The Law Society Conveyancing Portal - Destined for failure?

A new online conveyancing portal purporting to simplify and speed up the house-buying process, has entered the final stages of development and is scheduled to be launched to the conveyancing profession in Spring 2015.

The new online service, called Veyo ( named after a small town in the US?) , is a joint venture between The Law Society and Mastek UK, a global IT solutions specialist.

Its aim is to bring together all the processes from client instruction to completion, including checks and documentation prepared and undertaken by solicitors and licensed conveyancers in the sale and purchase of residential properties.

At its  recent launch there were some bold statements made  about this new system

“Veyo will shift the balance of power and give the profession greater control.” Jonathan Smithers, Vice President, The Law Society

  “Veyo will transform the way we do conveyancing.” Desmond Hudson, Chairman

   “Veyo will be secure, efficient and transparent” Elliott Vigar, CEO, Veyo

Conveyancers will be asked to pay a licence fee and a charge per transaction. The likely costing will be announced later this year, with a view to getting firms signed up from January 2015 onwards.

To justify the charge being the industry is told that Veyo will “reduce your costs of undertaking a conveyancing transaction and, fatten your margin.”

The investment?

A staggering £10million pounds has, or will have been invested in developing Veyo with the Law Society setting up a company to develop the system owning 60% of the shares and Mastek UK holding a 40% interest.

Money well spent?

Only time will tell but one must question the size  and  safety of this investment when it was not too long ago that the Law Society was left with egg on its face when its joint venture with MDA Advantage  to produce a Home Information Pack offering became one of the most famous IT debacles of recent times.   The cost of that project failure has never been released but it is clear that a sum not too far off that already spent on developing Veyo was lost. 

Spending such a large amount of members money on a project which claims to be there to support the CQS Protocol also begs the question whether the money would have been far better spent on looking to reform an antiquated conveyancing process ( last reformed in 1925) and or on extra staff and other resource for a Scheme which is clearly buckling under its own success. Why run with a new project and look to advance this with haste whilst  there  remain major cracks in the infrastructure of CQS? 

It is evident from speaking to some major conveyancing IT providers that the offer of making existing and proven systems available to the Law Society when the idea was first mooted, was not well received.  In fact the feedback is that quite a number of those technology companies were given the ‘cold shoulder’ in a way which had  caused much alienation.   Its surprising  that the Law Society chose not to go to a recognised supplier but instead decided to re invent the wheel and in the process spend a large chunk of money which could have been utilised on a  far more deserving project. 

My firm decided back in 2011 to invest in our own technology and with one developer we were able to develop an online conveyancing case management system which I know performs 80% if not more of the functions which Veyo say it will be offering.  The cost of our investment  baas peanuts in comparison. I acknowledge the Law Society is looking for robustness and security and I accept this accounts for part of the cost.   However there are plenty of Technology providers out there who could have delivered at a much reduced cost. 

There must also be some concern over the commercial aspects of the ‘partnership’. Like many of these joint ventures the actual terms of the arrangement will not be made public even though a large chunk of the investment has come from the Law Society's members. One thing for sure the commercial partner will not be making a hefty investment  without assurances that the project will be providing its shareholders with a sizeable profit within a reasonable amount of time.   This means  Veyo will need to pay for itself within 12 to 18 months and much of the early revenue will be dependant on a heavy take up of the system. It will also probably mean a high license fee and transaction cost.  

The dependancy on licence and transaction fees must give rise to the fear of ‘lock in’ arrangements with the CQS sitting at the top of the tree.  How long will it take before all CQS  members will be required to renew and  or apply for panel memberships through Veyo? Making membership of Veyo as a pre - requisite for joining or continuing with CQS must also be announcement waiting to happen. 

On top of this we will soon surely see restrictions on the use of third parties through Veyo. It will clearly follow that only preferred suppliers of ID checks, Searches will be available to the users of the portal.  To make money and to ensure its longevity I fail to see how the Law Society can avoid passing down the same route as those companies which run and operate successful referral platforms.  

We should all be calling on the Law Society to disclose its future plans and details of its business plan for this project for the next 3 years.  I suspect this will fall on deaf ears. 

Take Up 

I was told not too long ago by the Project Manager that a survey had been conducted and the results of this gave a clear indication that a large number of conveyancers have already committed to subscribing to Veyo.   This may be so, but its surprising that none of the large players in the industry have following the recent launch stepped forward to record their support and commitment to the system. I also question why the survey data has never been released. If supportive of the large investment why have we not had sight of it?

