About Conveyancing

Are you sure that you are insured ?

2012-01-18T00:20:00.000-08:00

Having recently recommend Travelers as preferred insurers,the Law Society and the Solicitors Regulation Authority are to take on the insurer over its aggregating of fraud claims and subsequent capping of a solicitors’ professional indemnity insurance policy. Such a move by Travelers has significant implications on the industry.

According to on-line insurance magazine The Post the original claim arose out of the activities of a conveyancing partner at a long-established Berkshire solicitors firm, Willmett Solicitors. Before resignation the partner had been, for some years, involved in a number of allegedly fraudulent conveyancing transactions, which SRA and Law Society claims unbeknown to other partners. Once the losses came to light as a result of the financial crisis numerous claims were brought against Willmett Solicitors and its partners by various lenders, including the claimant Godiva.

Willmett Solicitors has subsequently gone into liquidation and has no funds to meet the claims. Travelers assert that all activities arising from the individual partner's involvement in alleged frauds can be aggregated as ‘one claim' and therefore refuse to pay further sums beyond the £2m. In consequence, some of the innocent partners at Willmett have already been made bankrupt and the remainder are facing bankruptcy.

Law Society chief executive, Desmond Hudson, pictured, said: "It was vital that we, as well as the SRA, were able to intervene in this case. The insurer's interpretation of the aggregation clause, which led them to cap their insurance indemnity, could have widespread significance for the public as it will affect many claimants' right of redress.
"It is also of great concern to the profession in terms of their PII coverage and hence to the Society to ascertain how aggregation applies in a case such as this. Our members need to have confidence in their PII cover, and this could cast doubt on what they and their clients are protected against."

Did she really just say that ?

2012-01-11T23:57:00.000-08:00

Following on from HSBC’s controversial decision to restrict their conveyancing panel just 43 firms (down from approximately 4000) the bank may have added fuel to the fire by certain assertions about the quality of the restricted panel.

The Guardian Newspaper yesterday quoted HSBC spokeswoman Suman Hughes who said that while previously it "couldn't guarantee the consistency" of conveyancing firms, using the panel "guarantees a better service".

I am no litigator but that phrase “guarantees a better services” jumps out to me as a rather bold (and potentially dangerous statement)
1) Could that statement open up HSBC to a misrepresentation claim in the event that a customer receives poor legal advice ?
2) Does the reference to “better service” create a higher a duty of care on the part of their lawyers?

Only time will tell.

Why conveyancers need to know parish of Hebden Royd

2012-01-11T09:58:00.000-08:00

Hebden Royd is a civil parish with a town council in the Metropolitan Borough of Calderdale in West Yorkshire, England. According to the 2001 census it had a population of around 9,000.It includes Hebden Bridge, Mytholmroyd and Cragg Vale.

The reason why this parish is relevant to conveyancers is because Nationwide has identified this as the only area in the UK where they will lend on freehold flats. In a change to Section 5.6.1b of Nationwide’s Part 2 of the Handbook on the 10th January, the lender added properties in the parish as an exception to their general decision not to lend on freehold flats.

In answer to the question “Does the lender lend on freehold flats?” The new Section 5.6.1b now reads:

Generally no Exceptions-
i) see 5.7.1
ii) coach house flats - where there is one flat in a block built above garages and/or an access way there is no need to report details to us.
If there is an element of flying freehold - the requirements in part 1 paragraphs 5.6.2 must be adhered to.
Insurance - where the purchaser arranges insurance on more than one garage or garages owned/used by other parties, please ensure that the insurance company is aware of the arrangements.
iii) for properties in the parish of Hebden Royd see 5.6.1a above.

LENDERmonitor provides conveyancers with a subscription service that sends out email alerts advising when a lender makes a change to their policy. The recipient is then able to click through from the email to see the change in more detail on the LENDERmonitor website.

Increasing water pressure on Lenders

2012-01-11T03:14:00.000-08:00

It looks as though Water Industry Property Information Network (WIPIN), the trade association representing the 10 Water and Sewerage companies of England and Wales who provide Drainage and Water Searches, are finally reaping the rewards for lobbying lenders on the issue of personal water and drainage searches.

Personal water and drainage searches exist in the marketplace as an alternative to the official Law Society approved CON29 Drainage and Water Enquiry, the standardised and underwritten product provided by the water companies. WIPIN warn of the potential for misunderstanding by conveyancers that personal searches are comparable substitutions for the CON29DW. The organisation posits that personal searches do not contain the same robust guarantees as the CON29DW, exposing the lender and homebuyer to unnecessary risk.

LENDERmonitor has recently notified hundreds of conveyancers that subscribe to their service of changes to Section 5.3.5 of the P2 of the CML Handbook for Yorkshire Bank Home Loans Ltd and Clydesdale Bank Plc.

The answer to the afore mentioned section has changed from :

Yes, provided the firm has adequate professional indemnity insurance. This will be treated as being the case if the firm is registered with the Council of Property search Organisations and the firm states that it complies with the Code of Practice for Compilers or Search retailers as the case may be.

To

For Local authority searches, yes, provided the firm has adequate professional indemnity insurance. This will be treated as being the case if the firm is registered with the Council of Property search Organisations and the firm states that it complies with the Code of Practice for Compilers or Search retailers as the case may be.

We do not accept personal searches in respect of other statutory searches or other utility undertakings.

Significant case coud hinder conveyancers on sub prime negligence claims

2012-01-11T01:02:00.000-08:00

In a recent article entitled “Significant case helps conveyancers on sub prime negligence claims” Alexia Ward argues that the decision in the case of Paratus AMC Ltd & RMAC 2005 NS1 Plc v Countrywide Surveyors Ltd is good news for solicitors. I beg to differ.

The facts of the case are well explained in the article by Alexia. In short, the court decided against the lender in assessing the retrospective market valuation of a property a valuation method which relied upon comparable sales evidence obtained from the Land Registry for the period immediately prior to the historical valuation was to be preferred to one which primarily relied upon the application of a price per square metre to the floor area of the property.

The court’s decision itself is uncontroversial as the defendant was found not to have negligently overvalued the property; what is of interest are the judge’s ruling on the recoverability of the loss in light of the consequences of loan’s securitisation; and his comments on both the quality of GMAC's underwriting for the purposes of contributory negligence and on the market approach adopted by sub-prime lenders at the height of the property boom.

Alexia Ward comments “ The obiter dicta raised in this case suggests that courts will hold lenders to account for careless lending, even if valuations are found to be negligent. If large percentages of any damages are taken away by the courts for contributory negligence, then it may well not be financially worth taking these cases to court. More consideration to the circumstances in which the loans were approved will have to be given, before lenders decide to pursue claims against surveyors through the courts”

I would stress that this is a first instance decision and the judge's comments on contributory negligence were either fact-specific to the case or made obiter dicta, so they are not binding on any successive cases. It is also worth pointing out that the judge's view was that a “sub-prime lender” should only be measured against the standard of care expected of a lender in that market and that a LTV of 90% was not in itself negligent.

The conclusion Alexia reaches is that this case will result in “..fewer lenders making negligence claims against professionals after the issue of contributory negligence is raised”.

I tend to take the opposite view and would suggest that if one did have a persecution complex (something that conveyancers are entitled to have in the current climate) then one could argue that this decision will result in more claims against conveynacers.

If the lending industry’s confidence is knocked by this decision then instead of pursuing surveyors for their losses they will turn their attention to conveyancers. It is fascinating that two of the more recent reported cases against solicitors indicate that in relying on a breach of the CML Handbook and a claim for Breach of Trust, issues of contributory negligence disappear. Indeed, in the case of Mortgage Express v Iqbal Hafeez Solicitors (Ch) the lawyers sought to avoid a claim for breach of trust by arguing the firm was entitled to relief under s.61 of the Trustee Act which could mean that could reduce the damages as a result of the contributory negligence on the part of the lender. In this case it was held that it was not appropriate to make any deduction for contributory negligence.

Law Society spin Drs kick into gear in response to HSBC panel pruning

2012-01-08T06:13:00.000-08:00

Last Friday HSBC launched the latest attack in war against the majority of conveyancing solicitors by announcing a limited a panel of 43 firms to handle its mortgage work, which customers will not be obliged to use as well – but it will be much cheaper if they do.

The Law Society have used the point that all the solicitors on the panel are members of the Law Society’s Conveyancing Quality Scheme to spin the news in their favour. The Law Society Gazette headline reads “Quality hallmark for HSBC’s conveyancing mini-panel.”

The fact remains though that if HSBC attached any real value to CQS surely they would limited their panel to all CQS firms. This news could result in significant drop off in firms reapplying for accreditation.

The HSBC conveyancing panel is not closed and others can apply to join. HSBC has 5% of the UK’s mortgage market. It introduced the new panel in response to the Financial Service Authority’s recommendations for tackling mortgage fraud.

Sole practitioners , who might be forgiven for having a persecution complex, are particularly likely to be hit by this news. It will be interesting to find out how many of the 43 firms are sole practitioners. I suspect that it is round number.

HSBC publishes new Part 2 requirements on the CML website

2012-01-06T01:37:00.000-08:00

HSBC Bank PLC have, within the last 24 hours published their CML Handbook Part 2 requirements on-line for the first time. Up until now,HSBC had issued their blue booklet of conveyancer requirements direct to lawyers with their mortgage offers.

Up until now, if you were searching on-line for the CML handbook Part 2s for HSBC you would be faced with the wording ‘This lender does not subscribe to the CML Lenders' Handbook. Please contact the lender direct’. This lender has now given specific answers to 73 sections. As of yesterday, conveyancers should be checking the HSBC Part 2’s on-line before submitting the COTs”

The new Part 2s vary the previous conditions in the booklet. A change of particular note is the fact that personal searches are now acceptable.

The minimum lease terms requirement looks very generous and I would expect this to be changed within the next 12 months. Changes to HSBC’s P2 requirements as well as other lender’s requirements are tracked by LENDERmonitor.

Why do some firms not embrace risk managment?

2012-01-05T00:30:00.000-08:00

I am in the business of risk management and talk to lots of lawyers about the changing landscape of conveyancing and risk. Some firms embrace risk management and some don’t but all see the need for it.

I have asked myself the question: Why do some firms, even when they recognise the need to make changes, take no action. Is it simply lethargy? Perhaps the answer is even simpler. Perhaps they simply don't want to manage their risk.

Perhaps some law firms are afraid that once they start focusing on it would mean having to be ware of what is under the carpet.

Until a lawyer quiets the resistance and commits to actually putting in place processes to manage their risk, all the SRA practice notes in the world and notes furiously taken down at CPD seminars aren't going to make a real difference.

You don't need a new risk management plan for 2012. You need a commitment.

A boost for Legal Translation Services

2012-01-04T23:47:00.000-08:00

Those that regard the SRA as patronising have had fuel added to the fire by the recent press release from the SRA entitled “Take care with vulnerable clients, SRA urges”

The SRA main area of concern seems to focused on “…. the risks of the most vulnerable members of society not receiving the right service. Providing appropriate client care that meets the particular needs of a client is an important requirement in the SRA’s outcomes-focused regulation regime through the new principles and code of conduct.”

Executive director Samantha Barrass gave an example: “If a firm specialises in family law and has a client base where some do not speak English particularly well, it is unlikely that simply putting a lot of information into a long client-care letter will be sufficient.
“Yet there are firms who have told me that they do just that! They do it because it is what they have always done, they thought it was compliant with the old code, and are assuming it will continue to be compliant.
Directing the firm to Google Translate will not work. So the alternative is to employ the services of legal translators.

I have seen a number if commentators hold out this release as an example of the ‘old’ headmasterly SRA resurfacing. I think that such a response is over cynical. If you are a law firm in an area where a lot of your potential clients are not fluent in English it is surely to your advantage to have Terms that are readily understood. There is no harm done. At the very least it may actually win you some instructions.

Renewal time for Conveyancing Quality Scheme

2012-01-03T00:48:00.000-08:00

A year has now passed since the launch of the Law Society’s Conveyancing Quality Scheme (CQS). Just over 1000 accredited conveyancing firms across England & Wales with more in the pipeline. But has the scheme has been success for the profession in 2011?

The Law society have stated “ We have already put in place plans for CQS in 2012 and expect it to be equally, if not more successful next year”. But what constitutes success? If success is based on the number of lenders who state that being a member of CQS will protect your membership on their panel then CQS has had no success at all.

