Wednesday, 24 April 2019

SRA Shine a Light on Inadequate Leasehold Reports on Title

The recent review of the conveyancing sector by the Solicitors Regulation Authority found that 23 percent of conveyancing firms are inadequately advising leasehold homebuyers.

In what the SRA describes as a 'dangerous assumption', several firms said that they saw no reason to explain the difference between freehold and leasehold, assuming the client would already know or the estate agent would have already explained it. Ultimately this leads to the question as to whether the solicitors have breached their duty of care.

As a result of the SRA's review, six law firms have been referred to the regulator's internal disciplinary processes. No doubt these firms will have their Reports on Title scrutinised.

Regarding leasehold advice, the SRA report found:

  • Nearly a quarter of firms did not explain the difference between freehold and leasehold properties, with some relying on the client’s knowledge or information provided by an estate agent.
  • One out of five people who had purchased a leasehold property did not remember being provided with any information on the length of the lease, service charges and other payments such as ground rent.
  • 26% of clients did not recall being given a draft copy of the lease to review prior to signing it.
  • 17% did not think that their solicitor had clearly explained the features of their lease – rising to one in three among first-time buyers.

Leasehold reform campaigner Louie Burns of The Leasehold Group of Companies, said: “Conveyancing solicitors who are found to have given inadequate or misleading advice should be held accountable and leaseholders must be given adequate compensation.”

Lexsure are running a series of free webinars next month focussing on the leasehold section of their Report on Title technology (known as e-ROT).

This "Mini" Report accommodates the trend of law firms increasingly reporting on individual sections of the conveyancing documents. This also addresses recent identified failures by firms to report adequately on leasehold as a tenure.

Webinars can be booked here.

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