Monday, 10 September 2018

The Insurance Distribution Directive and Conveyancing - Are you ready ?

The Insurance Distribution Directive (IDD) will introduce  as from the 1st October, 2018 a new regime for those involved in insurance sales, even if selling insurance is not your primary business.



The IDD is designed to strengthen insurance customer protection, and will also apply to all businesses involved in the insurance supply chain, including where insurance is sold alongside other products.

So this will cover, for instance, the proposal and supply of defective title indemnity insurance. In this article I will look at the role adopted by most conveyancers when it comes to acting as a facilitator of indemnity insurance products. 

The SRA advised: “All firms should therefore assess their own individual practices and make sure they are… able to comply with the revised rules.”  The SRA has yet to issue confirmation of final rule change, though this is expected to be published shortly. 

Suppliers of indemnity insurance have also been slow off the mark to provide guidance and revised documentation even though these changes were due to be introduced back in February of this year. 

What is meant by insurance distribution activities?  

This will cover advising on and proposing contracts of insurance as well as carrying out work preparatory to the conclusion of contracts of insurance.  Most conveyancers who facilitate  indemnity insurance will fall within the category of “Ancillary Insurance Intermediary’. That is service providers and distributors of goods who distribute insurance products on an ancillary basis.

What are the requirements for engaging in insurance distribution activities as an ancillary insurance intermediate?

There needs to be evidence of registration with the your regulator to undertake such activities. 

Those involved need to be of good repute and possess  appropriate knowledge and ability to advise on and propose insurance products.   

This will entail training on products and on what formalities need to be addressed when engaging with clients.  The specific requirements for individuals to undertake 15 hours CPD relating to the provision of Insurance Intermediary Activities do not apply.

A  manager must be appointed to ensure compliance and records must also be kept to demonstrate  compliance. 

What are the rules on remuneration?

The IDD is keen to avoid conflict of interests when it comes to advising and supplying insurance products.    

This will therefore prevent a conveyancer from making  any arrangement by way of remuneration, sales targets or otherwise that could provide an incentive to the conveyancer or their employees to recommend a particular insurance product to a client when the solicitor could offer a different insurance product which would better meet the client's needs.

This will also mean a conveyancer will to be able to be paid a commission  or other advantage  for the supply of indemnity insurance without full accountability to the client. 

What information needs to be given to the client at the point of the retainer?

The client care agreement will need to be reviewed. Precise and clear information on the what what the conveyancer can do and not do under the IDD needs to be given.  The conveyancer’s regulator must be stated and the complaints procedure for dealing with complaints about the provision of and advise on insurance products must  be made clear. 


What information must be given before the indemnity insurance cover is put into force?

The requirement for a demand and needs statement remains and is extended. 

(a) sets out the client's demands and needs on the basis of the information provided by the client;
{b) where a recommendation has been made, explains the reason for recommending that contract of insurance;
(c) reflects the complexity of the insurance contract being proposed;

There is an obligation  to also provide the client with objective and relevant information about the insurance product in a comprehensible form to allow that client to make an informed decision while taking into account the complexity of the insurance product and the type of client. This shall be provided by way of a standardised insurance product information document ("IPID") on paper

The IPID 

This will be supplied by the  indemnity insurance supplier and shall include:

(a) information about the type of insurance;
(b) a summary of the insurance cover, including the main risks insured, the insured sum and, where applicable, the geographical scope and a summary of the excluded risks;
(c) the means of payment of premiums and the duration of payments;
(d) main exclusions where claims cannot be made;
(e) obligations at the start of the contract;
(f) obligations in the event that a claim is made;
(g) the terms of the contract including the start and end dates of the contract; and
(h) the means of terminating the contract.

What obligations are there when recommending to a client which insurance cover to run with?

Where a conveyancer recommends a contract of insurance, the client must be informed this is made on the basis of a fair analysis of the products available within the market.  This will involve looking at a  sufficiently large number of insurance contracts to enable a recommendation of a product which would be adequate to meet the clients' needs.   This will for example involve looking at the extent of the cover, whether the cover has an escalation clause, the rating of the insurer within the market and the conditions of the cover.  In other words making sure the client can make an informed decision about the product. 