The sale literature around the system boasts ‘A system made by conveyancers for conveyancers’  I am sure we would a all like to know which conveyancers were involved in the development as its clear that the Law Society is very far removed from grass root conveyancing and would not be best placed to advise on how processes work on a day to day basis. 

Integration 

There will we are told be third party integration kits. The Law Society say most of the Legal IT providers have said they will integrate with Veyo.  Surprisingly none of those suppliers have as yet come forward. I suspect they may be waiting for the commercial terms of the arrangement to be published before going public. 

There may exist conflicts between the commercial objectives of Veyo and other IT providers and going forward this may prevent the widespread use of Veyo.  Why would a large conveyancing business having already invested a large amount of time in securing and training with a current supplier wish to spend further time and money on either switching or having to change work flows etc to accommodate what in many cases would be an unnecessary ‘add on’.

Lenders

I was told that one of the aims of Veyo is to facilitate the movement of money between conveyancers on completion.   This is an ambitious step but would suggest that the Law Society has been working with Lenders.   Bearing in mind the large investment already made in this project it is again worth recording that as yet none of the major lenders have come forward and given their backing to this project. On the contrary they have instead focused their attention on establishing and promoting a different system namely the Lender Exchange. 

The Exchange had a shaky start but has found its feet; I suspect Veyo is likely to face a more difficult introduction and having not it seems engaged with the Exchange during development this could in due course prove to be a fatal  error of judgment. 

Viability 

Unless the Law Society and or  PII insurers decide to compel all of those undertaking conveyancing to use Veyo ( which is most unlikely) it seems that that the system like many others before it may be destined for failure.  Its no good having a hub to communicate with others , when some of the conveyancers in a chain have chosen not to use the system. 

Conclusion 

It is far too early in the day of course to pass judgment on a system which has yet to be released and which continues in the meantime to be nothing other than a concept.  

However for this to work and to be successful there needs to be complete transparency on the commercial arrangement as well as low start up fees.  There will also be a need for the Law Society  to win the hearts and minds of the conveyancing community.  This may be difficult given its appalling track record and its continuing failure to connect with those who operate at  grass root level. 

David Pett - Director and Solicitor 

MJP Conveyancing  are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

The Death of Leasehold Exit and Sub-Letting Fees?

There is great speculation surrounding the future of fees charged by Freeholders and or Managing Agents on the subletting of leasehold property.

This follows news that the Law Commission is going to examine the right to charge such fees as well as leasehold exit fees charged when selling or renting out a retirement flat.

According to the Leasehold Knowledge Partnership speculation is rife that such fees will be outlawed for good. 

The Partnership reports on its website:

‘This means anyone selling or renting out a retirement or non-retirement flat should keep all documentation with a view to making a claim in two and half years time’.

It adds:

‘LKP is deluged with inquiries about subletting fees, often where freeholders and their managing agents are plucking figures from the air for a sublet consent.

The tribunals have dealt with countless cases, but there is no binding decision on what would be a fair sublet consent (most freeholders have to give consent to a sublet, usually followed by the word “such consent not to be unreasonably withheld”.

The retirement sector is further complicated because some sublet fees are contributions to the contingency fund and some are set at one per cent of market price.

One family at Gibson Court, in Hinchley Wood, Surrey had to pay a sublet fee of £2,500 into the contingency fund last January.

McCarthy and Stone this month dropped the one per cent contingency charge at all sites where it is the freeholder in favour of an £80 plus VAT fee’

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

A Solicitor’s Dual Duty

When instructed in a purchase transaction in which a client is seeking to rely on the aid of a mortgage, it is important to note that a Solicitor owes a duty not only to their client, but also to the client’s lender. Does a Solicitor, however, owe a general duty to report any information which may materially affect the valuation of the proposed security for the Lender? 

The answer to this question is evident in the recent High Court judgement of E.Surv Ltd v Goldsmith Williams Solicitors, published on April 10^th 2014, which saw a conveyancing firm ordered to pay costs of £100,000.00 for failing to disclose information on the value of a property to their client’s lender. This article examines the decision of E. Surv Ltd v Goldsmith Williams Solicitors, which is likely to be of particular interest to lenders.