2012 is likely to see lenders further focusing on their relationships with law firms especially in light of the recent FSA guidance.

The emergence of "dumbed-down" lawyers in a post ABS world

2011-04-15T01:20:00.000-07:00

David Bott,the new president of the Association of Personal Injury Lawyers (APIL) yesterday warned of the emergence of a new breed of 'dumbed-down, legal-lite' lawyer following the introduction of alternative business structures.

Addressing the Associations annual conference, David Bott predicted that 'potentially massive' new entrants to the personal injury market will be 'very efficient', but 'process-driven'.

‘My view is that the new breed is likely to be dumbed down,' said Bott.

Now………..I will leave to your imagination to work out why the CLC or Law Society have not made similar comments about conveyancing. Answers on a postcard please.

Professional services showing signs of financial distress

2011-04-13T05:55:00.000-07:00

Corporate recovery experts Begbies Traynor have released their Red Flag Alert, which monitors a series of indicators of company cash difficulties. Professional services is area hard hit, seeing a 61% hike in firms in trouble.

Begbies Traynor Group boss Ric Traynor is quoted by the BBC as saying :
"Over 15,000 firms in the professional services sector are showing signs of significant or critical problems - partly driven by a stale property and corporate deals market - often the drivers for an active professional services community,"

Traynor said that it appeared firms which operated with a high fixed cost base were finding the current market conditions increasingly difficult "as their revenues fail to recover and the scope for further cost reductions becomes more limited".

How refreshing…………..someone using the window.

2011-04-12T10:51:00.001-07:00

I spoke to a head of a conveyancing team today who advised me that she was looking to take advantage of the slowdown in numbers of transactions by looking at how to improve processes and in particular improving their risk management.

It's a little like the break we had after the Cold War ended. The peace dividend was there, just waiting for us to repurpose our military, our military budget and our military research. We didn't. We wasted the window, wasted the money and didn't rush to fill it with the sort of top-down industrial projects (like finding a cure for deadly diseases or creating new forms of energy).

So, what are you going to do with the extra time ? Surf the web?

Nat West change P2s relating to Shared Ownership

2011-04-11T00:54:00.000-07:00

National Westminster Home Loans have just changed their version of Part 2 of the CML handbook relating to Shared Ownership.

Section 5.18.1 now reads “We do not lend on shared ownership properties. For shared equity and affordable housing you need to notify us (as detailed above in 1.11a) giving details of the proposal.”

What do conveyancers do if they have exchanged on such a property and are about to send through their COT ? For what it’s worth, I think a disclosure has to made to the Lender.

Conveyancers should make sure their Terms and Conditions cover this situation. Conveyancers should also consider, in light of the increasing number of P2 changes, to make sure the Contract for Sale is conditional upon lenders not withdrawing their mortgage offer as a result of a P2 change.

NHBC - Additional tasks for a purchaser’s conveyancer after completion of a new build property

2011-04-10T23:16:00.000-07:00

• The conveyancer should complete the Acceptance form in the Buildmark Acceptance and Offer pack. In order for NHBC to process this care should be taken to include all of the information requested on the form.
• Return the Acceptance form to NHBC - It is vitally important to return the Acceptance form to NHBC in order for the insurance certificate to be issued.
Once the cover note has been issued and the Acceptance form received NHBC will issue the insurance certificate which confirms that the ten year Buildmark cover is in place.
• Forward the NHBC documents to your client
• When you receive the insurance certificates distribute copies to your client (the original), lender (check CML Handbook to see if applicable) and keep the final copy for your files.

5 reasons why lenders will move quickly against negligent conveyancers ?

2011-04-10T09:40:00.000-07:00

If a lender has suffered losses resulting from of a breach of contract, negligence, fraud by a conveyancing solicitor it can bring a claim against the defendant. Lenders will need to act quickly for the following reasons:
1) The solicitors or Licensed conveyancer may be a limited company or LLPs who can enter into administration
2) The said firm may start up as a new phoenix company without any liabilities of the old business.
3) The claim may be out of time – the general rule is that the lender may have six years from when the cause of action accrues to bring a claim. In certain circumstances this can be extended by three years for negligence claims.
4) If a lender has a claim against a conveyancer it should notify the firm immediately. Due to changes to the ARP,if a claim is not notified to the professional’s insurers and the professional ceases trading a claim may not be covered by their insurers.
5) Insurance cover and assets can be eaten up by claims already made, so there is less money available in the pot to pay out claims.

Will leasehold conveyancing be impacted by the Peverel collapse ?

2011-04-10T07:33:00.000-07:00

The holding companies behind Britain's biggest property manager – which maintains 190,000 homes, including most McCarthy & Stone retirement properties could impact conveyancing for the following reasons:

1) If redundancies are to be made, obtaining management information could become very difficult. In recent years it can take weeks to obtain crucial management information from Peverel. The time frames involved could be dramatically affected
2) Peverel are specifically named in some leases as a management company. If they go into administration the lease will have to be carefully looked at to see if the landlord is under an obligation to take over the management company’s responsibilities.
3) Many leasehold titles contain restrictions which can only be lifted or complied with where Peverel grant an appropriate letter of consent. It is exceptionally difficult (although no impossible) to register new purchaser of a property or a mew mortgage if the appropriate form of consent is not obtained. With lenders increasingly looking at turn around times for registration of title conveyancers need to be certain that the certificate of compliance will dealt with expeditiously.

The problem of evidence-based marketing to conveyancers

2011-04-10T02:59:00.000-07:00

I have come to the conclusion that lawyers do not like evidence based marketing. It may work for scientists but not for lawyers. That's how science works. Thesis, test, evidence, conclusion. All testable and rational.

Here's the conversation that needs to happen before one invests a lot of time in evidence-based marketing in the face of sceptical lawyers: "What evidence would you need to see in order to change your mind?"

Of course, evidence isn't the only marketing tactic that is effective to conveyancers. In fact, it's often not the best tactic. What would change his mind, what would change the mind of many people resistant to evidence is a series of eager testimonials from other lawyers who have changed their minds. The best example of this is Chancel search and Chancel Insurance. When a critical mass of lawyers clearly and loudly proclaim that they've changed their minds, a ripple effect starts. First, peer pressure tries to repress these flip-flopping outliers. But if they persist in their new mindset, over time others may come along. Soon, the majority flips. In the legal world it's slow, but it happens. It’s why solicitors will eventually embrace change whether it is by joining the likes of QS or adopt new risk management tools .

TUPE regulation impact on commercial leases ?

2011-04-07T00:56:00.000-07:00

Commercial property conveyancers beware !

It may be possible for TUPE to apply to a lease termination situation. For example, a tenant single occupier of a building employs a caretaker to manage the building. If the tenant's lease is forfeited or terminated, does TUPE apply to the caretaker? If so, should an indemnity be given to the landlord in respect of any TUPE obligations he may have in relation to the caretaker?

A few conveyancing questions for you :

2011-04-07T00:43:00.000-07:00

* Arm’s length Transactions. When is it permissible to act for both parties? Do you understand the rules?
* Are you familiar with the types of instruction that may be acceptable from a lender, in compliance with R.3?
* Guidance on Conflicts and Confidentiality
* Identification issues: what is acceptable to the Lender? How are the requirements different for Licensed Conveyancers?
* What warranties are you giving to the lender in the Certificate of Title?
* Valuation issues
* What searches must be carried out and when might you exercise professional judgement?
* Building Regulations and Planning Control: essential advice for the purchaser and lender’s requirements
* Powers of Attorney: do you know what is acceptable to the lender?
* Leasehold management companies: must they be a party to the lease? What is acceptable to the Lender?
* Insolvency considerations: best practice
* Professional Consultant’s Certificates: what is acceptable?
* Road and Sewer agreements: Lender’s requirements
* Transfers of Equity
* Registration formalities. How do the BSA instructions differ from the CML part 1?
* When a lender changes their P2 or Specific Requirements

If you immediately know the answers to the above questions you probably don't need to use LENDERmonitor.

Get a Grip

2011-04-06T23:14:00.000-07:00

Every lawyer in the UK would recognise that one of the stark new realities facing Partners within law firms across the UK is a dramatic increase in the risk of significant liabilities that can affect their firms.

High profile cases against lawyers in connection with Money Laundering and other forms of fraud are a clear reminder of the potential vulnerability of law firms to the actions or mistakes of individual partners and their support staff. Yesterday’s article in the FT Adviser Fraudsters 'played musical chairs' with lawyers highlights such a case.

Don’t be fooled into thinking that the risks facing law firms are limited the problem of criminal activity.

The commoditisation of certain areas of law, especially in the field of conveyancing, has resulted in the slow but gradual extinction of qualified lawyers from residential conveyancing. The net result is poor quality work the knock on effect that negligence claims will inevitably start to emerge.

Traditionally, law firms relied on a common culture and shared sense of quality standards among their partners to address these issues. And, in a time when
firms were relatively small and when partners were "home grown," learning their craft from senior Lawyer who mentored them, the system worked well enough.
Today, the situation is far different.

To become ‘risk averse’ a Law firms now need to focus on technology to supplement the lack of technical knowledge as well as enable them to have to auditing functionality to see who within their firm is “pushing the envelope” .

Cutting out the bad apples

2011-04-05T05:55:00.000-07:00

On the 20th October 2010 Michael Coogan Director of the CML advised at the Property in Practice Conference “…. we do not yet know if CQS will meet our expectations for monitoring, supervision and auditing or that it will have an annual budget to ensure it is robust. And robust is not just record-keeping firm details – vetting – but also cutting out the bad apples – selective surgery.”

Yesterday Mr Coogan was quoted as stating “….Any conveyancing firm which wants to continue to act on behalf of lenders should expect the CQS to become an important new criterion for panel management, and expect to be asked by their clients whether their firm has been accredited.”

So here is my question: What has happened between October and today? As far as I am aware the Law Society have not as yet turned down any application. Has there been any selective surgery?

Land Registry portal e- conveyancing services

2010-09-07T07:53:00.000-07:00

The Land Registry has announced that the changes to portal Business e-services which were scheduled for 6 September, have not been released. This has been due to an unexpected electricity failure.

The much awaited changes will now be released on 13 September 2010. This includes the planned electronic delivery changes for portal Business e-conveyancing services transactions and application for Deputy Responsible Persons.

Early Completion and the CML

2010-09-07T04:22:00.000-07:00

The CML Lenders’ Handbook for England and Wales has not been changed to take into account early completion at the Land Registry.

Even though early completion may alter the order of events at the Land Registry the actual conveyancing process remains the same.

The Land Registry change offers conveyancers some protection as far as subsequent registrations are concerned and the move has accordingly been welcomed by lenders and conveyancers alike.

On the subject of the Lender's Handbook the Land Registry has stated that:-
"Completing the applications to register the transfer and new charge subject to the existing charge would not appear to affect the obligations of any party in relation to that existing charge.

Whilst early completion will not prevent the new charge taking effect as a first legal charge; it can never become a first charge until the existing charge is removed. This is so whether or not the new charge is entered in the register. The entry of the new charge under early completion simply protects the priority of that new charge as against any other interest whose priority is not protected at the time of registration."

Early completion does not change the requirements in paragraph 14.1.1.1 of the Lender's Handbook which oblige the conveyancing solicitor to register the mortgage as a first legal charge at the Land Registry. Lenders will not regard the undertakings and duty of care as having been completed until this is achieved.

What do regulators mean by “ Risk based approach “ to regulation ?

2010-08-09T23:10:00.000-07:00

The 2010 business plan for the Council for Licensed Conveyancers reveals that the CLC will be moving closer towards implementing an outcomes and risk based approach to regulation. They further confirm that this has been on their radar since 2008.

The CLC have blamed the slow progress in this area due to limited resources but now express confidence that they have now addressed that resource challenge through the imminent
introduction of a new Management Information System and a new organisational structure.

It will be fascinating to see how a Management Information System will deal with risk unless the conveyancer inputs date into a system which could be integrated with the Land Registry. It is lamentable that the Chain Matrix was shelved as this would have proved to be the ultimate panel manager technology which would have been invaluable for the Regulators and Lenders alike.

Prevention of Property Fraud

2010-08-09T22:54:00.000-07:00

With the dramatic recent rise in mortgage fraud and property fraud cases in the UK , there is increasing need for members of the public to be better informed about what to look out for and how to avoid falling foul of a property fraud scam.