If you are only using one provider of indemnity insurance the time may have come to look to other providers for comparable products or to a provider that can supply you with a list of  number of similar products for selection. 

Conclusion 

In practice if an indemnity policy is required it is often requested by the buyers conveyancer. If this is the case and you are acting for the seller given the above you should be saying it is for the buyers conveyancer to look for the policy and to determine which policy would be suitable for their client.  It would not be appropriate nor advisable for the buyer’s conveyancer to allow the buyer to accept a policy put forward by the seller without checking its suitability and carrying out an analysis of the market. 

If a policy is required the key is to ensure the client is presented with all of the information required under the IDD and is left to make the decision on which policy  designed to address the relevant defect he or she wishes to take out.   Providing  the appropriate policy required to address the defect is correctly identified  one should be  looking to only provide general advice to clients on the difference in insurer ratings and   the benefits of escalation clauses  when proposing insurance options. It should be made clear that cheaper cover may not always be the best option. 


MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Friday, 7 September 2018

‘Buyer Beware’ - Tips to avoiding post completion issues.




We all like to imagine our dream homes being exactly the way we envisaged upon completion.



Being able to move in with no issues and taking our time to replace items such as the boiler and improve rooms such as the kitchen and bathroom. Unfortunately our dreams are not always a reality on completion.



The unfortunate reality of purchasing a property in England and Wales is that the risk is  entirely with the buyer. It is for the buyer to inspect everything in as much detail as possible and for the buyers Conveyancers to raise adequate enquiries to eliminate as much of the risk as possible. This is really where your detection skills are put to the test.



We cannot stress enough the importance of inspecting the property as thoroughly as possible. Ensuring you not only view the property but test the items within it. Asking the seller to switch on the heating in the middle of summer can seem a bit excessive however it will reduce any doubt over the state of the boiler - a costly post completion situation we all too commonly see. Ask the seller, when was the boiler last serviced, if this was not within the last 2 years or if they do not have the report it may be worthwhile asking for it to be serviced prior to exchange of contracts.



Another equally important factor is to ensure that you commission a home buyer survey prior to exchange. It may seem daunting looking at the results but as your conveyancers we can view the home buyers survey and advise on any specific issues to be concerned with. If  necessary we can then raise further enquiries with the sellers solicitors. Our recommended  surveyors can assist and details can be found on our website : www.mjpconveyancing.com 



Finally if there is anything that is of particular concern to you but you do not feel this has been dealt with during the course of the enquiries do let us know. Once exchange has taken  place the seller is not obligated to respond to any further enquiries and it is therefore  important anything you wish to raise is dealt with pre exchange.



Post completion issues really can hinder your enjoyment of purchasing a new property, do  not be caught out inspection is the important key.


 
For further advice on post completion issues please do not hesitate to contact our dedicated  team - completions@mjpconveyancing.com or sophie.goodman@mjpconveyaning.com



Sophie Goodman

Trainee Solicitor
























MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Tuesday, 15 May 2018

The Dreamvar Appeal- Strict Liability for identity imposter fraud cases?

