a potential ‘problem firms’ if the lender has not received the TID within 4 weeks of completion. And yet most lawyers have to spend weeks chasing the management company for the release of the restriction which prevents any transfer by the proprietors of the registered leasehold titles in the block, from being registered unless the appropriate certificate by the management company is supplied. Evidence other than a certificate will not be accepted as it places an unreasonable burden on the registrar to decide if it complies with clause referred to in the restriction .

So what do you do if you are simply banging your head against the proverbial brick wall when it comes to  obtaining a certificate from the management company?

If, despite your best efforts, the certificate is still not forthcoming, either from the management company or its lawyers but you can show that there is no reason why the transfer should not proceed, the registrar may make an order disapplying the restriction to enable the transfer to be registered. The transfer (and any new charge) can then be registered.

An application to disapply a restriction must be made in form RX2. Evidence of the efforts made to comply with the restriction must accompany the application. If the registrar decides to make an order he will also make an entry in the register noting the terms of the order along the following lines: along the following lines:
“NOTE:- By an order dated [ ] made under section 41(2) of the Land Registration Act 2002 the restriction set out above was disapplied in relation to any application to register a Transfer of the registered estate to [ ] provided the application to register the Transfer is made within three months of the date of the order and that the application is in due course completed by registration.”

Please note that if you are applying to disapply and you are also acting for a lender don't forget to keep the lender informed as to what you are doing. 

Sunday, 12 May 2013

Leasehold conveyancing - When are service charge costs incurred?

Earlier this month Court of Appeal handed down its judgment in OM Property Management Limited v Burr ([2013] EWCA Civ 479) on an appeal from a decision of the Upper Tribunal (Lands Chamber) dated 26th January 2012.

At the heart of the appeal was the consideration as at what point in time service charge costs are incurred under Section 20B of the Landlord and Tenant Act 1985.

Section 20B of the said Act provides that service charges are not recoverable if the landlord does not demand payment, or notify the leaseholder that a payment will be due, within 18 months of the service charge costs being incurred.

Mr Burr owned a flat on the Royal Eastwood Park in Redhill. Royal Eastwood Park is a substantial estate, with communal facilities which include a leisure center and swimming pool, the latter heated by gas. OM Property Management Ltd, the management company, recovered the cost of the gas through the service charge.

When OM began managing the estate in April 2001, the developer told it that the gas for heating the pool was supplied by EDF Energy. Gas bills were duly received from EDF and paid. However, in November 2007, Total Gas and Power informed OM that it, not EDF, had been supplying the gas to the development. Worse, a gas meter had been misread and EDF had been undercharging. Total demanded the balance, which amounted to £135,337.28. This sum was later reduced to £100,289.28.

Proceedings were issued against Mr Burr in the county court and transferred to the Leasehold Valuation Tribunal (LVT). The LVT took the view that the costs were “incurred “when the gas was supplied and as the demand for payment was made more than 18 months after this date the charge was not recoverable from Mr Burr. OM appealed to the Upper Tribunal (Lands Chamber).

The Upper Tribunal found in favour of OM. In their opinion costs were not incurred when the gas was supplied but on the presentation of an invoice or on payment.

The Upper Tribunal made clear that the question of when costs were incurred depends on the facts of the particular case. For example where payment of an invoice had been delayed the question as to when the cost was actually incurred might be different depending on the circumstances. It might be relevant to decide whether payment had been delayed as there was a justified dispute over the amount of the invoice or whether delay was a mere evasion or device of some kind.

As the invoice had been sent to OM in November 2007 and the demand sent to Mr Burr in April 2008 the requirements of Section 20B had been met and the service charge was payable.
The leaseholder appealed to the Court of Appeal who upheld the decision of the Upper Tribunal.
The court accepted that as a matter of ordinary language a liability must crystallise before it becomes a cost and that costs are incurred only when they are paid (or when an invoice or other demand for payment is submitted by the supplier or service provider) and not when services are provided or supplies are made.

Thursday, 9 May 2013

Marketing conveyancing : saying it backwards

When it comes to marketing conveyancing services to the public the same old blurb is rolled out over and over again about about how moving home is one of the most stressful events and how choosing your firm can make all the difference. Other common messages include how cheap and fast your firm is and that clients need not attend your offices..

If what you're saying is obvious, it's entirely possible that no one is going to eagerly keep reading. If the website copy you've written is merely posturing or bragging, better to not say it at all.
Consider the alternative. Say the opposite. That your conveyancing isn't right for everyone. That your service might be overpriced. That you don't want clients who can't come in and see you.

And then tell them why. Many potential clients would love to know how you're going to wriggle out of that. And along the way, if your story is a good one, they might even give your firm a go.

Tuesday, 7 May 2013

What Harvard has to say about making a conveyancing practice truly great

If only we knew the secret of success for creating a great business. Almost no one provides scientifically credible answers to every business leader’s basic questions about superior performance: Which companies are worth studying? What sets them apart? How can we follow their examples?
Dont read on if you are fixated in your belief that solicitors are a profession rather than a business.
Harvard Business School, frustrated by the lack of rigorous research, recently undertook a statistical study of thousands of companies, and eventually identified several hundred among them that have done well enough for a long enough period of time to qualify as truly exceptional. This pattern matching exercise revealed something startling: The many and diverse choices that made certain companies great were consistent with just three seemingly elementary rules:
1. Better before cheaper—in other words, compete on differentiators other than price.
2. Revenue before cost—that is, prioritize increasing revenue over reducing costs.
3. There are no other rules—so change anything you must to follow Rules 1 and 2.
Upon reading this it hit a nerve as over the last 20 years I have witness law firms compete increasingly for conveyancing work by lowering their price. Competing on price is a race to the bottom. There will always be providers (whether they be brokers or firms) wanting to undercut you, albeit that the service offered may well be inferior to your offering and standards.