The case centres on Mr Gayler – the client – who bought a property in September 2005 at a cost of £390,000.00. The client sought to remortgage the property and consequently instructed E Surv Surveyors to value the property in November 2005, at which time he informed E Surv that he had bought the property six to twelve months earlier at a cost of £600,000.00. E Surv valued the property at £725,000.00. The client applied to a lender in December 2005 for a loan of £580,000.00 to be secured against the property, which was based on an approximate value of £725,000.00. E Surv’s valuation was not provided to the lender at the time of the application, yet the application erroneously stated that Mr Gayler had purchased the property in October 2005 for £450,000.00. During the course of their instructions, Goldsmith Williams Solicitors – who acted for client and lender alike – obtained the Land Registry’s Official Copies for the property, which disclosed that Mr Gayler had indeed purchased the property for £390,000.00 in September 2005; the Solicitors did not divulge this information to the Lender. The remortgage transaction completed on February 13^th 2006 on the basis outlined above. Mr Gayler defaulted on his mortgage payments and the lender took possession of the property, selling the same at a significant loss. Consequently, the lender pursued the Surveyors and Solicitors, but only followed through their action against the Surveyors for their supposed negligent valuation. The Surveyors agreed a settlement with the Lender for £200,000.00, only to later pursue contribution proceedings against Goldsmith Williams – it is this resultant case with which this article concentrates. This case centred around two principal issues: whether the solicitors were under a duty to advise the lender as to the recent disposition of the property and correct purchase price, as well as whether the surveyors could prove that, had the solicitors done so, they would have issued a revised valuation to the lender. Whilst the solicitors argued that there was no causative effect as between any breach on their part and the lender’s decision, the Court held that the solicitors breached their duty by failing to report the purchase price, with the surveyors evidencing that, on the balance of probabilities, the bank would not have proceeded had this information been communicated. The Court ordered the solicitors to pay 50% of the surveyors’ cost to the lender - £100,000.00. The solicitors have since stated that they will be seeking to appeal.

In anaylsing the impact of the judgement made, it is important to examine a solicitors’ duties to a lender during the course of a transaction. The Council of Mortgage Lender’s Handbook (CML), which was introduced in 1999, provides comprehensive instructions to solicitors when acting on behalf of lenders in residential conveyancing transactions; in addition to this, there is also the Building Societies Association Handbook (BSA Handbook), which was brought into force in 2010. Prior to the introduction of the CML handbook, a solicitor’s duty to report matters relevant to the lender’s valuation was derived from common law and had been held to be a part of his duty of care and skill. This ‘Bowerman Duty’ was outlined in Mortgage Express v Bowerman [1996] PNLR 62, which held that ‘if, in the course of investigating title, a solicitor discovers facts which a reasonably competent solicitor would realise might have a material bearing on the valuation of the lender's security or some other ingredient of the lending decision, then it is his duty to point this out”. Nevertheless, the case of E Surv v Goldsmith Williams focused on provisions 4.1.1.1 and 5.1.1 of the CML Handbook, which respectively note the following: 

4.1.1.1: You must take reasonable steps to verify that there are no discrepancies between the description of the property as valued and the title and other documents which a reasonably competent conveyancer should obtain, and, if there are, you must tell us immediately

5.1.1: Please report to us immediately if the owner or registered proprietor has been registered for less than six months.

It is important to note that selling or remortgaging a property so soon after a disposition of the same does not fit within the usual pattern of residential home ownership;  you would need to question why the proprietor is looking to dispose of the property so quickly after its purchase. There are, of course, certain situations which have been excluded from provisions 4.1.1.1 and 5.1.1, which include, but are not limited to, a sale of a property by way of a personal representative of the proprietor, or a receiver or trustee-in-bankruptcy. As aforementioned, one of the key issues in this case was whether the Solicitors were obliged to inform the lender of the fact that Mr Gayler had purchased the property within the last 6 months for £390,000.00. Clearly, under the CML, there is no obligation on the Solicitor within provisions 4.1.1.1 and 5.1.1 to report to the lender the purchase price of the property. Therefore, a crucial question of the case was whether the ‘Bowerman Duty’ survived despite the introduction of the CML, or whether the obligations listed therein are exhaustive, leaving no scope for any further duties. However, the Court held the following:

‘…in my judgment what the Lenders Handbook, read with the Practice Rules and certificate of title, is intended to do is to identify and delimit the precise scope of the specific activities which the solicitor is being retained to do, in circumstances where the solicitor is faced with the difficult position of acting for two parties with potentially conflicting interests. It is not intended to exclude the general obligation to exercise reasonable care and skill in the performance of such activities…’

What can we draw from the judgement of this case? It is clear that from this case that the CML handbook does not negate solicitors’ wider duties of reasonable care and still owed to the lender, or indeed the client; the ‘Bowerman Duty’ should thus be read in conjunction with the CML guidelines. E Surv Ltd v Goldsmith Williams serves to find a happy medium between meeting the client’s and lender’s expectations with the responsibility in acting as a solicitor, as the solicitor has not been placed under an extended burden to obtain further information. What the case does underscore to a Solicitor, however, is the importance of reading and reviewing the information obtained carefully, so that any potentially prejudicial matters affecting the valuation of a property are brought to the attention of the lender.   

A big thank you to Bethany Slaughter a Trainee Solicitor with MJP Conveyancing for this insightful contribution 

Mortgage Valuation Report

Your solicitor may ask to have sight of the valuation report used by your lender to assess your eligibility for a mortgage. In this article I look to explain why your solicitor needs to see a copy of the valuation. 

The CML handbook ( which governs your solicitors relationship with your lender )  requires  your solicitor to check the property valuation report. 

Your lender may not have  provided your solicitor with a copy of this document and because of this your solicitor will seek from you a copy of the valuation report which should have been sent to you direct.

Why does  your solicitor need to see this particular document?

Your solicitor must check that the correct property has been valued (by checking the address on the valuation against that on the contract or title) and that any assumptions made by the valuer, such as tenure, restrictions on use, availability of parking etc are correct.

Your solicitor must report any errors or omissions to the lender so that they can ask the valuer whether the valuation needs to be revised as a result of them. 

Even if you have provided your solicitor with a survey/homebuyers report  your solicitor will not be able to discharge his duty to the lender without sight of the valuation report. 

MJP Conveyancing  are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Gifts and buying a home

More and more property transactions are being funded in part by gifts from parents and other members of the family.  The involvement of a gift has implications which your solicitor is obliged to address and which will normally involve additional work.  

In this article I examine the obligations on your solicitor when you are purchasing a property with a mortgage and where you are receiving a gift to assist in the purchase of your home. 

The CML handbook ( which governs your solicitors relationship with your lender )  requires your solicitor to enquire of you as to how you intend to fund the balance monies - that is to say the difference between the purchase price and the amount borrowed under the mortgage. If your solicitor becomes aware that the balance is coming from somewhere other than your own savings or the sale of an asset (such as another property), for example a loan, or gift or second charge, then this must be reported to your lender.  

Your solicitor  will require your consent to make the report to your lender, and in the event that consent is not given your solicitor must return the lender's instructions (the mortgage offer) and explain that he can no longer act for you as a conflict of interest has arisen.  

If it is a gift of money your solicitor will need to obtain from the donor of the gift a letter to confirm that the monies to be advanced are a gift ( and will not be repayable) and that the donor will not by making the gift be looking to acquire an interest in the property. 

In addition, when acting in the purchase of a property at undervalue, or the purchase of a property by way of gift, your solicitor is required to obtain a clear bankruptcy search against the donor of the gift or seller  ( where there is a sale at undervalue ) and also obtain indemnity insurance. The reason for this is that if the donor of the gift or seller should become bankrupt within 2 years of the making of the gift/selling the property, the Official Receiver has the power to recall the gift.  Your lender therefore requires insurance to cover this eventuality. 

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 davidpett@m-j-p.co.uk

Your Guide to the Digital Property World

With more and more of us having access to the internet through tablets and smart phones, it should be of no surprise that there are an increasing number of websites available to satisfy the digital appetite of the property seller/purchaser.  

At one time the focus of these website was the professional, however the emphasis has clearly changed with more and more online portals popping up to provide the consumer with direct access to information.

The increasing number of house price indices will soon be challenging the number of coffee outlets! The better of the bunch include http://www.zoopla.co.uk/  and http://www.rightmove.co.uk/ these website offer the consumer not only access to the national property market but also offer information on latest UK house prices.  They also offer a range of sold price information databases, meaning that consumers have a much more accurate view on how much a property might be worth.

