Checks for conveyancers when dealing with Non‐Authorised Persons

Coming across non-authorised persons is rare in conveyancing but it does happen. I personally came across it on two occasions over a 15 year period. On both occasions I looked up the regulations but, given the serious implications of not following the right steps I made sure that I was in touch with my regulator throughout.

The first thing you should do (and arguably you should do this on all cases) is check on the Law Society, CLC, SRA sites or call them to see whether a person is an Authorised Person entitled to provide reserved instrument activities, as required by paragraphs A3.2 and B3.2 of the CML Handbook, or is otherwise an Exempt Person (schedule 3 2007 Act).

If you are unsuccessful at obtaining that confirmation you should immediately:‐
(a) Write to the Non‐Authorised Person:‐

• asking for an explanation why the prohibition under s.14‐16 2007 Act does not apply to them; and

• stating that in the absence of such explanation you cannot enter into any dealings with him or her unless there is clear evidence that no offenses will be committed. An example of clear evidence would be a letter from an Authorised Person confirming that he will prepare the relevant documents; 

(b) Write to your own clients explaining why you can not deal with the Non‐Authorised Person unless clear evidence is forthcoming. This needs to be done delicately.

Where you are acting for the Buyer you should consider the following and, if appropriate, amend the contract:‐

(a) replies to the Property Information forms and all other preliminary enquiries and requisitions should be signed by the seller;
(b) the deposit must be paid to your firm as stakeholder. If the vendor will not agree to this, it may be possible to agree to hold the deposit in a deposit account in the joint names of you and the seller;
(c) either the vendor must attend your offices personally at completion, or an authority must be handed over on completion signed by the seller for the purchase money to be paid to his agent. The reason for this is that the protection provided by s. 69 Law of Property Act 1925 only applies when a document containing a receipt for purchase money is handed over by a Recognised Body or solicitor, or the seller himself;
(d) deeds and keys are given to the person entitled to receive them (the buyer). If an authority on behalf of the buyer is offered to you, it is for you to decide whether or not to accept it, bearing in mind that no authority, however expressed, can be irrevocable;
(e) The purchase money, including any deposit, is paid either to the seller or to the seller’s properly authorised agent.

When acting for the Lender you should consider the following:

(a) You are not obliged to undertake work which would normally be carried out by the borrower’s
legal adviser (e.g.  preparing and drafting the instrument of transfer). However, it is essential to the lender client that good title is transferred to the borrower.
(b) Compliance with s. 69 Law of Property Act 1925 may mean that you require either that the borrower to attend personally on completion, or that a signed authority from the borrower in favour of his agent is received on completion.

It is important to carry out the right steps when dealing with a non-authorised person as the implications of getting wrong are very serious :

It is a criminal  offence for a person who is not an Authorised Person and is not an Exempt Person to carry out conveyancing.

Where a Non‐Authorised Person carries out conveyancing, the Non‐Authorised Person’s client is likely to be guilty of aiding and abetting the offence. The Authorised Person acting for the other party (which could be you)  may also be guilty of procuring the commission of an offence by inviting or urging the Non‐Authorised Person to provide a draft contract or transfer or to progress the transaction.

Finally, and forgive me for stating the obvious here: an undertaking offered by a Non‐Authorised Person should not generally be accepted as it is not enforceable in the same way as an undertaking given by you or by another Authorised Person.