Peter Ambrose: How does a solicitor affect the outcome of a deal?

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
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6 Comments

  1. tbridge74

    An interesting article which identifies some of the issues which can affect transactions . Most large conveyancing operations are specialists and employ appropriate technology to progress cases proactively. Provided the operation has access to internal technical knowledge / expertise then I would expect the issues identified would be dealt with during a transaction. In my view the most important factor is communication with clients , introducers and other parties in the transaction .

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  2. Woodentop

    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. I can name more than a few expensive, who fall into this category

     

    They must specialise and ensure the right people are doing the right job. No kidding!

     

    Solicitors should not be giving quotes and legal executives should not be checking identification documents. Run that by me again!

     

    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.  Is it me, or does this say a lot about solicitors?

     

    I can name many good solicitors and just like any business, it is the people you employ that makes all the difference, not the brand. Not always practicable, but I have always thought it would be good for conveyancers to visit the property they are selling. Most certainly stay away from call centres and corporate agents own solicitors wing.

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    1. Peter Ambrose (The Partnership)

      Thank you for the feedback Woodentop.

      I definitely agree that lack of expertise is not only confined to the cheap lawyers!

      I know that it sounds really obvious, but almost without exception lawyers that we interview for roles here spend a considerable amount of time giving quotes to clients and have highly experienced legal executives performing tasks that they really shoudn’t be doing. Train up specialists in reviewing identification documents – this requires different expertise than legal.

      The fundamental problem is being able to employ enough people in different, specialist roles, and instead, expecting the lawyer to cover all aspects of the role, including creating financial statements, and getting in new business.  Most law firms simply cannot afford to invest in the training and expertise in ALL areas to make this work.

      Attracting the right people is a challenge, but typically the bigger problem is using them effectively – it is endemic in law firms that solicitors are often forced to take responsibilities due to a lack of resource.

      And let’s not even talk about how registration is mishandled by law firms – that’s for another article.

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  3. Rob Hailstone

    Back in the day Woodentop, when I was being trained by a very experienced Legal Executive conveyancer in Bristol (Bob Fletcher), we visited a number of properties (sometimes on a sale, sometimes on a purchase) to check boundaries and take measurements etc. The legal fees being charged in those days enabled that to happen.

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    1. Woodentop

      Hi Rob, the good old days. Is it me, but isn’t todays 21st century supposed to be more proficient! This internet thingy has  a lot to answer for, great at killing off companies, the high street and reducing service levels for the sake of cheap, cheap, cheap. Meanwhile the youngsters can’t do without it (that’ll bring  a few posts). The adage “The older one gets, the wiser one becomes” has stood the test of time and thinking of what you can get away with today, is not wise enough for looking to (their) future.

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  4. P-Daddy

    Love the section Too many insurance policies…unfortunately solicitors would be lost without them, covers lack of understanding or each side refusing to answer a straight question. Peter is so right on that one!

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