In recent years a number of solicitors have been found guilty of professional misconduct after breaching the six month rule requiring conveyancing solicitors, to report any transactions in which the property being purchased/remortgaged has been owned by the owner or registered proprietor for fewer than six months.
The rule, contained in the Council of Mortgage Lenders’ Handbook, is primarily designed to combat the potential for vendors to inflate the value of a property and commit fraud. The lenders’ instructions are clear – you must notify the lender under the ‘six month’ rule of that fact (subject to the stated exceptions)
Yet lenders and PII underwriters often me that non-compliance with disclosure under the 6 month rule is still all too frequent.
The recent case of E.Surv Ltd v Goldsmith Williams Solicitors [2014] EWHC 1104 serves as another reminder that a lawyer must perform the express obligations under the CML Handbook by undertaking a Land Registry search and by reading the office copies so obtained as well as by reading a copy of the valuation report provided to him. The law firm admitted breach of an express obligation to inform the lender that the borrower had been the registered proprietor for less than 6 months. Goldsmith are not the first and will certainly not be the last to fall foul of this obligation.
The number of claims relating to the failure to comply with the 6 month rule may be set to increase as the lenders start extending their requirements. In the last 24 hours Paratus AMC Ltd changed their CML Part 2 requirements to:
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