You can also take a look at the crime rate for the postcode by visiting www.crimerates.co.uk/

If the standard of local schools is of importance you can find the latest Ofsted inspection report rating here: www.locrating.com/

If public transport is important check the location of the local bus/train station and timings of buses/trains by visiting: www.transportdirect.info

Check your mobile phone reception and broadband speeds within the home. The following website shows some of slowest areas in the country: http://on-msn.com/VwkVWd

As for the conveyancing process is concerned, the bad news is that there is still a lack of products on offer which enable a consumer to access information and documents during the course of a transaction.  

Www.quickcoveyance.com offers some relief by providing the consumer with 24/7 access to post, conveyancing documents, solicitor updates and legal reports generated during the course of the transaction.   These are all presented in an online and client specific property log book which can be accessed even after the transaction completes.

My firm makes use of this portal and since it was made live in 2011 it has helped handle 29,000 transactions.  It clearly used by our clients having recorded in July of this year over 16,500 views.

The Law Society Portal which will be launched soon promises more of this type of portal – only time will tell if it the Law Society can for the very first time deliver a product which will be adopted and preferred by professionals and consumers alike.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Demand more for the fee you pay to your estate agent

I always make a big effort to manage my clients expectations when  taking on new instructions. I do this because some clients may be buying a home for the first time and other clients arrive on our door step with  a distorted expectation stemming from discussions with the estate agent.  I am not sure why some agents believe that conveyancers  have attended Hogwarts.  I am certain however that by providing a client with misinformation about the conveyancing process some agents simply do not do their clients any favours. 

You pay your estate agent a small fortune to market your property and perhaps the time has come for us all to expect the agent to do more than put a ‘For Sale’ board up and place a few advertisements in the local newspaper.  A simplistic view I know and I must qualify the preceding and following observations by acknowledging that not all agents are the same.  There do exist pro active agents who often prove very helpful. 

So what could the agent be doing to help to speed up the process of a house sale?

To begin with it would be good to know that your agent has some knowledge of the legal process behind selling and buying a home.  How many agents have actually taken the time out to spend time with a conveyancer to understand the steps involved and more importantly the reasons why delays can arise.   If an agent devoted the same amount of time to learning about conveyancing as some agents  do in chasing a conveyancer for updates there would be vast reduction in the the number of interruptions conveyancers receive each day and a massive improvement in turnaround times. 

I did send an email around not too long ago inviting agents to a free training session.  The idea was to provide an overview of the selling and buying process.  Surprise, surprise I did not receive one acknowledgement let alone an acceptance! 

If you sell a home there are what are known as transaction forms to complete.  These set out details on the property such as council tax banding and particulars of the items you are leaving in the home.  These are forms which normally take a client sometime to compete and there are some clients who need help in completing the forms.  I have never understood why the selling agent does not hold a stock of these forms so hand to clients when it comes to the marketing of the property.  It would save so much time and allow the conveyancer to send out the contract pack much quicker. 

Helping the client to get  together to pass to the conveyancer the warranties, guarantees and planning and building documents would also make life so much easier for the conveyancer.  We spend so much time on chasing clients for forms and documents and this is often the source of major delays. 

Once the transaction is up and running the agent should not telephone/email the conveyancer every day seeking an update.  Rather than helping these constant interruptions only serve to cause delay.  We have ploughed several thousands of pounds into developing a state of arts online tracking systems which clients love and which is accessed by our clients around 13,000 times each month.  The system also allows the selling agent on sales to receive the same updates but to actually get an an agent to use it is simply impossible.  The mentality is why should I access an online system when I can try and get the information by telephoning.  Agents seem obsessed by the telephone.  

Last month our support team took over 4000 call of which 70% were from agents.  These calls involved over 150 hours of manpower which we could have used far more usefully in progressing transactions. 

The other way agents could help and is to give up on creating a blame culture.  Some agents enjoy playing one party to a transaction against the other.  Why?   All it does is to fuel unnecessary stress and make the whole process even more painful. 

The agent could play a far bigger role in helping the conveyancer when it comes to fixing a completion date.   This can often prove to be a logistical nightmare and trying to get the agent to call the other agents involved to come up with a mutually acceptable completion date would help to save so much time and wasted energy. 

