The risks which conveyancing solicitors face. Wow! Who knew?!
Compare the fees of conveyancing solicitors with those of estate agents, surveyors, mortgage advisers, mortgage lenders and removal companies. Conveyancing solicitors will usually come out cheapest. And we do not mean the Google brigade of hidden charging conveyancers who claim to charge £150 etc.
No, we mean the everyday conveyancing solicitor who typically charges an average fee of £600 plus VAT for their services. Yet, even after comparing them with the above, they have huge risks in store for what might be viewed as a paltry £600.
But what risks?
Even before they can open a file for you, they face a threat of prison and fines due to the need to carry out money laundering and anti-mortgage fraud checks. Are you who you say you are, or are you about to pretend to be someone else, and attempt to pull the wool over the eyes of the conveyancer? Admittedly this is not as easy to do these days, as conveyancers have lots of training behind the scenes and will regularly report anything suspicious – without the need for client consent. But the failure to properly make such checks can find solicitors guilty of money laundering charges even where no money laundering has taken place.
£600 hardly seems worth it. But that is only just the first hurdle.
- As part of the legal papers which are sent to a buyer, the seller is asked to complete a Property Information Form. If the conveyancing solicitor fails to check answers and the seller has volunteered unnecessary information, has the conveyancing solicitor acted in the clients best interests, particularly if loss is suffered? No? Then the client may have a claim against the conveyancing solicitor.
- If the buyer offers to pay less than 10% deposit at exchange and the seller’s conveyancing solicitor fails to advise the seller on the implications, the seller may well be able to claim the loss from their conveyancer.
- The seller’s conveyancer will be expected to undertake to the buyer to repay the seller’s mortgages (which they will do by using the sale proceeds). But if the conveyancing solicitor overlooks obtaining a repayment statement and still gives the undertaking, and the borrowing exceeds the sale price, they face paying the difference personally.
- The conveyancing solicitor allows their client to exchange contracts without drawing their attention to a mortgage early repayment penalty, then they could face paying this personally.
- Any third party fee that crops up as needing to be paid as part of the sale process should be approved by the seller personally. Failing to do this could mean the conveyancing solicitor being responsible for it personally.
The scope on a purchase is huge for mistakes by the conveyancing solicitor. For example:
- The Council of Mortgage Lenders say that conveyancers are recommended to advise their clients to have a survey. Failing to do this may result in a claim by the client. The conveyancer could foot the bill for any losses.
- Overlooking the fact that the property has no legal access and must cross third party land for which there is no consent. If a third party successfully blocks access, the loss in value of the property could fall to the conveyancing solicitor to cover.
- Overlooking that the use of the property is not authorised for planning purposes, maybe the garden was recently agricultural land and was taken into the garden. Any loss to reinstate/costs to obtain belated consent may fall to the conveyancing solicitor.
- Overlooking the need to advise a buyer on the terms of the conditions in ANY conditional planning consent affecting the property, as such a consent may prevent use of the property for the purpose the buyer had intended. The buyer’s loss could falls to the conveyancing solicitor.
- Overlooking the fact that the property stands in breach of a covenant/restriction in the deeds, and upon purchase, the buyer suddenly receives notification, and suffers financial loss to remedy (e.g. take down the extension/conservatory). The conveyancing solicitor can be liable.
- The conveyancing solicitor overlooks reading the estate agent particulars of sale and yet would have seen numerous alterations had been carried out to the property, and so the conveyancing solicitor missed ensuring the Council’s building control consent exists. After their client purchases, the Council take enforcement action, and the client loses £000s through reinstatement/costs to remediate. The conveyancing solicitor may be liable.
- The conveyancing solicitor fails to at least ask the selling lawyer to contribute an amount to cover any excess charge for the current estimated year’s management charge in a lease. The buyers lawyer can look to their own conveyancer to cover this.
The net result on nearly all mistakes means:
1. The conveyancing solicitor has worked for free, for all those weeks, despite best intentions;
2. The conveyancing solicitor has to pay out on top, and this can be £10 to well of £100,000, in fact the value of the property being sold, maybe more.
And yet, try finding a disclaimer anywhere in a conveyancing solicitor’s paperwork. Rare to see, as they always make their client’s welfare top priority.