Reported recently on www.Telegraph.co.uk the chief Legal Ombudsman has raised concerns about clients being "caught by surprise about the way their legal expenses were charged".
A good example we can think of is in area of conveyancing charges.
Conveyancing used to be the sole domain of the Solicitor, but over the last decade or so, a whole host of outfits have set up shop claiming to offer the same service but at vastly cheaper prices. Unfortunately, no Solicitor is offered, instead often just a conveyor belt of poorly trained individuals putting the accuracy of your home ownership at risk. A worrying thought.
Yet, a cheap headline price is highly attractive to some people, of course it is.'Conveyancing £150 plus VAT!' how wonderful you might think.The adverse consequences of going cheap are put out of mind, as home movers see themselves on a budget.
The problem is, is that there is always a bare minimum amount of legal work to do on every house sale or every house purchase, and the cheaper the price, the more corners have to be cut to enable the business to still make a profit. No business will last in the long run operating that model, and as a result, cheap prices have begun to disguise buried and hidden charges to bring the prices back up - all pure profit going to the law firm - and yet to a level where the client still does not receive an actual qualified lawyer.
Here are some examples of hidden/buried charges:
- A fee if the property being bought has an unregistered title. The majority of land is registered in England & Wales, but many conveyancers are inexperienced with unregistered title and so make the client pay for their learning curve. An experienced Solicitor need not separately charge.
- A fee for acting for the mortgage company on your purchase. For many firms, they make no separate charge and many do not even charge for this work, simply treating it as part of a standard purchase.
- A fee for completing the Stamp Duty Tax Return. Why this form is singled out makes no sense, as why not charge for preparing the contract, or a two page letter etc. This charge dates back to 2003 when a new longer tax return came into being. Law firms panicked and felt it would take longer to complete - when in fact it takes about 3 minutes of time to do on most firm's computers.
- A charge towards the conveyancer's â€˜Professional Indemnity Insurance'. All firms must have this to operate so this is an overhead just like paper and electricity, but some conveyancers still collect a contribution.
- A fee for postage and telephone calls. Again a pure overhead.
- A fee for repaying a mortgage on the sale of your property. This can be up to £150 or more. Pure profit.
- A fee if the gap between exchange of contracts and completion is less than an arbitrary amount of time. There are reports that some firms' websites state that they charge around £100 if that gap is in less than 3 weeks - when most gaps are 10-14 days anyway. So it will always be triggered!
- A fee for making no-standard enquiries of the sellers. This is part of the conveyancer's job, to make enquiries on the papers.
- A fee for commissioning searches beyond the Local Authority search. Near universal practice is to commission 3 other searches anyway, so this will always be triggered
So be smart when deciding on who you want to handle the legal work on your house sale or purchase and consider the following:
- Never feel pressured into using a conveyancer by an Estate Agent or Mortgage Adviser - they will more than likely have a hidden agenda that is not best for you
- Always receive the quote in writing
- And always check for small print for the extra charges - like those mentioned above and any others
- Ask for a guarantee that there will be no extras added on
- Ask who will be your actual conveyancer. Demand the very same one person throughout and make sure they are legally qualified for the job e.g a Solicitor or Legal Executive
It's your house move, and you owe the security of choosing well to yourself and your family.