I suppose what I am trying to say is that if there was a closer working relationship between the agent and the conveyancer, and a better understanding of the selling and buying process on the part of the agent,  the time it takes to sell a property could be much shorter and less stressful.  Is this likely to happen in the future?  I very much doubt it.  Agents are not going to change when there is no need to do so given the very high fees they charge. Why do more work than is necessary?

Perhaps some conveyancers who pay agents for referring home sellers to them are partly to blame.  Would they really wish to do anything that could rock the boat?

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Conveyancers help to fight crime

Solicitors always ask clients for lots of information when they are buying a property. Two of the most important pieces are identification and Source of funds. 

Solicitors  gather this information to ensure their clients are who they say they are and to play their part in preventing crime.

In this Article Katie Easter, trainee with MJP Conveyancing, looks to explain the reasons behind the inquiries solicitors undertake to ensure as best they can that they are not used a a conduit for criminality. 

Anti-money Laundering

Source of funds is closely linked to anti-money laundering purposes. Identification takes away the possibility to commit money laundering whilst remaining anonymous. It can also make it easier to catch previous offenders. Establishing the source of a client’s funds when purchasing a property allows law firms to be vigilant against any suspicious sources. This helps to prevent criminals passing the proceeds of crime though law firms’ client accounts.

The ‘risk profile’

Law firms are encouraged to build a ‘risk profile’ of their clients with the information gained from identification and source of funds. Each client can be considered low or high risk in relation to money laundering depending on the source of their funds and any discrepancies between identification documents. 

Once a client’s risk is ascertained, any changes to this throughout the transaction can alert a law firm to the possibility of untoward behaviour.

At MJP we use a Source of Funds form with questions such as:

·         Are you purchasing with the help of a mortgage?

·        Please also ask [any other] party concerned to produce evidence of identification in the form of a passport or photo card driving licence and a utility bill delivered within the past two months

These help us to build a picture of each client to enable us to monitor the possibility of criminal activity throughout every transaction.

Cash Purchasers

Law firms are advised to ask for additional documentation to show their client’s source of funds where there is the potential for more risk. 

Cash purchasers can be considered more of a risk compared to individuals purchasing with the aid of a mortgage because mortgage providers carry out their own checks against each customer. In contrast, cash in a bank account is not necessarily ‘clean’ and cash purchasers can therefore find that they are asked for more information about where their funds originate from.

Why has the person giving me a cash gift for my property also been asked for identification?

All money coming into a law firm should be monitored with the use of identity and source of funds checks.  This includes money that comes from an individual that may not actually be a client. This is intended to prevent clients attempting to purchase property with another person’s funds that could be the proceeds of crime. 

The main thing to note

Clients can be concerned that law firms are actively seeking to accuse them of money laundering. This is not the case. Although law firms and particularly conveyancing departments are responsible for ensuring that the proceeds of crime do not pass through the firm’s accounts, they are not policing money laundering. 

Law firms strive to maintain constant vigilance to prevent crime without handing in every cash purchaser and wealthy client that is purchasing a property!

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

I am frustrated with my conveyancer

‘I am frustrated with my conveyancer as the whole process is taking far too long’ - I hear this from time to time despite the efforts we make at the outset to manage a client’s expectation.  It’s easy to blame and vent anger in the direction of the conveyancer but more often than not the source of the frustration lies elsewhere.

For most home buyers, once they have had an offer accepted on the property of their dreams the next thing they want to do is to start picking out furnishings and make plans to move.   In simple terms  one party wants to buy and one party wants to sell, what could be simpler and why should it take so long for the formalities to be sorted?

The reality is that there is no set timetable when it comes to a conveyancing transaction and so things only progress as quickly as the slowest moving part of the chain.  At a time when banks are now looking closely at their lending criteria it can often be the case that a buyer may have to jump through more hoops that previously in order to satisfy their chosen lender.  Also, one person’s idea of urgent may not necessarily accord with another’s, and buyers and sellers can face dealing with people and or their representatives who may not share the same views on how quickly a transaction should proceed.

People have their own agendas and rightly so often decide to keep these very much under cover.  So even though on the surface he objectives are in common with each other there often exist complications which make it difficult for the conveyancer to push through things quickly.

If there is a sizeable chain of transactions then it is possible that one transaction can be ready to proceed fairly quickly, but is delayed whilst transactions elsewhere in the chain deal with complications.