Property fraud scams can be carried out in a multitude of forms and involve a number of participants; some who don't even know they're being taken advantage of.

Participating in a scheme that requires you to provide false or misleading information to a mortgage lender is mortgage fraud and therefore a criminal offence.
There are two prominent kinds of mortgage fraud today: one involves a property fraud scam - and the other frauds are designed to squeeze money out of transactions involved when a property is exchanged between buyers - 'fraud for profit'.

An example of a Mortgage Fraud is where a Straw Buyer is used. This happens when someone is offered money to lend their identity, and are considered phoney loan applicants. They are often offered several thousand pounds for the use of their name and good credit information. Some straw buyers may not know that their name was used on a mortgage application.

Property Flipping ( not be confused with flipping conducted by MP’s ) seems to have been used to perpetrate mortgage fraud during the boom years of the property market. This involves a dishonest seller who artificially inflates the value of a property. This involves fraudulent valuations, false loan documentation and exaggerated incomes in order to secure mortgages.

New-build properties, like property flipping have been especially exposed to mortgage fraud with complete blocks of apartments being given phoney valuations so that larger mortgages can be sourced. These types of property may be bought using a false name or a shell company as the buyer. The fraudster will often fail to make mortgage payments and then disappear with the excess mortgage advance. When the mortgage company repossesses the property, they find that it is worth substantially less than expected. As a result there is currently a lack of appetite on the parts of lenders for new build properties.

Conveyancing solicitors have a duty to be on the look-out for any suspicious behaviour surrounding property sales. A conveyancing solicitor who becomes innocently involved in property fraud could be guilty of a criminal offence on the basis that he should have been aware that a fraud was being committed.

Yet another example of property fraud

2010-06-14T02:12:00.002-07:00

Property Fraud is on the risk agenda and increasingly conveyancers will be looked upon as one line of defence. I recently stumbled across a blog from a very articulate letting agent who revealed a case of property fraud which he became aware of. Properties that are let are regarded as a prime target for fraudsters.

The case in hand relates to a tenant who stole his landlord’s identity and applied to remortgage the property for over Two Hundred Thousand Pounds, then disappeared without making any repayments. The disappearing tenant ( let’s call him Mr X ) rented the property through a Letting Agency in Brighton. Mr X paid 6 months’ rent in advance together with a rent deposit. The property owner, had successfully let the property for several years after moving abroad. Shorty after taking occupation Mr X was able to successfully pose as the owner of the property.

Yet another example of property fraud

2010-06-14T02:12:00.001-07:00

Property Fraud is on the agenda and increasingly conveyancers will be looked upon as one line of defence. I recently stumbled across a blog from a very articulate letting agent who revealed a case of property fraud which he became aware of. Properties that are let are regarded as a prime target for fraudsters.

The case in hand relates to a tenant who stole his landlord’s identity and applied to remortgage the property for over Two Hundred Thousand Pounds, then disappeared without making any repayments. The disappearing tenant ( let’s call him Mr X ) rented the property through a Letting Agency in Brighton. Mr X paid 6 months’ rent in advance together with a rent deposit. The property owner, had successfully let the property for several years after moving abroad. Shorty after taking occupation Mr X was able to successfully pose as the owner of the property.

When is a first-time buyer ( FTB ) not a first-time buyer?

2010-03-24T23:47:00.000-07:00

Whist the Chancellor's plan to scrap the stamp duty below £250,000 for first-time buyers will give the housing market a new boost, the extent of the boost will be determined by the definition of “ Fist Time Borrower”.

According to HMRC in order to qualify for the stamp duty relief a buyer must not have acquired a major interest in residential property, not have acquired foreign property and the purchase must not involve a company, partnership or trustees . It is unclear whether those who have inherited property in the past would qualify.

In the case of joint purchasers both buyers have to be “ First Time Buyers”.

The rules themselves are very restrictive, very confusing ( even for conveyancing solicitors ) and will almost certainly delay the number of first-time buyers actually receiving the relief. I suspect that purchasers who define themselves as FTBs will be asked by their Conveyancing Solicitors to sign a statutory declaration confirming that they meet the Revenue’s requirements.

Conveyancers offering on line quotations should be careful about allowing buyers to define themselves as FTB’s and receive a quote stating that no stamp duty is payable.

MDA make move in commercial conveyancing

2010-03-24T04:38:00.000-07:00

Macdonald Dettwiler & Associates (MDA) have made a move in the arena of commercial conveyancing as they are about to offer a Hosted Land Referencing Solution. The new conveyancing technology will allow all interested stakeholders access to open-ended, client-driven set of data layers, overlaid on an OS map using Geographic Information System (GIS) technology to provide a shareable view of the development site.
Possible data layers may include HMLR title information, Local Authority Searches, flood, contaminated land and utility information, highways and water searches.

MDA SearchFlow are partnering with the Land Registry as an intermediary on behalf of the England & Wales legal marketplace, with a specific focus on land information for commercial property development. The first contract for the new service, already in place, will provide data intelligence for a leading UK law firm and its client for a large-scale urban redevelopment project.

MDA SearchFlow is the UK’s is a leading search information provider used by many conveyancing solicitors in the UK. The Company provides a one-stop shop for sending and receiving property searches and Home Information Pack (HIP) content for legal professionals, estate agents, and HIP providers who conduct property and other financial transactions.

Land Registry launches consultation on e-conveyancing

2010-03-22T05:19:00.000-07:00

Following the previous two consultation papers on e-conveyancing published in 2007, Land Registry has launched the third consultation on today.

The stated aim of Land Registry’s e-conveyancing programme is to make conveyancing easier for everyone, with an electronic system that makes buying and selling property less stressful for the public, conveyancing professionals and the other parties involved.

The consultation contains the Land registry’s proposals for The Land Registration (Electronic Conveyancing) Rules 2011.

These rules will introduce a proposed new electronic transfer (e-transfer),complete with electronic signatures (e-signature), and revoke the Land Registration (Electronic Conveyancing) Rules 2008, which related solely to electronic charges (e-charges). An updated version of the 2008 rules will be incorporated into these new rules so that not only “stand alone” e-charges will be possible, but also e-charges accompanying a TR1. It will be possible to combine the electronic transfer with a new e-charge so that, when also associated with an electronic discharge, conveyancing solicitors will be able to complete the formal documentation for standard transactions electronically.

Is it time for the conveyancing industry to be unionised ?

2010-03-21T07:32:00.000-07:00

How much longer can conveyancing solicitors accept being at the bottom of the legal food chain, with all the responsibility and risk involved.

Conveyancers would be forgiven for having a persecution complex having recently come under attack from insurers and lenders. Add to the mix the threat of “ “Tesco Law”. Whilst there has not been any serious suggestion that Tesco will consider launching conveyancing in the near future, it is the supermarket giant’s brand which has become the unofficial moniker for the Legal Services Act .

Most conveyancers believe that Tesco conducting conveyancing is a bad thing. Such an opinion is fine if conveyancers have market power, but they don't. The Beatles were not able to stop iTunes from changing the record business by abstaining from the platform, and there's no book publisher who can stop Amazon’s Kindle. The market waits for no one.

The alternative to embracing the changes that the Legal Services Act will bring is to sit out the game loudly. Don't just hold back your support, organize your peers or unionise conveyancing. Create a coordinated effort to stop innovation. I for one would not bet my house on your efforts, but it will certainly outperform a solo effort.

Conveyanacers Beware - Property Fraud likely to top £1b in 2010

2010-03-21T05:22:00.000-07:00

Approximately £1 billion a year is predicted by the National Fraud Association to be lost through mortgage fraud.

Since the onset of the recession, mortgage lenders have gone to greater lengths to combat fraud and protect their businesses (partly driven by their insurers). For example, with sub-prime, buy to let and self-certified mortgages proving to be the primary target of fraudsters, banks have sought to reduce the number of products available in these niches. Similarly with the economy forcing more and more lenders to reduce their costs, there has been a greater emphasis from banks for fraud prevention, detection and recovery of losses.

The Council of Mortgage Lenders (CML) has called for closer scrutiny of conveyancing solicitors firms to crack down on mortgage fraud committed by solicitors, and a comprehensive review of the way solicitors are regulated.

The CML said the principles-based approach of the SRA is not adequate to help restore lender confidence, and out of touch with the more intrusive style of regulation being championed by the Financial Services Authority.

Are the CML right ?

I would contend that the correct response is to insist that conveyancers to be prohibited from acting for both the Lender and the Borrower. There is huge potential conflicts of interest between them. This can only be provided by independent conveyancing solicitors or conveyancers .

Conveyancing Explained - The Evolution of Defective Title Insurance

2010-03-21T01:50:00.000-07:00

In today’s conveyancing market, Defective Title indemnity insurance policies are increasingly being used to enable conveyancing to proceed where the defect threatens the transaction. Title Insurance responds to the issues created by defective title in a number of ways, including

• Underwriting the legal cost of responding to a challenge over the owner/mortgagee /insured’s right to use the property
• Indemnifying the fees for rectifying a challenge including legal fees
• Covering the insured against a loss including having to give up ownership of the property or not being able to use the property in the way that they envisaged

In the past, the process of obtaining a quotation for Indemnity Insurance and subsequently arranging cover was a lengthy and complicated process for conveyancing solicitors, in the submission of complicated risk details and underwriting information. Today various companies offer online applications and quotes as well as archiving of the policy itself

Recent OFT Report on Estate Agents seems to please no one !

2010-02-26T01:47:00.000-08:00

Conveyancing Solicitors :

Conveyancing Solicitors have expressed the disappointment that the OFT did not propose the regulation of estate agents in its home buying and selling.
Commenting on the report Paul Marsh, Law Society property spokesman, said: ‘We’d have liked to see them recommend that regulation of estate agents was put in place to create a level playing field with solicitors, who are very heavily regulated.’

Strange that government deems that solicitors must be heavily regulated by independent bodies and cannot regulate themselves, despite the fact that satisfaction surveys say they do a good job.

Estate Agents :

Peter Bolton King, chief executive of the National Association of Estate Agents, added: ‘Once again the OFT has categorically failed to see that better regulation of the home buying and selling market is required… it is disappointing that the OFT has not thought it appropriate to acknowledge that a robust and appropriate level of consumer protection is needed.’

‘The NAEA would like to see a greater level of regulation to ensure that professional, qualified estate agents are not confused with agents that, all too often, fail to meet the basic professional standards we would expect from our members,’ he said.

When extending a “priority search” is not enough !

2010-02-22T04:39:00.000-08:00

One major difference between the BSA instructions, introduced last month, and the CML Handbook is additional clauses dealing with the registration of mortgages where a priority period has expired.

Clause E.30 states “If you cannot register our mortgage within the priority period afforded by your Land Registry Search made before completion you must register a unilateral notice to protect our position. Simply renewing your original Land Registry Search is not acceptable.”

Clause E.31 states:

“If registration at the Land Registry has not been completed within three months from completion you must write to us explaining the reason for the delay and keep us
regularly informed of the position until registration has been completed.”

The above BSA clauses are aimed at dealing with the problem of mortgages not being registered within priority periods: a major cause professional negligence in the field of conveyancing.

The usual situation is that a conveyancing solicitor acts for a buyer on a property purchase and applies to the Land Registry for an official search with priority, but problems further down the chain delay completion. The solicitor isn’t able to register the mortgage or transfer within the 30-day priority period, so he submits a new search application and gets a further 30 days. No problem, right? Wrong! Very Wrong …negligent in fact !!

It is a common misconception among conveyancing solicitors that priority periods can be extended – this is not the case! Whilst you can obtain a new search period, but this will not extend the original one. If a third party has made a search or lodged an application in the intervening period, that third party’s interest may have priority. Some lawyers argue that the misconception of priority periods being renewable is not helped by Land Registry officials routinely misleading solicitors by suggesting that priority periods can be ‘extended’ when this just isn’t possible. Even the new BSA instructions refer to ‘renewing’!

The Law Society has been very vocal in it’s opposition to this particular new BSA requirement describing the BSA obligation to register a unilateral notice as ‘a major headache for conveyancers’ and a ‘heavy handed approach for resolving problems with late/out of time registrations’

The big question is who is going to have to stump up the cost for this additional work.

Leeding the way in making conveyancing tougher

2010-02-11T04:31:00.001-08:00

Have any conveyancers noticed the change in conveyancing requirements for Leeds Building Society ?