The long and much awaited Court of Appeal decision in Dreamvar (UK) Ltd v Mishcon de Reya and the linked claim in P & P Property Ltd v Owen White and Catlin LLP, has now landed, and for the conveyancing industry, landed with a big bump.
In both cases a fraudster posed as the legal owner of the property.  Each buyer instructed solicitors to act in the purchase and each transaction completed.  The sale proceeds were unwittingly released to the fraudsters and the fraud was only discovered after the money was completely out of reach.  The buyers were left high and dry and took action against their advisers.
In Dreamvar, the purchaser sued the solicitors acting on the purchase as well as the selling solicitors and selling agent. Even though the judge at first instance had no issues with the purchaser’s solicitors conduct of the transaction they were found liable.
On appeal the Court of Appeal has attempted (and in many areas failed) to provide clarity on the following issues, and unfortunately the news for conveyancers and their insurers is not good.
Breach of warranty
The Court of Appeal found that as the selling conveyancers signed the contract in P&P there was a warranty that the selling solicitor’s client, that is the imposter, possessed the authority to transfer the title, and that as the buyer placed reliance on that warranty the selling solicitors remain liable for the losses.
It’s not clear what the position would be had the imposter signed the contract and not the seller’s solicitors. What is clear is that if the seller had included in the special conditions within the contract a clause to the effect no warranty as to the true identity of the seller is given, and that any reliance on any a warranty to this effect is unjustified, the decision might have been different. 
In practice this could give rise to a stand off between the seller and the buyer and it is clear urgent guidance from insurers, the Law Society and the CLC is required. The late intervention of the Law Society in this appeal represented a lost opportunity to make a marked impact on the decision and as always it is the practitioner which has been left with uncertainty and unnecessary risk.
Breach of Duty
Some good news! As anticipated the Court held a seller’s conveyancer does not owe a duty of care to a buyer.
Breach of Undertaking
The Court held that the undertaking that forms part of the Code for Completion covers the situation where the funds are received from a buyer in a situation where as in these cases the seller is not the legal owner of the property. Therefore, by releasing the funds to the imposter, the seller’s conveyancer had breached the undertaking.  This gives rise to not only professional difficulties, but a sellers conveyancer could also find themselves on the end of enforcement action under summary jurisdiction.
I would suggest there is a need for seller’s conveyancers to look to modify the Code and make it clear that the authority to receive is on the understanding that all reasonable efforts to identify the seller as the owner have been made, and that as no warranty to that effect can be given, the undertaking should be viewed as amended in these terms. 
Again, guidance from the insurance industry and the professional bodies is needed sooner rather than later.
Breach of Trust
Further bad news for the conveyancer.
The questions addressed were:
Should the buying conveyancer be excused from their liability for breach of trust under section 61 of the Trustee Act 1925 when they had acted properly, and whether the seller’s conveyancer is liable for breach of trust at all when they innocently release the money to the fraudster.
As for the seller’s conveyancer it was held there was a breach of trust as there was not a genuine completion – it goes without saying that completing the transaction on behalf of the fraudster and not the true owner is not a true completion.
Unfortunately, little if any guidance on what would constitute grounds for establishing a successful s61 defence was given. If these cases go onto the Supreme Court, which is probable, then hopefully some useful guidance for the industry may be given.
Clearly, carrying out good AML checks and having regard to what are now well-established red flags (vacant property, no charge, large sale price) would be a good start.  Making sure in these cases that there is evidence tying the client to the property should now be a routine check. However, given the exemplary conduct of the buyer’s solicitors was not found to be sufficient to justify a S61 defence, it is questionable whether a S61 will still be an option, irrespective of the steps a conveyancer takes.  This is bad news on all fronts as it could lead to a sizable increase in PII premiums.
It also gives rise to the possibility of the seller’s conveyancers saying to the buyer’s conveyancer that they may wish to perform their own checks on the seller before proceeding. The buyer’s conveyancer may in turn advise their client whether they wish to proceed with a transaction where there is no warranty given as to the identity of the seller. In other words, putting the risk at the door of the buyer. In Dreamvar the first purchaser pulled out for this very reason. 

Conclusion

It seems we are close to seeing a strict liability era for conveyancers who unwittingly find themselves on the wrong end of imposter fraud of this type. How the insurance industry reacts to this remains to be seen.