Managing expectations and recognising that most conveyancing transactions will have complications or reasons for delay which are beyond the control of the conveyancer makes it advisable that buyers and sellers should not set their hearts on any specific dates for completion. 

There is no harm if parties wish to work towards target dates, but moving home is stressful enough without adding in the stress of trying to complete a transaction by a specific date, which may turn out to be non - achievable. 

Estate agents often raise expectations and set timetables which are unrealistic and for this reason it’s always advisable to speak to and rely only on the guidance given by your conveyancer.

Also keep in mind that the conveyancing process which has not changed since 1925 is antiquated and is not designed to promote a quick and efficient transaction.  On the contrary it often contributes to delay and makes it difficult and costly for the home owner to sell and or buy.  But that’s a different story! 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Can a conveyancer act for both a buyer and seller?

Conflicts of interest, as outlined within the SRA handbook is an important issue that we as conveyancers must consider at the forefront of every undertaking of instruction by potential clients to a transaction. The SRA handbook outlines two different types of conflict which shall be detailed below. 

Georgie Harrington, trainee solicitor with MJP Conveyancing will seek to discuss the contentious topic of acting for both the buyer and seller to a conveyancing transaction, a matter that holds a very high risk of conflict within a firm. Investigating the potential difficulties and whether it is ever considered good practice.

‘Conflict’ for the purposes of our understanding, is something that compromises your, or your firm’s, ability to act in the best interests of each of the clients. For example, one is not able to recommend the best course of action for one client if it in turn prejudices, or has the potential to, affect the interests of the other client to the firm.

The two types of Conflicts of Interests:

The first type of conflict is that of an ‘Own Interest Conflict’. The nature of this conflict arises where your duty to act in the best interests of any client conflicts with your own interests. This could include a financial or personal interest for example. The second type of conflict arising more commonly in the practice of conveyancing is the ‘Client Conflict’ held in Outcome 3.5. 

This is whereby the solicitor owes separate duties to act in the best interests of two or more client’s in relation to the same or related matters and these duties conflict or there is a significant risk of the duties conflicting.

Acting for the Buyer and Seller:

A common client conflict within the conveyancing field occurs from the scenario where a conveyancer to the firm takes instruction to act for both the buyer and the seller of a property.

The SRA does not make these circumstances impossible under the rules; we know this because of the existing exceptions contained in Outcomes 3.6 and 7.

Examples include where the transfer of land is a gift between the parties or it is between family members or such like. There may be such a close connection between the parties to enable their interests to so closely relate it would be disproportionate to instruct a further solicitor on the matter. Chapter 14 of the Code explains that a ‘substantial common interest’ between the clients must be clear and the achievable outcome evident, with the conflict being secondary to the common interest. Of course here, the clients must first be agreeable and aware of the risks involved. Furthermore, a situation may exist where the parties know the solicitor well and do not want for anyone else to act on their behalf. With all this in mind, it is ultimately down to the acting solicitor to decide whether a client conflict is likely to arise, the significance of the common interest if any, and whether it is reasonable in taking the risk. This in turn raises the question ‘at what point is it reasonable to undertake the risk based purely on the understanding that the client’s share a common interest?’

In light of making this decision, the solicitor must take into consideration certain factors such as the likelihood of making negotiations between the two parties and whether this would create an imbalance between the interests. For example, where negotiation of price comes into question, there is a significant risk that negotiation will not benefit the best financial interests of at least one of the client’s. As we well know, negotiations are simply not limited to that of monetary requirements. The parties to a transaction are often faced with the discussion of insurance policies, what fixtures and fittings are to be included in the sale price, agreeable completion dates and so on. Moreover, the solicitor must consider any situations, necessary action or advice that would put one of the parties in a vulnerable position. For example where there is an existing exchange or completion deadline or where a survey flags up an important issue, the solicitor is obliged to advise on what is most beneficial under such circumstances. This advice may not be effective as it is simply conflicting or may in turn expose one client to vulnerability.

A firm, in compliance with the Outcomes to the SRA must consider and put in place such behaviours that will limit the risks of a conflict arising. Adhering to these behaviours will evidence that a solicitor has complied with the overlying Principles to the Code of Conduct. If subsequent to entering into the client-solicitor relationship with both the parties, a conflict or risk of such arises or even where the existing conflict becomes relevant, the acting solicitor is obliged to cease to act for one of the parties. He may continue to act for the other party to the transaction if this does not affect the confidentiality of the former party.