Having received a notification from LENDERmonitor as to a change I thought I would share it with you as yet a further example of how lenders make conveyancing increasingly difficult and complex.

Leeds have made two changes. The first relates to monies received from third parties paying monies towards the purchase price and the second relates to building insurance. The changes are as follows :

Old : 5.9 - Contact point if borrower is not providing balance of purchase price from funds/proposing to give second charge.

New : 5.9 -If the balance of the purchase price is being paid wholly or in part by anyone other than the borrower, you must provide us with a declaration of this amount, that such an amount is not repayable and that the party providing this amount will not acquire an interest in the property. You must also ensure that clear bankruptcy searches are carried out against the borrower and all parties contributing to the balance of the purchase price.

Old : 6.13.5 - What is the maximum excess you will accept on buildings insurance policy? a £250.

New : 6.13.5 - We will accept up to a limit of £1,000 upon written receipt of the borrowers acknowledgment of their obligations. Any excess of £1,000 must be referred to the Mortgage Lending Department.

Both changes require an additional declaration to be drafted and entered into by the relevant parties. No precedent has been supplied or suggested. These changes will undoubtedly result in one of three things happening ( depending on the conveyancing firm ) :

1. The conveyancing lawyer will not realise this change of requirement and breaching their obligations to the lender
2. The conveyancer will deal with the additional work and absorb the cost
3. The cost of the additional work will be passed on to the client who will no doubt feel aggrieved in thinking that they have been overcharged ( not fully appreciating that this is a cost that could not have been anticipated by the lawyer at the point of giving out the conveyancing quote )

Barny Armey needed to enforce planning

2010-02-03T23:22:00.000-08:00

The advice by the Court of Appeal in their decision against the council in Welwyn Hatfield Council v Secretary of State for Communities and Local Government was that local planning authorities need to look carefully at the inside of buildings, not just at the exterior, when determining whether a building has been constructed and used in accordance with planning permission.

In this fascinating case, the Court of Appeal allowed a landowner's appeal and held that the landowner was entitled to a certificate of lawfulness even though landowner confirmed in his evidence to the planning inspector that he had deliberately deceived the council when applying for planning permission.

Having obtained planning permission for a hay barn, a landowner constructed a building that externally looked like a barn but which was internally fitted out as a dwelling house. The landowner and his wife lived in the building for four years before applying for a retrospective planning permission.

Is it really reasonable to expect the local authorities at a time when they are expected to cut costs to have an army of planning officers to be knocking on peoples doors to check that works comply with planning permission. Surely individuals need to take some degree of responsibility ? Am I alone in my thinking here ?

Law preventing pulling of rug from under tenants feet

2010-02-03T22:22:00.000-08:00

Last week saw the second reading, in the House of Commons, of The Mortgage Repossessions (Tennant Protection ) Bill. The proposed legislation aims to give private tenants greater protection from repossession if their landlord defaults on the property mortgage. If passed it is believed that the Bill would close a legal loophole causing problems for at least 3,000 tenants a year.

The Bill:

- Gives courts the power to suspend (for up to two months ) the repossession of a property in cases where the mortgagee had rented it out without informing the mortgage lender
- Requires the lender to give notice, at the property, of the proposed execution of the possession order.

The Bill, which has cross party support, also has the backing of the three national landlord organisations as well as the Citizens Advice Bureau, Shelter and Crisis, and is likely to become law in the next few months. The most vociferous opponent to the Bill is the CML

Market Harborough Building Society publish Conveyancing Documentation

2010-01-28T00:17:00.000-08:00

Market Harborough Building Society ( a CML Member ) have today published on their web site all of the documents that a conveyancing solicitors will require in order to progress a standard mortgage transaction with the Society .

These conveyancing documents include :

Mortgage Terms and Conditions

Schedule of Documents of Title

Building Society Agreement & Undertaking

Mortgage Deed (Draft Version)

Mortgage Deed

Certificate of Title

Borrowers' Fees for Additional Services - Fees for Additional Services

The documents listed above are only for the use of Solicitors, Licensed Conveyancers (in England & Wales) and Independent Qualified Conveyancers who have been instructed by the Market Harborough Building Society to act for the Lender.

Argie Bargie over Home Information Packs

2010-01-27T13:20:00.000-08:00

In response to a question from Conservative MP David Amess on what methodology would be used to use to evaluate the effectiveness of the Home Information Pack programme, Communities and Local Government Minister Ian Austin was involved in heated argument. The wording of the debate ( reported in Hansard ) makes interesting reading, so I thought I would share it with you :

Mr. David Amess (Southend, West) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement.

Mr. Andrew Mackay (Bracknell) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement.

Mr. David Jones (Clwyd, West) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement.

The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Ian Austin): As my right hon. Friend the Minister for Housing said in response to a written question from the hon. Member for Welwyn Hatfield (Grant Shapps), we intend to evaluate the effectiveness of HIPs by updating the HIP baseline research report, which was published in January 2007. A copy of that report is available on the DCLG website.

Mr. Amess: Whatever methodology the Department intends to use, is the Minister aware that Southend estate agents, without exception, believe that although HIPs may have been introduced with the best of intentions, in practice they have not worked out at all well and have damaged the housing market?

Mr. Austin: I do not accept that at all. Despite a difficult housing market, evidence shows that HIPs actually speed up sales. I am not sure whether there is a branch of Connells estate agency in the hon. Gentleman's constituency, but its survey of more than 37,000 transactions showed that sales with HIPs go through an average of seven days quicker.

Mr. Mackay: Why is the Minister in total denial? Nobody whatever thinks that HIPs work, and it would be sensible for the Government to knock them on the head before the election rather than have that albatross around their neck. For our part we are delighted that they are not doing so, but it is in his interests that he should.

Mr. Austin: As always, I am very grateful for the right hon. Gentleman's advice, but I can tell him that thousands of jobs and hundreds of small businesses depend on the HIP process and 13,000 people have invested thousands of pounds in training as energy assessors. The Opposition need to explain why they want to put all those jobs and businesses at risk. He needs to tell all the people in his constituency whose livelihoods depend on the process why the Opposition want to put them out of work.

Mr. David Jones: The interim results of the updated baseline research report are not due to be published until this summer at the earliest. Given that no empirical evidence is therefore available to the Government about the impact of HIPs on the current housing market, why do they not listen to bodies such as the Law Society, which has said clearly that HIPs

"add a significant layer of costs for consumers but produce no discernable benefit"?

Mr. Austin: As a result of HIPs, more than 2 million home owners now have an energy assessment and recommendations in their energy performance certificate that can help them cut their fuel bills by hundreds of pounds and reduce carbon emissions. That is just one of the many benefits of the HIP process that we have introduced. I thought that tackling climate change was one of the big priorities for the new, modern Conservative party. So much, I suppose, for voting blue to go green.

Rob Marris (Wolverhampton, South-West) (Lab): I have to tell my hon. Friend that as a member of the Law Society of England and Wales, I tend to agree with it. We have to have energy performance certificates under European Union law anyway, and we would have the jobs because of that. Does he really think that for most people, a cost of more than £500 to save an average of seven days, according to the Connells survey, is money well spent? A lot of my constituents do not.

Mr. Austin: Obviously, I am very grateful to my constituency neighbour for his intervention on this issue. He is a great man, he really is.

Conveyancing Solicitors probed by SRA over mortgage fraud

2010-01-26T17:46:00.000-08:00

According to the Financial Times today over 100 law firms suspected of mortgage fraud were investigated in 2009 as part of a crackdown on rogue solicitors resulting in increased interventions.

The figures just released by the Solicitors Regulation Authority reveals that the completed 106 investigations into firms where there was suspected misconduct in relation to mortgages or property.

Of these One Hundred and Six practices, 22 were permanently closed down. Twenty four cases have been referred to the police for investigation, and 30 cases have been referred by the SRA to the Solicitors Disciplinary Tribunal, which has the power to strike off solicitors.

The FT comments “There has been concern about rising levels of property fraud with the SRA’s own figures showing an increase in reports of suspected property fraud involving solicitors up from 85 cases in 2005 to 400 in 2009.”

In the 1980’s property fraudsters used corrupt or incompetent solicitors to help them carry out property fraud and it now seems that history is repeating itself. Mortgage fraud continued its steady rise in 2009. There were 31 cases worth £77 million in the year, compared to ten cases worth just £3.7 million in 2007 and 25 cases worth an estimated £36 million in 2008.

For the full story click here

New HIP report due in 2010

2010-01-25T23:00:00.000-08:00

Grant Shapps has asked the Secretary of State for Communities and Local Government when the 2010 report on the effectiveness of the home information packs programme will be published; by whom the report is being produced; using what methodology; and at what cost.

As reported in Hansard John Healey’s response was “ We intend to evaluate the effectiveness of HIPs by updating 'The HIP Baseline Research Report', We are currently in the process of commissioning the study through the established contract tender process, so the timing and cost have yet to be finalised. I expect the interim results could be available in summer 2010.”

The HIP Baseline Research Report was published in January 2007.

Landlord and Tenant Act 1987 and unfair service charges?

2010-01-24T15:02:00.000-08:00

In the recent case of Morgan v Fletcher & others six leasehold owners (the "leaseholders") in a block containing of eight flats (the "block") applied to the LVT to vary retrospectively vary their leases.

The leaseholders argued that the service charge clauses in the leases were " not satisfactory" under section 35 of the Landlord and Tenant Act 1987 (LTA 1987). At the time of their application the total of the service charge proportions of all the leases amounted to 116% of the landlord's expenditure.

The landlord then went to vary the service charge provisions for the other two leasehold flats in the building, reducing the total service charge contributions for the building to 100% of the landlord's expenditure.

The LVT( rather logically ) adjusted the leases of the leaseholders to make the service charge contributions proportionate.

The freeholder appealed. The court allowed the appeal. It held that section 35 of the LTA 1987 was not intended to deal with unfairly disproportionate service charge provisions. It was only intended to deal with surplus contributions or a shortfall and not situations where the contribution amounted to 100% of the landlord's expenditure albeit the contribution proportions were unfair.

Even though the court the court expressed sympathy with the leaseholders, it could not retrospectively adjust their leases to rectify the unfair service charge since their circumstances operated outside the intention of the legislation. Accordingly the court was unable to interfere in the contractual freedom of the parties.

Conveyancers would do well to learn of of the difficulties when drafting fair service charge provisions, particularly where the individual flats are of disproportionate proportions.

New Chair announced by the Council for Licensed Conveyancers

2010-01-22T01:08:00.000-08:00

The Council for Licensed Conveyancers ( CLC ) has this month announced the appointment of Anna Bradley as the new Chair of the CLC following a selection process overseen by the Appointments Commission. Ms Bradley’s appointment, will commence on 1 May 2010 for a period of four years.

Victor Olowe, CLC Chief Executive, said: “I am very pleased that Anna has agreed to take up this position on the new Council. I am confident that the CLC will benefit from Anna’s wide ranging skills and experience and we very much look forward to working with her to deliver better outcomes for consumers and other stakeholders”.

Following confirmation of her appointment, Anna Bradley said: “I am delighted to be taking up this new role at such an interesting and exciting time for both the CLC and the legal services market”.

Anna is currently Chair of Ofcom’s independent Consumer Panel having previously been Consumer Affairs Director of the Financial Services Authority (2002-5) and Chief Executive of the National Consumer Council (1999-2002).

Conveyancing solicitors urged to sign up to web portal

2010-01-22T01:04:00.000-08:00

The Land Registry Direct system will be ending on 31 March 2010. The technology platform on which it is rests will cease to be supported, meaning that conveyancing services in Land Registry Direct cannot be developed further. The new home for the Land Registry business e-services is the Land Registry Portal, which uses the most up-to-date online technology to provide conveyancers and the public with enhanced services.

The Law Society, the CLC and the Land Registry are all encouraging conveyancing lawyers to sign up if they haven’t done so already. If conveyancers send in their application forms by 15 February 2010, then they will avoid the risk of losing access to their business e-services. If conveyancing firms require additional services such as Network Access Agreements and Lender Services, these are optional and can be applied for at a later date.

Report on Back Garden Development Published

2010-01-20T22:13:00.000-08:00

The final report of a study into the planning issues surrounding development on back gardens undertaken was published this week by the Department of Communities and Local Government.During the passage of the Planning Act 2008, the Government committed to carry out a review establishing the extent of development on back gardens.

