The End of Dual Representation?

09 Sep 2011

It is very common for lawyers to act on behalf of the borrower and lender for commercial and residential transactions (although lenders will usually appoint their own lawyers when dealing with a high value and / or complex transaction).   


On 6 October 2011, the new Solicitors Regulation Authority Handbook will be introduced to replace the existing Solicitors’ Code of Conduct.  Compliance with the new Handbook will be compulsory. 


As currently drafted, the new Handbook only permits a lawyer to act on behalf of the lender and borrower if:


  • the mortgage is a standard mortgage provided in the normal course of the lender’s activities, where a significant part of the lender’s activities consists of lending and the mortgage is on standard terms;
  • the property is to be used as the borrower’s private residence;
  • the lawyer is satisfied that it is reasonable and in the client’s best interests for the lawyer to act; and
  • the certificate of title required by the lender is in the form approved by the Law Society and the Council of Mortgage Lenders.

This will mean that lawyers will be prevented from acting on behalf of a lender and borrower if:


  • the mortgage is over commercial property;
  • the mortgage is over the borrower’s investment property; or
  • the borrower can negotiate the terms of the mortgage.

This is a significant departure from current practice and will result in an increase to costs and delays.