Tuesday, 29 December 2009

Freeing up Government Data on Rights of Way

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.

Sunday, 27 December 2009

What is Caveat Emptor ?

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?

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

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.

Wednesday, 23 December 2009

Landlord stung by failure to comply with service charge requirements

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

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.

Sunday, 20 December 2009

Consumer panel opens consultation on conveyancing referrals

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.

Wednesday, 16 December 2009

Changes to post completion conveyancing

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.

Tuesday, 15 December 2009

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

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 .

Sunday, 13 December 2009

Conveyancing Yorkshire Style

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.

Thursday, 10 December 2009

Action over property misdescription

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.

Monday, 7 December 2009

Investigation into Conveyancing referral fees

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.

Sunday, 6 December 2009

Property Fraud on the increase

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

Years ago, a completion of a 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. One can often find a conveyancer or solicitor 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.

Other popular conveyancing sites include :

Lease Extensions Hackney
Find a solicitor on the Nationwide Conveyancing Panel 
Transfer of Equity Conveyancing 

Friday, 4 December 2009

China requires UK conveyancing protection

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 ?

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.

Monday, 30 November 2009

The ever-changing landscape of conveyancing and referral fees

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

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.

Saturday, 28 November 2009

The Emergence of Green Conveyancing

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.

Thursday, 26 November 2009

No sale no fee Home Information Pack insurance

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

Wednesday, 25 November 2009

Possible Conveyancing implications as a result of the next general election

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

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.”

Tuesday, 24 November 2009

Conveyancers and their brown paper envelopes

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 ?

Monday, 23 November 2009

Poor Service from Conveyancing Solicitors or Licensed Conveyancers

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?

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.


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

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 ?

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

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.

It's not difficult to find a 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]

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.