Over the last 30 years, and especially during the recent housing boom, the issue of back garden development (sometimes known as ‘garden grabbing’) has become politically contentious.

Private gardens currently have no special status in planning law, other than as part of private amenity space and their development is treated, in principle, like any other land. Despite the recession which has muted demand for housing land, fundamental concerns about the supply of land to meet housing targets, are still ongoing.

In many situations the development on garden areas may be interpreted as entirely appropriate and there are many clear, definable benefits to such development. They reduce the need to extend development into the countryside, create new homes without the need for increased infrastructure provision, provide better utilisation of land in areas where people no longer demand large gardens due to life style changes and they may provide small sites appropriate for local developers who employ local people. For these reasons garden land development may add significantly to the housing stock in ways that are sustainable and which meet identified local housing needs.

There are of course arguments against over development on gardens. They may lead to increased building mass, loss of character, increased population density and associated demand on service provision and traffic generation. Environmentally, garden development can result in a loss of green space and soil sealing/paving over gardens; ultimately leading to loss of habitats and biodiversity and increased risk of flash flooding due to increased run off.

Historically Garden sites are normally regarded as ‘brownfield’ under the government’s land classification of previously developed land and are often favoured sites for developers as they are situated in established residential areas and often present less physical issues than brownfield sites that are, for example, old industrial and contaminated sites.

As a result of the Report , Housing and Planning Minister, John Healey, has announced that he will be strengthening national policy advice to make it clearer that garden land is not necessarily suitable for development and that decisions to stop building on it should be taken at a local level.

Could conveyancers be responsible for accuracy of seller's answers in Conveyancing Questionnaires ?

2010-01-20T21:49:00.000-08:00

The issue of liability for misinformation within the PIQ ragged on this week with the Housing Minister being asked about the extent of an estate agents liability. If agents know that the answers were untrue, could the agent be in breach of consumer law?

John Healey suggests that Estate Agents may be liable as part of a reply to MP Robert Neill, who asked whether agents are liable for misleading omissions in PIQs under HIP legislation, and whether agents were responsible for checking the information.

The Housing Minister said they were not liable under HIPs law for PIQs, as long as the agent “believed on reasonable grounds” that the documents complied. No news there then !

The most interesting point that Healy raised was when he added: “An estate agent could be in breach of the Consumer Protection Regulations (CPRs) if he failed to act on information in the PIQ which he knew to be inaccurate or untruthful, because they are required by the CPRs to act in accordance with honest market practice and good faith.”

If the Housing Minister is correct in his interpretation of CPRs this could have greater implications than agents being sued for misinformation within the PIQ. If the CPR’s extended to information in the Sellers Property Information questionnaire or other conveyancing questionnaires then conveyancing solicitors and property lawyers alike could be held liable for misinformation where the lawyer know the information was inaccurate. The financial implication are far greater here than the losses resulting form an inaccurate PIQ.

The biggest SRA intervention of 2009 - Wolstenholmes

2010-01-20T05:39:00.000-08:00

The SRA's intervention into the practice of Wolstenholmes, which began on Christmas Eve, was the biggest of 2009, according to the regulator. The firm, closed during the investigation, has offices in Cheshire, Manchester, Birmingham and conducted Conveyancing in London and throughout the UK .

Wolstenholmes was a multi disciplined practice offered a full range of services, including conveyancing, family, employment, personal injury, immigration, private client work.

An SRA spokesman said the practising certificates of five solicitors were suspended.

The Wolstenholmes website still boasts having completed more than 200,000 conveyances, with monthly transactions worth £175 million.

According to the site, the secret of the firm's success is explained by "two centuries developing our expertise, refining our knowledge, keeping our nerve during financial hardship and having the nerve to expand beyond all comprehension in a recession."

Property loans fraud results in Solicitor being struck off

2010-01-19T02:07:00.000-08:00

An Irish conveyancing solicitor who engaged in fraudulent practices to obtain loans on properties, leaving a financial institution with losses of €1.25 million loss, has been struck off by the High Court.

According to IrishTimes.com, Mary Miley, formerly practising as Miley and Co Solicitors, Rathdrum, Wicklow, obtained money by pretending she was acting for a borrower called Mary Ann Dore, which was in fact herself using her married name, and used some €570,000 of that for her own personal benefit, the court heard.

The lender , Secured Property Loans Ltd is now looking to recover the funds and yesterday was successful in obtaining a freezing order over Ms Miley’s assets to the tune of €1.25 million. President of the High Court Mr Justice Nicholas Kearns agreed to a Law Society request to have papers referred to the DPP.

The High Court judge made an order that Miley should make restitution to those parties who are at a loss as a result of her behaviour. The court also ordered that she surrender her passport .

Council of Mortgage Lenders calls for abolition of Stamp Duty

2010-01-17T09:15:00.000-08:00

The CML in recent report expressed it’s belief that fundamental reform of stamp duty is necessary. It states that it regards Stamp Duty as a tax that discourages labour mobility, and with it’s “ tier ” structure has the effect of causing transactions to “bunch” just under each of the tax thresholds.

The CML state “ While abolition would be the best option, a move to a graduated structure would be an improvement on the current system, even if done on a cost-neutral basis. While the temporary concession was welcome as far as it went, it is disappointing that the government has not sought to implement this desirable reform of an anachronistic tax”.

Mortgage Fraud Booming Like Never Before

2010-01-17T03:00:00.000-08:00

BDO, has come up with some frightening figures on mortgage fraud, against a backdrop of soaring UK losses to fraud in 2009 (over £2 billion) across all sectors. It predicts worse to come.

In 2009, mortgage fraud accounted for 18% of all reported fraud and 27% of fraud in the UK finance and insurance sector.

Simon Bevan of BDO commented rather frankly: “It may have become more difficult for the person on the street to secure a mortgage in the UK, but the mortgage fraud industry is booming!”

Mortgage fraud often works through a large loan being taken out on an overvalued property with a corrupt buyer, valuer and/or conveyancing lawyer working in collusion.

The same group will then apply the scam to a portfolio of properties, meaning that the fraud can escalate to large amount.

BDO warns of “a tidal wave” of fraudulent borrowing that has only just beginning to appear, particularly through the use of over-valued properties as security for mortgages .

Worryingly, he suggests many of these frauds are yet to be recognised by the banks, which still have them classified as non-performing loans.

Land Registry launches new Flood Risk conveyancing search

2010-01-16T13:46:00.000-08:00

Adopting some of the latest IT, the Land Registry has recently combined its data with the Environment Agency's flood data to produce its new Flood Risk Indicator.
Homebuyers can use the Flood Risk Indicator to access clear and reliable information about the possible risk of flooding.

Customers can purchase Flood Risk Indicator on-line via the Land Registry website. After inputting address details, home buyers will receive a Flood Risk Indicator result in a couple of minutes – stating whether a specific area of land is likely to experience flooding. Customers can instantly download their result, which indicates whether or not their property is affected by a flood plain. This will assist in being able to obtain building insurance. Time will tell whether mortgage lenders will require this search to become a compulsory search within the conveyancing process.

Flood Risk Indicator raises customers' awareness of flooding, and helps them plan and prepare as a result of being better informed about the possible risks. Flood Risk Indicator is available now in the Find-a-Property section of the Land Registry website.

Advantages of land registration in the UK

2010-01-16T07:52:00.000-08:00

Land Registration under the 2002 Land Registration Act supports land and home ownership by:

• ensuring state-backed registration, giving greater title security
• protecting against the possibility of losing title by adverse possession
• indemnifying home owners under s.103 and Schedule 8, Land Registration Act 2002 against any loss if they are deprived of their state-backed title on a rectification of the register of title for a specific property
• introducing certainty and simplicity into conveyancing
• setting out, or referring in the register to, all the rights that benefit and affect the title other than certain overriding interests
• showing the general extent of the land in each title by means of a title plan
• providing that capital can circulate freely in the economy by making land readily available as security
• making large holdings of land and portfolios of charges readily marketable.

Jack Straw agrees meeting to discuss justice for Wolstenholmes victims

2010-01-06T10:19:00.000-08:00

In the House of Commons today Cheadle MP Mark Hunter challenged the Secretary of State Jack Straw to reassure all those affected by the abrupt closure of Manchester Conveyancing Solicitors Wolstenholmes that their money and documents were safe.

Jack Straw shared the concerns and agreed to meet Mark to discuss the issue.

Mr Hunter told the House that he had been contacted by a number of distressed local residents and people from all over the country that currently have documents or money held by the firm.

In Justice Questions in the House of Commons, Mark asked Jack Straw to ensure that the concerned residents were fully compensated where appropriate. Jack Straw replied and agreed to meet with Mark to discuss the issue further.

Commenting, Mark Hunter MP said: "I'm very concerned about the sudden closure of such a long-established business. I've already heard from a number of constituents who have money and/or documents lodged with Wolstenholmes and who are worried about the consequences.”

"I'm advised by the SRA that for those who fear they have lost money, it will be dealt with by the solicitors indemnity insurance or the SRA Compensation Fund. People affected should contact DWF on 0161 603 5044.”

"My message is clear: I am determined to help solve this problem. I will be meeting with Jack Straw as soon as possible, I have already been in touch with the regulatory authority, and I will fight to ensure justice for all those affected by this unexpected closure."

On 30th December the news broke that Wolstenholmes, established in 1818, had been closed down by the Solicitors Regulation Authority (SRA) and that five solicitors had their licences suspended amid claims of dishonesty and account irregularities.

BSA releases their conveyancing requirements

2010-01-03T01:37:00.000-08:00

The BSA’s Mortgage Instructions launched today provide a full set of conveyancing instructions for conveyencers acting on behalf of BSA Members and their subsidiaries in residential conveyancing transactions. The Instructions come into full effect from 1 January 2010. The conveyancing Instructions are being used by 31 lenders including 27 building societies.

The BSA Mortgage Instructions comprise of two parts ( as is the case with the CML ) : a core set of mortgage instructions; and specific requirements setting out individual lenders’ policies.

The FAQ's on the BSA site include the following question and answer:

How does the introduction of early completion by the Land Registry affect the use of the instructions in England and Wales?

We have considered the impact of the Land Registry bringing in early completion and do not feel that the change requires any significant amendment to the instructions. This is because early completion does not affect the overall process for buying and selling a home – though it may impact the sequence in which some events happen.

The changes will not alter the requirements set out in paragraph E.27 of the instructions which require the conveyancer to register the mortgage as a first legal charge at the Land Registry.

The Land Registry has confirmed that “completing the applications to register the transfer and new charge subject to the existing charge would not appear to affect the obligations of any party in relation to that existing charge.

Early completion will not prevent the new charge taking effect as a first legal charge; it can never become a first charge until the existing charge is discharged. This is so whether or not the new charge is entered in the register. The entry of the new charge under early completion simply protects the priority of that new charge as against any other interest whose priority is not protected at the time of registration.”

More information on this can be found on the Land Registry's website.

London Conveyancing firm shut down over alleged dishonesty

2010-01-01T01:28:00.000-08:00

This morning’s Times contains an article Solicitors Regulation Authority closes down law firm Wolstenholmes. The article reveals that five solicitors have been suspended after allegations of dishonesty involving hundreds of thousands of pounds of clients’ money.

The Solicitors Regulation Authority has started an investigation into the activities of Cheshire-based Wolstenholmes, which was established in 1818 and carries out conveyancing in London, Manchester and Birmingham.

Customers have bombarded the forums of websites such as Money Saving Expert with complaints about the way the company takes £300 as a deposit and then allegedly does not return calls.

One client of the conveyancing firm has reportedly told the BBC that she had been left living in a caravan with her children. She claimed that the £445,000 she had transferred to Wolstenholmes, nearly half of which was her own money, had been frozen.

Freeing up Government Data on Rights of Way

2009-12-29T09:38:00.001-08:00

Google Maps containing information on public Rights of Way could be of use in the Conveyancing Process as conveyancing solicitors in some cases have to investigate trough Commons Registration Searches and other conveyancing searches.

I am sure we all agree that speeding up conveyancing would be a good idea.

What is Caveat Emptor ?

2009-12-27T04:36:00.000-08:00

The principle of caveat emptor (let the buyer beware) means that the purchaser is assumed to purchase the land or property in its condition at the date of the contract, regardless of what the buyer actually knows about the property. The responsibility for finding out about the property lies with the purchaser so it is the purchaser ( =though his advisers ) who submits pre-contract enquiries with the vendor.