In consideration of the above, whilst the SRA Code of Conduct enables the possibility to act for the buyer and seller of a property, the practice is not one to be recommended. In circumstances it may be considered desirable for the practicality of the prospective clients, however in balance of this against the capability of a conflict to arise, I determine it trifling. Be it better for a firm to comply with behaviours and practices to avoid these conflicts than to enter into an agreement where the risk is so dependent upon matters out of our hands

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Buying a property without a survey is bonkers!

When it comes to a conveyancing transaction where the Buyer is reliant on a mortgage there is a common misunderstanding the lender carries out a detailed survey.

There are, writes Michael Riches, Trainee with MJP Conveyancing,  three “levels” of surveys that are available to a Buyer, which are: Valuation Report, Homebuyers Survey, Full Structural Survey.

Valuation Report

This is the survey the lender carries out when they are considering a mortgage offer. It is a mandatory requirement for any Buyer reliant on a mortgage. The lender will instruct a surveyor, at the Buyers expense, to report to them on the value of the property. The purpose of the survey is to advise the lender whether the property will make a suitable return should the Buyer default on the mortgage. The report does not comment on the structural soundness or any defects the property may have. It is merely a report on the current market value of the property.

Homebuyers Report

A homebuyers report will comment on the quality of the property. It is a survey more suited to newer properties, by which we mean properties less than 70 years old. The purpose of this survey is to point out to the Buyer any areas of concern such as damp or woodworm and indicate a cost of repair. When instructing a surveyor for their Valuation Report most lenders will offer, at an additional charge, to have their surveyor carry out this survey.

Full Structural Survey

This is a more comprehensive report and as such is time-consuming and costly to the Buyer. It is a survey more suited to older properties, which may have timber frames, thatched roofing or are listed. It would also be the more appropriate survey for any Buyer considering having significant works carried out on the property. As the name suggests it will comment on the structure, major and minor faults and any areas of concern.

After reading the above definitions and what each survey contains it may surprise you to know that only 20% of all Buyers will carry out an additional survey to the mandatory Valuation Report conducted by the lender’s surveyor. There is a common myth that the Valuation Report will be sufficient and provide all the detail a Buyer will require to make an informed decision about the purchase of a property. This is simply not the case.

In the world of conveyancing there is a latin adage Caveat Emptor, which means “Let the Buyer beware”. The seller has a limited duty to disclose latent defects in the property. Therefore it is the Buyer’s responsibility to investigate the property as much as they can. This is a very simplified and edited explanation of the principle to illustrate the importance of surveys. The survey will advise the Buyer of any concerns which can then be duly forwarded to the Seller during pre-contract enquiries. This

may then result in the defect being corrected, a re-negotiated purchase price or indeed neither of these.

It is for these reasons that when asked the question “Do I need a survey?”, any conveyance will answer “Yes!”.

The logical follow-up question would be “Which surveyor should I use?”.

You may be able to use the same surveyor the lender uses to carry out their valuation report. However, it is important when buying a property to make your own investigations in the first instance. A Buyer should always visit the property and inspect as much as possible. By doing this you may find areas of concern that you can ask the surveyor to pay particular attention to. This is an important step.

The main purpose of any survey is to advise the Buyer but it is also to protect the Buyer. By viewing and inspecting the property you will be able to give specific clear instructions to the surveyor on areas of concern to you. This means the surveyor is duty bound to investigate those particular areas as well as conduct a general survey of the property. If a surveyor fails in this duty and a fault is found after completion, then this may give rise to a claim of negligence against the surveyor. If you fail to give clear instructions and the surveyor only conducts a general survey, the report will usually contain caveats to cover the surveyor should any future defect arise.

If you do not want to use the lender’s surveyor then you can instruct an independent surveyor. Most surveyors will be regulated by the Royal Institute of Chartered Surveyors and you will be able to find a local surveyor on their website http://www.rics.org/uk/ . Using a local surveyor will have the benefit of knowledge of the local market values.

When looking to purchase a property the main focus of the transaction should be geared towards finding out as much about that property as possible. When you are buying a property you are making a big investment. Therefore it is important to understand what you are buying, whether it is worth the money you are paying for it and whether there are likely to be any significant expenses in the future. Surveys are one way of achieving this.

MJP Conveyancing  are solicitors who provide conveyancing services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk