When we’re talking to agents, our favourite question is “What do think makes a good solicitor?”
Most normally say “Someone I can always get hold of” or “Someone who can get deals through”.
This presents a challenge for agents to ensure their clients and buyers actually do choose the best solicitor.
Given that every deal seems more challenging than the last, understanding how things can go wrong is a useful way to help explain to clients that their choice of solicitor may determine whether a transaction succeeds, or fails.
In the past, solicitors could be confident that mistakes could be rectified amicably with the other side working together constructively.
However, increased competition, downward pressure on fees and increased requirements from mortgage lenders has resulted in this co-operative approach between conveyancers becoming a distant memory.
With over 70% of insurance claims against solicitors for residential conveyancing issues, and with finger-pointing and a blame culture rife amongst firms, it’s no surprise the Government estimates that over 28% of deals fall through.
In our experience, lawyers, due mostly to lack of experience, often give up when problems arise, which can usually be solved by thought and application. Here are some examples of how things can go wrong.
Selling the whole property?
It is not unusual for a seller’s solicitor to miss out part of a property when supplying title documents to the buyer. As the buyer solicitor relies on these when requesting searches, the buyer should be asked to check their accuracy before the searches are ordered. We often find mistakes in this area, which would require additional searches being ordered on the missing parts later in the process, delaying matters by weeks.
Putting a wrong, right
Despite checking plans, things can still go wrong. A client was buying a property with a reasonably square garden and told us that the plan was correct. However, after completion, it became clear their new neighbour owned a 9m square part of the garden, which had not been included in the contract.
Naturally our client was upset, but through our persistence we managed to convince the seller’s solicitor to transfer the property after completion for no additional cost, making it sellable in the future.
Potential ransom strips
Access issues cause problems because inexperienced solicitors struggle to know how to deal with them. We were buying a property for a client which had a private driveway that did not connect to the adopted highway road.
Although the seller had a right of way over the driveway, after we checked on Land Registry, we found the entrance to the driveway was not registered to the seller and they did not have a right of way over a verge to access the driveway.
We knew lenders would object to this, making the property unsellable, so we suggested an indemnity insurance policy to allow the deal to exchange and registered the land afterwards for our client.
This involved highly complex drafting, but got the deal through and eliminated the risk of the owner of the land demanding access fees in the future – the creation of a ransom strip.
Too many insurance policies
We were acting for the buyer of a property that had 14 insurance policies taken out on it, which made it such a high risk that the mortgage lender refused to lend on it.
We clarified access issues by obtaining statutory declarations from the owners and had new lease plans drawn up and submitted them to Land Registry.
Although it took a few months, solving these problems enabled us to get the deal through.
Anticipating future costs – the crystal ball problem
Particularly with leasehold properties, there are often worries about unknown future costs and these often kill deals. A buyer may be worried about planned works and the seller does not know how much they will be.
Experience is vital here, as such problems can be addressed by agreeing to the buyer holding back some money from the deal to cover such eventualities. All too often we have to explain to other firms how to do this, and draft agreements for them when they do not have the expertise themselves.
After exchange, things can still go wrong
Most agents are aware of problems caused where solicitors forget to notify the mortgage lender to send the money on completion day, causing completions to be delayed.
However, usually this can be solved by drawing up licence agreements to enable people to move into their new property, although, again, we often have to draft these documents for other lawyers.
Why can’t all solicitors solve problems?
It is the lack of expertise and experience caused by firms not having the time to invest in training or technology needed, due to the low costs they charge.
They must specialise and ensure the right people are doing the right job.
Solicitors should not be giving quotes and legal executives should not be checking identification documents.
Trained salespeople should be employed, combined with smart technology, because until such modern, confident approaches are taken, the number of staff with experience will not increase, due to a lack of profitability.
This will mean an increase in both transaction times and a drop in the number of abortive cases.
Which is one outcome we’d all love to avoid.
- This is Peter Ambrose’s first column for EYE. He is founder of conveyancing firm The Partnership