David Pett – Property Law Solicitor
15/5/18

The Dreamvar Appeal and the game of 'ping pong' it has created



The decision of the Court of Appeal in  Dreamvar (UK) Ltd v Mishcon de Reya and the linked claim in P & P Property Ltd v Owen White and Catlin LLP has created more uncertainty and will without doubt lead to conveyancers playing ‘ping pong’ with each other as I hope this article looking at the practical implications will demonstrate. 
So a buyer solicitor will be asking the seller for a warranty that the conveyancer’s client is the legal owner of the property. In return the seller conveyancer will or should say that all money laundering checks required by statute have been undertaken but that no warranty should be implied into the response as to the true identity of the seller.  
The ball now firmly back in the buyer’s conveyancer’s court, the competent buyer’s conveyancer should challenge this, and say this is not good enough, and to specifically enquire as to whether the seller’s conveyancer has seen evidence to link the client to the ownership of the property. For example, evidence of building insurance or recent payment of council tax. This I submit is a reasonable request and one which the seller’s conveyancer should be required to answer.  If the seller’s conveyancer refuses then the buyer should be made aware that there is a refusal to provide the evidence, and be advised that he or she should not proceed without it. Make sure the seller’s conveyancer is made aware of the consequence of failing to answer this question. 
If confirmation is given I am not sure the buyer’s conveyancer can do more. I consider it would in the absence of any other red flags be sufficient to take the reply as read.  If there are however red flags present then the buyer’s conveyancer may decide to ask for the sight of the evidence. The risk here is by asking for this and then receiving it, the buyer’s conveyancer is then taking on responsibility for checking the authenticity of the documents supplied. 
This line of enquiry should be undertaken in each and every transaction. 
If the buyer’s conveyancer following this enquiry has on going doubts then as I say this should be made aware to the buyer, and it may be that the advice is not to proceed, and if the buyer wishes to do so then a disclaimer should be signed. 
The buyer in these circumstances should check the adequacy of the seller’s conveyancers PPI cover to make sure that off an issue arises the buyer is not exposed if a claim needs to be made. 
The buyer’s conveyancer should also insist that the Law Society’s Code of Completion should be adhered too, which is of particular importance if the seller conveyancer is a licensed conveyancer or a conveyancer which operates outside the Law Society Protocol ( if the Protocol applies the Code is implied).  If the Code does not apply then the buyer’s conveyancer should insist on the seller’s conveyancer undertaking that they have the legal owner’s authority to receive the purchase monies. This should be sought before exchange.
If this is not forthcoming my view is that the buyer should be advised not to proceed without it and if the buyer says he or she still wishes to proceed make sure a disclaimer is sought. 
There is no outright winner in this game - its all about compromise and making the client aware of the risks where these exist. 
David Pett - Property Law Solicitor 


MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at david@mjpconveyancing.com

GDPR- What, How When, Where, Who?


In an increasingly digital world, it is arguably harder to keep track of what we have bought, who we have spoken to, what we have signed up to and more importantly, where our data is held. When we receive the telephone calls about accidents that we never had or emails from a friend who is supposedly stuck in Thailand after being involved in a tuk tuk collision, it often worries us how our details ended up in the hands of these rather ominous places. 

Organisations have become wise to the trends in consumer behaviour; namely, we want things done quickly and efficiently with as little bureaucracy as possible. A trend that has been exploited by firms using pre-ticked boxes and electronic receipts as consent to marketing as a way of increasing their customer base and decreasing consumer knowledge.

Well, four letters have the potential to shift the power back to the consumer and those four letters are G.D.P.R. You may have only just started to hear the acronym being used or might not be aware of what it even means but organisations all over Europe are currently working on becoming compliant with what is being dubbed the biggest change to data protection law in the last 20 years. 

This article will give you a brief understanding on the EU General Data Protection Regulations (GDPR) and what MJP Conveyancing has been doing to ensure compliance for our clients.

What?

1998; the era of chunky Nokia flip phones and dial up computers. 1998 was also the year that the Data Protection Act was introduced setting out 8 principles governing the use of personal information. Since 1998 we have witnessed technological growth on a scale far greater than we can process resulting in inadvertent cultural trends and an increasing imbalance of power in favour of the producer rather than the consumer.

 Let’s take the Tesco Clubcard as an example. Introduced in 1995, the Club Card was arguably introduced to gain a competitive advantage against its rivals by offering perks to returning customers. Since 1995 however, the growth in technology and types of data collected through the Club Card has enabled Tesco to gain a better understanding of their customers’ shopping habits such as what meals people like to eat, whether people like to cook from scratch or how many people are in the household based on the number of toilet rolls a customer purchases. My point? It is clear to see how data collection and analytics are changing at a rapid pace and there has been a growing need to modernise data protection legislation in order to protect how our data is shared and utilised by organisations.

The General Data Protection Regulation (amongst many other functions) seeks to bring data protection legislation into the 21st Century by protecting the fundamental rights and freedoms of natural persons and in particular their right to the protection of personal data.  


How?

How does GDPR seek to modernise data protection regulation? There are various ways in which GDPR seeks to modernise data protection laws such as appointing a Data Protection Officer, Free Subject Access Requests and the relationship between data processors and controllers.

One particular modernisation of the GDPR under Chapter 3 lays out 8 rights for individuals, namely:

  1. The right to be informed
  2. The right of access
  3. The right to rectification
  4. The right to erasure
  5. The right to restrict processing
  6. The right to data portability 
  7. The right to object 
  8. Rights in relation to automated decision making and profiling.

These 8 rights amongst other things aim to provide individuals with a higher degree of access to their data as well as more transparency around how it is processed. What’s more, the GDPR explains how companies must provide a ‘reasonable’ level of protection which in itself provides the Information Commissioner’s Office with a lot of scope to fine companies who are in breach of these rights under the regulations.  

Another modernisation to the data protection act through GDPR is the mandatory requirement to report Data Breaches within 72 hours to the ICO which was not under the Data Protection Act. Companies such as Carphone Warehouse, Facebook, Under Armour and My Fitness Pal have been in the press recently for Data Protection breaches, but it is not just the big guys that face liability. Small and large companies are under an obligation through Article 33 of the GDPR. With fines as large as €20 Million or 4% of total global turnover as versus maximum fines of £500,000 under the Data Protection Act, not only is GDPR enabling regulatory bodies to clamp down on bad practice, but are also providing clients with a satisfying remedy knowing that their data has not financially benefited business.

Overall, these regulations reflect a changing technological landscape which in turn has required our legislation to impose a greater degree of responsibility for those who control and process as part of their business.

When?

GDPR comes into force on the 25th of May 2018. MJP Conveyancing have been working since December 2017 to ensure full compliance with the regulations. A dedicated team of inhouse staff have worked through a project list and we are now confident that we are compliant with the regulations.

Where?

You may be thinking why I have taken then time to write this article given that the GDPR regulations are a piece of EU legislation and doesn’t apply to us because of Brexit. This is in fact wrong and the UK will have to prepare for GDPR as with all the other organisations within the EU in line with Article 3 of the GDPR .  

To end…

MJP Conveyancing has been working tirelessly to comply with the GDPR regulations having successfully run a re-permissioning campaign, risk assessments and audits, staff training and various policy changes. We feel ready for the regulations and hope to provide our clients with a safe, transparent and reliable service which is really the ultimate aim of these regulations. 

See you on the other side of May 25th!


Written by Emily Chawawa.

MJP Compliance Officer 

Thursday, 10 May 2018

Can a party wall surveyor be sued for negligence?

The vast majority of surveyors who work within the party wall arena discharge their duty in a competent and ethically driven manner. 
There are however, a small minority who continue to let the side down. They operate outside the ambit of their statutory appointment and with little attention or care for the interests of the home owners they touch along the way. 
This presents a problem for many, since once appointed it is very difficult to remove a party wall surveyor. The involvement of an unethical surveyor can often lead to a whole heap of misery and financial loss for the unwitting appointee and or adjoining owner. 
I am often asked whether faced with this situation is it possible to bring an action against the rogue surveyor to seek legal redress for loss stemming from the negligent delivery of the service provided. In other words, can a party wall surveyor be sued for negligence. 
For an action in negligence to succeed the claimant will need to show that a duty of care exists, that the surveyor involved has breached that duty, and that there is a causal link between the breach and the actual loss suffered by the claimant. All of these elements must exist. So for example, if there is no loss then there is no entitlement to damages even if a breach can be proved. 
Duty of Care 
There is a clear contractual and common law duty owed by a party wall surveyor to the appointing home owner. The duty is to undertake work with reasonable care and skill. 
Following a section 10 of the Party Wall Act 1996 appointment, there is also a statutory duty owed, not only to the appointing owner, but also to the adjoining owner.
It has been suggested that each surveyor owes a duty of impartiality to each of the appointing parties and that this must take priority to the interests of their own appointing client ( Anstey, J., Party walls and what to do with them, RICS Books 1996, p. 15. See also Anstey, J., Trouble with the Neighbours, College of Estate Management 1983, p. 21). 
This was recognised in Lahrie Mohamed and Shehara Lahrie V Philip Antino and Raymond Stevens ( 2017) where HHJ Bailey recored in his judgment the following:
'It is important to note that the provisions of section 10 arise when a “dispute arises or is deemed to have arisen”. Once there is such a dispute, whether actual or deemed, either a single agreed surveyor or three surveyors are appointed, or, strictly, in the case of the third surveyor, selected. Where there are three surveyors two of them will have been appointed by (or occasionally for) one of the owners, whether building owner or adjoining owner. These party-appointed owners do (or should) not however act in any sense as agent for the owner appointing them. As the Earl of Lytton said when introducing the Party Wall Bill in the House of Lords on 31 January 1996: 
“The duty of party wall surveyors is quasi-arbitral. Once appointed they have a duty of act properly in the interests of both parties as statutory surveyors, which is a most important safeguard.”
Breach of Duty 
So in what circumstances could a breach arise?
The most obvious breach is bias, where a surveyor clearly fails to take into account the interests of both parties. This is not to say one surveyor should not be able to adopt a position which is contrary to that of the other surveyor. Indeed, this is the reason a third surveyor is often appointed. There is nothing wrong with positioning, however the Act has more to do with serving the interests of the parties. 
As explained the surveyors are under a duty to act fairly and within the spirt of the Act, and to ensure they do not lose sight of the enabling purpose of the Act. The parties are not interested in the construction and interpretation of the Act, the building owner is looking to complete the works, and the neighbouring owner is keen to know what work is to be carried out and what measures will be in place to protect the neighbouring property. 
So those surveyors who look to create disputes which do not exist and or who use the statutory procedure to constantly argue for no purpose other than to cost build, could clearly be viewed as failing to discharge their statutory and common law duty of care.
Equally, a surveyor who fails to assist parties to reach a quick and inexpensive resolution of issues could also be exposed to a negligence clam. It is clear from the Court of Appeal decision in Gray v Elite Town Management (2016) that the “the statutory procedure is intended to be a simple, inexpensive dispute resolution mechanism”. 
It could also be argued that a breach could result from a surveyor failing to advise his appointing owner or indeed both owners of alternative dispute resolution options, such as mediation, when, as often occurs, there is a deadlock between the parties. 
Causation and Loss 
In the case of a surveyor acting outside of his or her statutory appointment, through, for example, raising countless argument on issues which are no longer in dispute, and or constantly moving the ‘goal posts’, and or unnecessary protraction of the process, and or obstructing/hindering the proceedings and or acting in a confrontational manner, and or using the Act for personal gain, there may exist sufficient evidence to prove a breach. 
If it can be shown that there is link between the breach(s) and actual financial loss, then the affected party or parties could very well be in a position to bring a negligence claim against the offending surveyor to claim damages. 
The general aim of an award of damages in tort is to restore the claimant to his pre-incident position. In contract, on the other hand, the aim of a damages award is to put the innocent party in the position he would have been in had the contract been performed.
A damage claim could therefore include :
Extra surveyor fees due to the unnecessary protraction of the process - that is for both building and neighbouring owners
Extra cost/penalties due to the delay in the commencement/continuation of works
Damage to incomplete building works due to prolonged exposure to the elements 
Legal costs incurred in addressing issues created by a rogue surveyor 
The cost for establishing and running an alternative dispute resolution option
Negligence actions are not for the faint-hearted, though do keep in mind that surveyors operate with professional indemnity insurance cover, and that once a claim is intimated you should find yourself dealing with the surveyor’s insurers rather than the surveyor direct. 
David Pett - Property Solicitor with MJP Conveyancing