Whether or not the purchaser raises enquiries, the vendor is legally compelled to disclose latent encumbrances and defects in title, unless the contract says otherwise.

The vendor's duty does not extend to disclosure of physical defects and the vendor is not required to disclose anything that is already in the purchaser's knowledge. It is generally unwise for the vendor to assume that the buyer has actual knowledge.

The purchaser's remedies for incorrect or incomplete replies

Subject to the terms of the conveyancing contract, the purchaser has no remedy against the seller for incorrect or incomplete replies unless the buyer can successfully establish that there has been some misrepresentation. A legal misrepresentation requires:

-An untrue statement of fact by the vendor.
-Reliance on the statement by the seller, inducing it to enter into the contract.
-Loss suffered by the buyer as a result of entering into the contract.

Preparing replies in advance of the pre-contract enquiries being raised

Although usual for the purchaser to raise pre-contract enquiries with the vendor, in some circumstances it may be appropriate for the vendor to supply replies to anticipated pre-contract enquiries.

What is the Legal Services Board going to do?

2009-12-27T02:39:00.000-08:00

The Legal Services Board is to have an oversight role in ensuring that the interests of consumers ( including conveyancing clients ) are properly protected.

It is said that the immediate priority of the Legal Serviced Board is to ensure that the regulatory function of each regulator is separated from any representative function. This is most relevant for the Law Society which has set up the SRA ( Solicitors Regulation Authority ) to regulate conveyancing solicitors and non conveyancing solicitors. The Bar Council has set up the Bar Standards Board to regulate barristers in England and Wales.

The establishment costs and ongoing running costs of both the Legal Services Board and the OLC will be funded by the legal profession. The Legal Services Board will soon make rules to determine the way in which the costs will be covered and split between the different branches of the legal profession. The Council of Licensed Conveyancers will soon after decide how its liability for these costs should be apportioned across it’s conveyancing members

Chosing a conveyancing solicitor

2009-12-27T02:24:00.000-08:00

Conveyancing stands as the legal process to obtain the ownership of a property. Conveyancing covers the whole buying and selling process of a property, hence the property is registered in the name of the purchaser only after following the legal process of conveyancing. Conveyancing is essentially the transaction that takes place between the buyer and the seller. It is therefore during the contract negotiations between the two parties a conveyancing service provider is needed. Conveyancing service is usually provided either by the conveyancing lawyers, known as the conveyancer, or by the conveyancing companies.

Choosing the conveyancing solicitor can be daunting. Consider the following tips to choose the best service to befit your requirement and to strike the best deal.

Look for a competitive and fixed rate: Whether you are searching for a conveyancer or conveyancing companies, look for a fixed competitive conveyance cost if you want the value for your money. Keep away from the firms that charge on an hourly basis. You can also search conveyancing online to choose the cheap yet reliable services.

Look for a guaranteed quality: With the boom in the real estate market conveyancing service providers have also mushroomed. Make sure that your conveyance firm is regulated by the Council for Licensed Conveyancers or the Law Society

Look for the expert: Choose your conveyancing company with utmost care, so look up for a firm who specializes in financial residential properties and also make sure that the conveyancer or the firm is specialized in family and litigation, divorce along with buying properties.

Ask for the client care letter: Before selecting certain conveyancing company or any particular conveyancer, ask for the client care letter, it is indeed one of the most important aspects.

Assess the technology: There are companies who often send email with the online conveyancing quotes. Research well prior you select one. Try to gauge the technology options which are available with the firm. Some online conveyancing service providers will be able to track the status of your transaction via internet and will also update you through SMS. Apart from this, a conveyancing solicitor will also give you the username and password to ensure security and convenient conveyancing.

Landlord stung by failure to comply with service charge requirements

2009-12-23T00:16:00.000-08:00

In Daejan Investments Ltd v Benson and others [2009] UKUT 233 (LC), the Freeholder/landlord who owned a block of shops and flats gave notice to the leaseholders of the flats that it intended to carry out major works amounting to £270,000.

The landlord failed to comply with the statutory service charge consultation requirements leading to a service charge dispute. The Leasehold Valuation Tribunal (LVT) refused to grant a dispensation from compliance. This net result of the decision was that the service charge liability of the five leasehold owners was limited to £250 each.

At appeal, the Lands Chamber of the Upper Tribunal agreed with the Leasehold Valuation Tribunal that it could not take into account the disproportionate financial consequences for the landlord when deciding whether or not to make an order for dispensation: the statutory consequences of the failure to comply were an intrinsic part of the law relating to service charges, and there to be followed.

This decision should be seen as a warning to landlords to comply fully with the detailed service charge consultation requirements. This is particularly important in the case of major works, as non-compliance can result in a drastic reduction in the amount that the landlord can recover from the leasehold owners.

Conveyancing London and Crossrail Project Updates

2009-12-23T00:10:00.000-08:00

Did you know that you can be kept up to date about the progress of Crossrail subscribe to the Crossrail Bulletin, keeping you up-to-date on the progress of the Crossrail project. This is very useful for those who conduct conveyancing in London.

Crossrail's contact details are as follows: Crossrail Limited | 25 Canada Square | London | E14 5LQ Switchboard: 0203 229 9100 | Helpdesk (24hr) 0345 602 3813.

Consumer panel opens consultation on conveyancing referrals

2009-12-20T01:08:00.000-08:00

The Consumer Panel of the Legal Services Board has announced that it is carrying out an enquiry into conveyancing referral arrangements. This is an issue about which there are strong views and conveyancers are urged to take advantage of this opportunity to make sure their views are taken into account. A copy of the Terms of Reference is available from the download section of the Council of Licensed Conveyancers website.

All conveyancing referral arrangements will be covered, whether or not they involve payment or fees, including non-monetary arrangements that are linked to the introduction of clients, such as the provision of free or below-cost services in exchange for the referral of other business.

The deadline for evidence is 5pm on Friday 26 February 2010. Licensed Conveyancers are invited to respond direct.

Changes to post completion conveyancing

2009-12-15T23:53:00.000-08:00

For the last few years the mechanism for lenders to discharge registered charges has been by way of an electronic notification of discharge (END). This is to change early 2010.

The END has proved to be of great benefit to the conveyancing practices as conveyancers no longer have to chase discharge forms from lenders and manually send the forms to the Land Registry. In other words, it has assisted the post completion element of the conveyancing process.

The Land Registry has stated that hopes that those lenders who currently use the END system will sign up to the new portal, which will enable them to discharge mortgages using an electronic notice of discharge of a registered charge (e-DS1). Unlike an END, an e-DS1 operates as a stand-alone application for discharge, which does not require the conveyancer also to submit a separate paper submission.

Minimising risks faced by property owners as a result of property fraud

2009-12-15T12:22:00.000-08:00

Background to property fraud

Identity Theft

The phenomenon of identity theft has assumed alarmingly high proportions around the world today .Advances in technology often fuel identity theft rather than prevent it , as more and more sophisticated means of identity theft are devised by fraudsters .

It is estimated that identity theft costs the UK economy approximately 1.7 billion Pounds per annum . In the UK alone there are around 120 000 cases a year of identity theft ( the worldwide figure is 10 million ) per year . Identity fraud is one of the UK's fastest growing crimes .

Property Fraud

The property industry is not immune against the scourge of identity theft . Mortgage fraud alone is estimated at 700 million Pounds per annum .

Land and buildings are usually the most valuable assets people own.Property can be sold or mortgaged to raise money . They are therefore attractive targets for fraudsters . Identity theft is often initiated by the fraudster by changing the legal owner's registered addresses at the Land Registry enabling the fraudster to gain control over the property ( 3 addresses can be listed ).Even if a fraudulent transfer of a property is held to be invalid ( which is by no means certain ) a mortgage registered against the property can still be held to be enforceable against the true owner ( Barclays v Guy ) , enabling the secured lender to attach the property for unpaid mortgage payments .Compensation by the Land Registry ( where applicable ) can be a long and frustrating process .

Properties which are owned outright are prime targets for fraudulent sales or re-mortgages .

Property fraud risk is at its highest in the following circumstances :

• following a divorce
• where the property is empty
• where the property is bought to let
• where the owner is absent or abroad
• where the owner is infirm or in a home

Sophisticated counterfeit technology helps fraudsters to obtain fake identity documents and gather information from the public register at the Land Registry . Anyone can inspect the Register , find out the name and address of the current owner and obtain a copy of registered title .

The conveyancing process

During the course of the conveyancing process the seller's conveyancing solicitor and the buyer's solicitor will call for proof of identity from their respective clients . However , because of the existence of technology copies of identity documents may not enable the solicitors to absolutely verify that the documents are genuine .

In the course of a transfer both solicitors will conduct certain searches . The seller's solicitor will carry out local authority searches and other searches as required . Near the end of the process the buyer's solicitor will conduct a search to ensure that no mortgages have recently been registered on the property or any of the parties have been declared bankrupt . These searches are unlikely to bring to light any identity theft or property fraud which may have taken place .

Despite increased efforts on the part of Land Registry and solicitors to minimise property fraud , under the present system the risk thereof remains . In some cases the fraudster is in fact aided and abetted by one of the professionals involved in the sale and transfer process e.g. estate agent , mortgage broker and even solicitor . A protective and preventative process needs to be devised and implemented to mitigate against or even hopefully eliminate instances of property fraud .

Conveyancing Yorkshire Style

2009-12-12T23:57:00.000-08:00

Even though the stamp-duty holiday, which has meant properties under £175,000 have been exempt from the levy, ends in the next couple of weeks, there has been some good news for those looking to get on the property ladder.

Yorkshire Building Society has this week launched a new range of mortgages for first-time buyers with a deposit of 15 per cent or more. Its three-year fixed rate of 5.84% with no fee is a market-leading deal and includes £500 cashback, a free survey and conveyancing. This is not only good news for fist time buyers but also lawyers on the Yorkshire conveyancing panel .

The "free conveyancing work" only covers basic conveyancing costs and does not cover search fees and land registry charges.

Action over property misdescription

2009-12-10T06:43:00.000-08:00

A businessman’s legal dispute with a developer in Reading has led him to set up a website for others legal assistance.

As reported in the Reading Post earlier this month, Roy Assersohn is suing Muse Developments over the purchase of six Chatham Place apartments.

Mr Assersohn, a former city editor with a national daily paper, has now set up a website to offer legal advice to people who believe they may have been a victim of a “property misdescription”. The Legal Investigation Services is www.property-misdescriptions.com.

Most members of the public believe if they have a problem over the purchase of property, their legal redress is with the conveyancing solicitor.
But often they should be taking legal action against the developer or in non new build cases the seller of a property.

Investigation into Conveyancing referral fees

2009-12-07T05:19:00.000-08:00

Hot on the heals of the Law Society looking into the question of referral fees, commissions by conveyancers to estate agents and mortgage brokers are to be examined by the Legal Services Consumer Panel.

The Legal Services Consumer Panel will also look at other referral fees paid by lawyers to insurance and claims management companies.

Property Fraud on the increase

2009-12-06T09:50:00.000-08:00

The Daily Mirror in an article entitled How Mortgage Fraudsters Stole Our Mother's House last week highlighted a recent case where crooks have managed to sell a house from under the noses of the real owners - who warn the same fraud could happen to anyone.

In March 2009 a BBC reporter wrote to Land Registry, claiming to be the owner of an unmortgaged house in London. Using a bogus signature, the reporter asked for the property's correspondence address to be changed to Liverpool. Land Registry wrote to both addresses confirming the change to be made in 21 days. The owner was known not to be resident at the London address and so no objection was raised. Having been successful it would have been left open to commit a fraud.

Although not clear form the Mirror article, critical to many of these scams is the use of stolen identities. According to many conveyancing solicitors specialising in the field, the key context for the problem was the dash into deregulation and e-commerce at the turn of the century.

“There was a view throughout the profession that the abolition of documents of title and reliance upon electronic records would contribute to fraud. And so it has proved,” Samson says. “All this information is open to view through the internet so a fraudster can see exactly who owns a property, assume his or her identity and then sell it.”

Purchase Conveyancing – The Danger Of Failing To Complete On Time

2009-12-06T09:39:00.000-08:00

Years ago, completion in a purchase conveyancing transaction would take place in person with the buyer’s solicitor visiting the seller’s solicitor’s office to inspect all the documents before releasing the purchase monies. These days, however, provided the transaction is not complicated, completion takes place through the post.
Occasionally, problems may arise on completion and completion is delayed as a result or the transaction can even fail to complete entirely.

The contract will specify the date the purchase conveyancing transaction is due to complete. This date is agreed upon by the parties during exchange of contracts. The Standard Conditions of Sale , currently the 4th edition, provide for what happens if completion is delayed or if the transaction fails to complete at all. If for some reason the Buyer is unable to complete on time his Solicitor should notify the Seller’s Solicitor as soon as possible. The Seller’s Solicitor will serve a ‘Notice to Complete’ on the Buyer’s Solicitor (the costs of which are usually borne by the defaulting party and most contracts will include a special condition stating what these costs are) and the clock will effectively start ticking. The Buyer then has ( normally ) ten working days from the date of completion in which to complete the transaction. If the Buyer fails to complete at the end of the Notice period, he forfeits the deposit of 10% of the purchase price. If the deposit paid on exchange was less than 10% the Seller is entitled to pursue the Buyer for the shortfall. The Seller may also sue the Buyer for breach of contract and damages.

If the Buyer completes within the ‘Notice to Complete’ period then he is still liable to pay a daily rate of interest as set out on the front page of the Contract. The deposit, however, is not forfeited if the Buyer is simply late in completing. Sometimes, the Seller’s solicitor may include a special condition in the contract stating that if the Buyer is late in completing he is liable to pay for other costs incurred by the Seller as a result of the delay, e.g., bridging finance, removal costs etc. It is good practice and in the interests of the Buyer Client if the Buyer’s Solicitor strikes through such a clause when approving the draft contract. If the Seller’s Solicitor does not agree to the clause being removed or modified, the position must be clearly explained to the client as they will find themselves paying rather more for failing to complete on time as opposed to a client whose contract does not include such a clause. This special condition is sometimes seen in contracts where there is a chain and solicitors may not wish to delete it if it appears in each contract in the chain.

The Standard Conditions of Sale state that completion must take place by 2.00pm on the day of completion. Seller’s Solicitors often insert a special condition in the contract varying this time to make it earlier. The Seller may have a mortgage to pay off which means that the lender will need to receive the redemption monies by 3.00pm or thereabouts to treat the mortgage as having been redeemed on that day. For this reason the time for completion is often brought forward to midday or 1.00pm. This should be taken into account by the Buyer and his client. If the Buyer is relying on mortgage finance and/or there is a chain involved then his Solicitor may wish to request the mortgage funds the day before completion to ensure there are no delays in sending the purchase monies to the seller’s solicitor. Solicitors should always advise their Buyer clients to send the completion funds for the purchase of the property, to their solicitor, at least a day before completion to avoid the risk of completing late.

If the Seller is the defaulting party and completion is delayed, the Seller must pay a daily rate of interest to the Buyer as stipulated in the contract. If the Seller fails to complete within the ‘Notice to Complete’ period, the Buyer may pursue him for breach of contract.

Delayed completion can therefore be extremely costly for the Buyer and the danger of failing to complete on time should be clearly explained to the Buyer client beforehand in the form of clear, written advice, especially where the Standard Conditions of Sale have been varied.

China requires UK conveyancing protection

2009-12-04T01:00:00.000-08:00

Bank of China has this week become a member of the CML setting out their conveyancing requirements through publishing their Part II requirements.

For those not familiar with the CML Lenders Handbook, I should explain that The Lenders' Handbook provides comprehensive instructions for conveyancers acting on behalf of lenders in residential conveyancing transactions. Part II details each lender's specific requirements.

At first glance there is nothing too unusual in the Bank of China’s Part IIs. However I remain perplexed by Section. One of the Part II questions is “Contact details if you need to be notified when the seller does not have legal representation”. Bank of China's response is : We do not allow licensed conveyancers to act for the Bank. Therefore, this section in n/a.

Can anybody please translate this for me ?

Will the Flood Risk Regulations 2009 affect Conveyancing ?

2009-12-04T00:30:00.000-08:00

The well timed The Flood Risk Regulations 2009 (FRR 2009) will come into force next week on the 10 December 2009. The FRR 2009 transpose Directive 2007/60/EC on the assessment and management of flood risks (the Floods Directive) into law in England and Wales.

The Regulations require lead local flood authorities to, amongst other things, prepare preliminary flood assessment reports, identify flood risk areas, prepare flood hazard and risk maps and prepare flood risk management plans in relation to each flood risk area.
It will be interesting to see whether as a result of legislation and greater information conveyancing lawyers being required to carry our further checks. I am anticipating that at some point within the next couple of years the CML Lenders Handbook will be developed to include a requirement for further investigation into flood risk.

The ever-changing landscape of conveyancing and referral fees

2009-11-30T12:58:00.000-08:00

Referral Fees
The conveyancing profession is not what it was fifteen years ago let alone thirty years ago.

Fifteen years ago when I qualified as a solicitor the conveyancing market was dominated by conveyancing solicitors conducting transactions. I suspect that today more than 30 % of transactions are carried out by unqualified staff.
Conveyancing solicitors have squandered the high esteem in which we were held by the public. The demise of the conveyancing solicitor started when the Thatcher government broke the conveyancing monopoly in the belief that competition was a ‘good thing’

The emergence of licensed conveyancers sparked a price war with conveyancing costs being cut again and again. The lesson that should have been learnt was to compete on price but on service and to collectively highlight the deficiencies of cheap conveyancing. Unfortunately, solicitors did not learn their lesson as will writers, claims handlers, independent advisers – all have chipped away at solicitor’s preserves so that they really do not exist any more. Solicitors need back to justifying why the public should pay for expertise. We all know that cheap equals dear but the public have not realised this.

Solicitors need to create coordinated effort to challenge panel providers or conveyancing factories. I'm not going to bet much on your efforts, but it will certainly outperform a solo effort.

How ironic that so may solicitors have been up in arms in the suggestion that referral fees should be abolished arguing that they are being asked to fight with one hand behind their back. Paying fees for work is a false economy and with 2011 not far away law firms should be thinking about how they can win business directly. Paying referral fees just means you are delaying the inevitable. The panel provider or supplier of business will drive your margins lower and eventually be competing with you. Why feed your future competitor ? Quiet, passive-aggressive whining in the corner is both annoying and ineffective.

10 causes of sale constipation in the conveyancing process

2009-11-30T12:42:00.000-08:00

Today’s blog exposes some of the reasons where a the conveyancing lawyer, acting for the seller typically slows the process down :

When selling many conveyancing lawyers have the mistaken the belief that all they do is throw out the papers to the Buyer. This mistaken belief has been perpetuated by the doctrine of Caveat Emptor, which obliges the buyer rather than the seller to uncover defects or legal problems with a property. As if the Caveat Emptor was not enough the courts, through cases such as …………have encouraged convayancing lawyers not to look at the paperwork for fear of being legally exposed to an argument that in reviewing ir commenting on the papers that may have some degree of responsibility to the buyer.

I would also argue the commoditisation of conveyancing and the driving down of conveyancing fees means that most conveyancing forms do not give themselves the luxury of being proactive and reducing the risk of the buyer’s conveyancers raising enquiries.

The net result is that most conveyancers fail to read through them first with the following results:

1 . They fail to ensure the Buyer’s conveyancing lawyers receives the HIP. Lamentably very few conveyancing lawyers produce HIPs and therefore rely on the agent to supply the HIP to the buyer’s conveyancing lawyers.

2. The HIP, not being prepared by those with deep knowledge of the conveyancing process , has unspotted errors in because the Seller did not have it prepared by a conveyancing solicitor.

3. Many Sellers rely on the registered title in the HIP which may be months old, which is not acceptable to the Buyer’s conveyancing lawyers (because it is not up to date) and so days are lost in getting fresh requested

4. Even if an up to date title is sent, but so many conveyancers forget to apply for and send the independent
documents referred in the title. Perhaps as many as one third of titles refer to additional documents which the Buyer’s lawyers will predictably ask to see. The land Registry can take up to a week to supply these documents. They are not a required part of a HIP.

5. Planning permissions for works certainly in the last 4 years, and ideally in the last 20, if not a complete set, are not produced, so the Buyer’s conveyancing lawyer has to chase. According to Fridays Property Lawyers internal data, there is a average of 1.5 planning documents applicable for each property.

6. New Home Warranty documents are not sent. They are not required as part of the HIP and are often in the hands of the Seller. Often these documents are lost and the days are wasted obtaining duplicates. No Lender in the UK will lend on a newly built property without such warranties being to hand.

7. All UK Lenders require conveyancing lawyers to be satisfied with management information for a leasehold property. All too often the seller’s conveyancing lawyer does send this information out on a leasehold sale, until requested, losing weeks potentially
8. Out of date Protocol Forms are often sent by the sellers conveyancer , meaning supplemental questions have to be asked to get them as comprehensive as the latest edition.

9 . Not reading the Sellers Property Information Form or Property Information Questionnaire which refers to guarantees, or building works or UPVC or electrical works – so the conveyancing lawyer for the Buyer has to then chase for this information

10 . Having too many contractual ‘special conditions’ some of which can be controversial, like seeking a refund of searches, or not warranting the accuracy of plans or having clause after clause of what penalties the Buyer should pay if they fail to complete

If a seller’s cconveyancing lawyer dealt with all the above it would undoubtedly speed up transactions but it would not make the paperwork “ exchange ready “. So, are exchange – ready – HIPs the solution ? Unfortunately I am yet to see such a document. My fear is that they are as rare as hen’s teeth. One particular company indicates that their HIP will include a certificate saying that the HIP is “ Exchange Ready “. |Given that the ERH does not deal with all of the above points at best it is an insult to the public's intelligence but at worst it may merit investigation by Trading Standards for being misleading.

The Emergence of Green Conveyancing

2009-11-28T08:22:00.000-08:00

The inclusion of environmental searches and enquiries into the conveyancing process is relatively new, having only emerged as something the conveyancing lawyer should investigate in the last 15 years.

Heightened environmental awareness has resulted in environmental factors are becoming increasingly relevant to all stakeholders in conveyancing tractions . Factors such as flooding, subsidence, issues of land pollution, radon gas and similar issues are increasingly making the headlines.

Since April 2000 Local Authorities must inspect and identify seriously contaminated land areas, however they are only slowly starting to come to terms with their duties here. If in time the local authority identifies a Property area as being contaminated they can issue remediation notices requiring action to clean up the contamination in the absence of voluntary agreement to do so. Liability in such circumstances would primarily rest with the contaminator of the Property. However, if that person cannot be identified then liability could pass to the current owner of the Property and compliance could be costly.

In the light of increasing awareness of environmental factors, affecting home owner’s decisions on where they desire to live and mortgage lenders decisions to lend, conveyancing lawyers as part of the conveyancing process commission an environmental search on the property. An Environmental search report looks at a variety of records of issues including the historical use of the land, past contaminants and polluting processes, landfill, waste treatment sites, nearby toxic substances, the probability of radon gas and the risk of subsidence and flooding. As the search is a review of records held by the report specialists, it would not cover unknown contaminants or environmental risks.

It is worth noting that conveyancing lawyers are not qualified to interpret the technical results of environmental search. If you are uncertain as to any parts of the search result you may wish to discuss it with your surveyor.

No sale no fee Home Information Pack insurance

2009-11-26T08:13:00.000-08:00

Conveyancing Liability Solutions (CLS) has launched a product to assist conveyancing firms who sell Home Information Packs direct to sellers or has an associated company that does this. The product is a No Sale No Fee insurance policy for the HIP market.
The no sale no fee insurance covers homeowners in the event that the sale of their property either falls through, or fails to sell in a 12 month period from first day marketing where “sale” is classified as exchanging contracts.

In addition homeowners are covered if the sale of their property fails either through accident, sickness or redundancy for instance.

The cost of the HIP, including all searches, estate agency referral fees, legal and marketing fees are covered in the premiums listed below:

Up to £500 limit of indemnity £55
Up to £1,000 limit of indemnity £90

At the end of the 12 month term, if the property has not sold, the homeowner can make a claim to the limit of indemnity purchased.

Sam Cherry, Director of CLS said;

“Our No Sale No Fee insurance policy is a new approach to HIPs and will give people selling their property peace of mind regarding the costs of selling their property in this uncertain market.”

The CLS No Sale No Fee insurance can be sold in conjunction with the Close Payment Services products that allow the home seller to defer the payment of their Home Information Pack. Thus your clients can market their property minimising the initial charges and only pay on completion for this element of the transaction cost – but if it fails to sell the CLS policy will pay for the relevant costs.

To find out more about this policy and the deferred products as well as how to buy it, please contact Sam Cherry at sam.cherry@clsl.co.uk or on 0870 013 0872

Possible Conveyancing implications as a result of the next general election

2009-11-25T05:46:00.000-08:00

If you are looking at one of government schemes such as HomeBuy Direct, be aware that if the Tories take power the deals may change.

The Conservatives have also said they will raise the stamp duty threshold, due to drop to £125,000 in January, to £250,000, freeing nine out of ten first-time buyers from the duty

HIPs to go within weeks

2009-11-25T05:18:00.000-08:00

The Conservatives intend to scrap Home Information Packs is not news. Grant Shapps has been saying this has been saying it to the trade press. The fact that he has suggested that this will be done in a “in a matter of weeks” after coming to power will catch the public and stakeholders in the property industry by surprise.

In an interview with The Times - carried in several other National papers – Shapps says that abolishing HIPs would be his first initiative, should the Conservatives win the election.

The assurance follows claims by many estate agents that the packs are adversely affecting the housing market, as would be sellers regard the cost of HIPs as a disincentive at a time when homeowners are already reluctant to move.

Shapps said: “House prices are rising because supply is restricted. HIPs have not helped. The main priority is to scrap them. They are easy to suspend and there are emergency powers we can use to do so. This can happen very quickly. HIPs will be gone in a matter of weeks.”

Conveyancers and their brown paper envelopes

2009-11-24T09:25:00.000-08:00

Kick backs paid to estate agents by conveyancing companies could be outlawed, after a decision by regulators to lobby for their ban.

The Law Society, which represents all UK conveyancing solicitors, has tabled a motion to ‘make representations to government and the Legal Services Board that referral fees do not have a place in markets for legal services’ and that they should be banned. The Council of Licensed Conveyancers, who regulate Licensed Conveyancing Firms has not made a similar motion.

My firm stopped paying estate agents fees a while ago now. I don’t know what it is like outside London but in London estate agents typically receive anywhere between £100 and £400 for each referral lead that converts into a conveyancing instruction which reached completion.

The motion follows recent research by the Office of Fair Trading which found that 80% of estate agents recommend conveyancing solicitors to their clients, and half of these receive referral fees as a result. I believe that the OFT report underestimated the level of commissions being paid and the level of disclosure to clients.

One can expect some law firms who pay large referral fees to win business fight “ tooth and nail “ against a ban on referral. No doubt they will role out the argument that they have not received a single client complaint regarding referrals fees. But do their clients know that a referral fee has been paid ?

Poor Service from Conveyancing Solicitors or Licensed Conveyancers

2009-11-23T11:52:00.000-08:00

The only people, by law, who can deal with the legal aspects of conveyancing are solicitors and licensed conveyancers. If you have had poor service from your conveyancing solicitor or licensed conveyancer, and they haven’t dealt with your complaint satisfactorily, you can do the following:

• In the case of a conveyancing solicitor, you can complain to the Legal Complaints Service (LCS). If it agrees with your complaint, the LCS can order your conveyancing solicitor to refund your fees or pay you compensation. If you are not happy with how the LCS handles your complaint, you can then take the complaint to the Legal Services Ombudsman.
• For a licensed conveyancer, you can complain to the Council for Licensed Conveyancers who, like the LCS can order your conveyancing lawyer to refund your conveyancing fees or pay you compensation.

If you suffer a financial loss as a result of negligence (i.e. the conveyancing solicitor or conveyancer didn’t do something they should have done, or did something they shouldn’t have done, and you lost out as a result), you may have a case for compensation. In this situation you need the independent advice of a litigation solicitor to take your case. Neither the LCS or Council for Licensed Conveyancers determine handle negligence claims. The Law Society has a ‘negligence panel’ of solicitors who are prepared to take action against other solicitors. Solicitors and conveyancers must, by law, be covered by negligence insurance, also known as professional indemnity insurance.

Who should care if the Land Registry is privatised?

2009-11-23T10:03:00.000-08:00

The government may start a selling spree as it acts to reduce record borrowing, set to hit more than 12 percent of gross domestic product this year. The Land Registry has been earmarked by the Government as part of proposals to sell-off £16 billion of public assets to raise cash.

So does it matter ? I set out below some of the reasons conveyancing solicitors should care as should members of the public.

Conveyancer’s Self Preservation

As a public body the Land Registry has no commercial agenda other than to try and cover its costs. Should the Land Registry fall into private hands there is the possibility of it offering certain services that otherwise would have been carried out by solicitors or licensed conveyancers that traditionally have the closer relationships with buyers and sellers.

Currently, the Land Registry is predominantly focused on dealing with conveyancing lawyers as opposed to members of the public. What happens if that changes? What happens if they choose to charge for online applications that appear particularly targeted towards members of the public (subject, of course, to getting round the security issues)?

Dilution of free and expert advice

Of all the institutions connected with the conveyancing process the Land Registry are the most highly regarded by the legal industry. Other public bodies such as Local Authorities have often let conveyancers down. One only needs to think of delays in obtaining searches from the Inland Revenue in shambles when it came to the introduction of Stamp Duty Land Tax Certificates.

The vast majority of conveyancers have used the Land Registry for advice and guidance. At a time when conveyancing seems to be commoditised with an ever decreasing number of experts , the quality of the legal advice of the Land Registry is consistently strong. There is in fact a steady stream of practice notes and guidance leaflets that are issued by the Land Registry. Ultimately, home buyers and sellers will suffer.

Would this guidance come at a cost if the Land Registry was privatised? Probably.
Because many conveyancers use the Land Registry as a free service to pre-approve documentation even before applications for registration are submitted, privatisation puts this benefit at risk. Free services such as approving complex transfer forms or estate documentation along with Land Registry approval of lease plans or estate plans, would be now come at a high cost.

Compromise on Privacy Issues

While conveyancers and lawyers alike take it for granted that there are no privacy issues with the Land Registry, privatization may call this into question. Presently, the Land Registry Charges Department maintains an index of persons named in Bankruptcy Petitions and Orders, and the Land Registry Insolvency Service and Call Service are closely linked to upgrade the processes. Privatisation may required heightened scrutiny.

Independence

Finally, it is worth noting that the Land Registry in certain situations sits in the capacity of an Adjudicator. It runs approximately 80 cases a year, half of which settle shortly before hand. This invaluable service offered by the Land Registry has a significant credibility amongst the industry and consumers. It is doubtful that a privately owned company would be able to offer this service and even if it did, whether or not it would have the same "trust and credibility".

A campaign to Save the Land Registry has been set up and directs visitors as to various ways in which conveyancing solicitors and the public can help. These activities include :

• Offer to help raise publicity
• Writing to MPs
• Write to forums, blogs, web sites and newspapers challenging the automatic assumption that the private sector is good and the public sector is bad
• When talking to business colleagues, suppliers, partners, friends and family let them know the valuable public service the Land Registry provides
• Sign the e-petition at the Number 10 web site

Council of Mortgage Lenders highlight HIPs as Hindering UK Conveyancing

2009-11-23T07:21:00.000-08:00

UK lenders who have clear interest in the future of conveyancing have recently commented on a Law Society Consultation on Improving Residential Conveyancing.

Lenders rely on conveyancing solicitors and conveyancing lawyers to act for them both at the outset of a mortgage transaction or where lenders exercise their power of sale.

The CML express doubts as to whether the introduction of HIPs has assisted the conveyancing process and, suggest as which? have done, that HIPs may actually limit consumer choice because of tie ins and referrals.

The CML particularly highlight the plight of home owners facing repossession : “For borrowers in difficulty trying to sell a property to overcome financial problems it is a further expense. Lenders assist where possible but for customers experiencing payment problems a HIP is an added expense.”

Are estate agents breaking Home Information Pack Laws ?

2009-11-23T07:07:00.000-08:00

Three top London agents have strongly denied breaking the Home Information Pack law.
The Association of Home Information Pack Providers initially identified the three estate agents as repeatedly listing properties without Home Information Packs.

Following their “outing” of the estate agents, AHIPP withdrew the names for legal reasons, but is standing by its overall allegation that agents, particularly in London, are routinely flouting the law on Home Information Packs.

One of the estate agents responded to the online magazine Estate Agency Today : “We are unsure as to what the basis is of this accusation. We strongly request anyone come to our office so we can show them the HIP reports we hold for the properties we are marketing.”

I am not aware of any talk within the conveyancing industry of there being any repeated problem of acting for purchasers without Home Information Packs being made available.

The Legal Services Board Consultation Paper on Alternative Business Structures

2009-11-23T06:14:00.000-08:00

The Legal Services Board has just issued a consultation paper on 18 November 2009 “Alternative business structures: approaches to licensing”

The consultation, which has a huge impact on future of conveyancing, is to close 19 February 2010.

The consultation and invites licensed conveyancers to submit comments either to the Legal Services Board direct or the Council of Licensed Conveyancers.

The issues raised in the consultation are very important to the to the future of conveyancing and the licensed conveyancer industry as well as to the other branches of the legal profession such as conveyancing solicitors.

A small number of licensed conveyancer practices currently have non lawyer managers or have owners who are not lawyers. All these conveyancing firms will need to become licensed bodies (also known as Alternative Business Structures) regulated by the Council of Licensed Conveyancers as one of a number of licensing authorities.

The Consultation Paper sets out in varying degrees of detail the nature of the rules it expects licensing authorities to make. For instance, as a licensing authority the CLC will require each licensed body to have a Head of Legal Practice and a Head of Finance and Administration. All Managers (principally partners and directors) and owners will have to pass a “fitness to practise” test. Other important issues are raised: requirements for governance of the practice, indemnity insurance, arrangements for compensation, reserved and unreserved services, access to justice.

The rules for ABSs will be different from the rules for licensed conveyancer practices. The Council of Licensed Conveyancers have already made it clear that their current view is that the two regulatory regimes should be very closely aligned although they will not be identical. All licensed conveyancers will therefore be affected by these changes regardless of whether or not they choose to practise in an Alternative Business Structures.

Conveyancing Case Law - William Sindall Plc -v- Cambridgeshire County Council [1993]

2009-11-23T05:59:00.000-08:00

This was a conveyancing-related case where land was bought for developmental purposes, but the buyer later found a drainage pipe which very much limited the potential of the land. The pipe's existence had not been disclosed on the sale, because it was not known to the seller. Held: Under the National Conditions of Sale, it is the purchaser who takes the risk of there being easements unknown to the seller.

The court clarified that a seller was not liable for damages for misrepresentation if he had taken reasonable steps to make known to the purchaser what he himself knew.

Clause 14 of the Conditions attached to the Agreement for sale in this was is not an exclusion clause, but rather qualifies the sellers obligations. It did not therefore fall to be tested for reasonableness.

In using the phrase 'not so far as the vendor is aware' replies to preliminary enquiries the court determined that that such a statement was akin to a representation that the seller’s conveyancing solicitor and the seller had each made appropriate enquiries to support the statement.

The court concluded: 'knowledge may go beyond what is in somebody's head, that it requires a solicitor to read his file and to read it properly and to make . . . reasonable and prudent investigation of the grounds upon which the belief is based . . .'

The Law Society through their magazine the Gazette in an article about this case states “The effect of this case would appear to be that a prudent conveyancer should check the deeds carefully, read the file and any other relevant files the firm may have by checking the filing records, and following this make any other reasonable and prudent investigations. Checking answers given on SPIF1 must be part of the solicitor's duty as a prudent conveyancer. Failure to do this would surely amount to at least inadequate professional service, and probably professional negligence”.

Although the Law Society state “The Society recommends that solicitors complete the second part of the SPIF form.” There is no binding duty of the seller’s conveyancing solicitor to complete Part II of the Property Info Questionnaire.

It is due to this case of William Sindall Plc -v- Cambridgeshire and the statement by the Law Society that we at Fridays endeavor to ensure that where a seller completes a Sellers Property Information form that we ask the Seller’s lawyer to complete a Sellers Property Information Form Part II. In other words attempt give the buyer that we are acting for maximum protection and entitlement to rely on the information provided by the seller.

Unfortunately, most seller’s conveyancing lawyers, in the interest of self preservation, refuse to complete Part II of the Sellers Property Information Form.