In recent years, the role of the conveyancer has expanded significantly, particularly around searches, while fees have dropped radically, argues Peter Rodd. But does the solution lie in the hands of the profession itself?

In the June 2016 edition of Property in Practice (see oppoiste), Nick Gurney-Champion pondered the question of why solicitors still undertake residential conveyancing.

Conveyancers need to resist the temptation to assume more and more responsibility and thereby more and more potential liability for parts of the process with which they should not need to concern themselves

He was referring to the increasing risk involved in such work, as against the diminishing returns in terms of the amount which conveyancers are paid for doing it. Certainly, professional indemnity insurers have long considered residential conveyancing to be high risk, and the rapid growth of cybercrime and fraud in its many forms has only served to exacerbate the issue.

Looking back

To put that into some sort of perspective, I was recently instructed by a client in connection with the sale of a plot of land which his family had bought in the 1970s, when scale fees for conveyancing were still in place. He sent me a copy of the bill he’d received at that time. Out of curiosity, I increased that fee by the appropriate increase in the Retail Price Index. I discovered that on that basis we would have earned four times as much as I had actually charged for the sale.

I don’t remember scale fees, but I do remember the conveyancing boom of the 1980s, when we and other local firms were charging £125 to reflect the cost of the work, plus half a per cent of the consideration, to reflect the value element. The fee was probably considerably more than most firms are currently able to charge now. The other big difference, of course, is that in the 1980s, a finished conveyancing file was usually less than half an inch thick. Mortgage instructions arrived on a single sheet of paper, and there was no such thing as the CML Handbook. The Money Laundering Regulations had never been heard of, cybercrime didn’t exist, and people had to produce title deeds if they wanted to sell a property.

In the 1970s, 28 days between exchange and completion was the norm. Today, it is practically unheard of: the expectation is to wait no longer than it takes to obtain the mortgage advance. By contrast, the overall timescale between agreeing to buy a property and moving has changed very little.

The conveyancing process is much more complicated and complex than it was 40 years ago. Modern technology, including email, mobile communication devices, and other technology, has done little to expedite the process, and new procedures such as the absence of paper title deeds, have created more problems than they have solved. But both have raised expectations at a time when society insists on instant gratification.

The growth of searches

Historically, the local search was the only pre-contract search routinely carried out in a conveyancing transaction. Other searches were available, but only applied when relevant to the property being purchased. Today, search providers offer a bundle of searches providing a wealth of information, which the conveyancer then has an obligation to pass on in a comprehensible form to the client. Does the client need all of that information? Do they even want it? Most of them don’t seem to read it!

Conveyancers must take part of the blame in allowing the conveyancing process to become as complex as it now is. We have allowed others to dictate the agenda and we continue to do so. We’re now overwhelmed with the volume of data, much of it in digital form, which may be relevant (arguably) to the conveyancing process. But how far do we want to go?

Before the Law Society Conveyancing Protocol was launched, there was a seemingly unstoppable trend in raising more and more enquiries. Has the property ever been burgled? Does the property have a burglar alarm? Are there parking restrictions on the road outside the property? Is the property haunted? Why has the profession sought to add to the already considerable challenges the process involves, making itself more work and taking on more responsibility?

Providing a comprehensive service is a laudable aim but, as recent cases have shown, it can come at a cost.

Recent cases

In Purrunsing v A’Court & Co [2016] EWHC 789 (Ch), the buyer’s conveyancer raised enquiries about the due diligence carried out by the seller’s conveyancer. Were the questions necessary? If they weren’t, why ask them? If they were and, as in this case, the answers were inadequate, the conveyancer has then taken on the responsibility of pursuing the matter further and reporting fully to the buyer about their concerns. Failure to do so leaves them liable to a claim for negligence if things go wrong.

In the words of His Honour Judge Pelling QC: ‘It is, I think, common ground, or should be that in general a solicitor or licensed conveyancer is not obliged to undertake investigations that are not expressly or impliedly requested by the client but that if in fact a solicitor or licenced conveyancer acquires information that may be of importance to a client, then it is the duty of the solicitor to bring that information to the attention of the client. This point is only significant in this case because (counsel for the buyer’s conveyancer) said repeatedly in the course of his cross-examination that the question that (the buyer’s conveyancer) asked at paragraph 6(2) of the additional enquiries was not one that was usually asked, that it was not standard conveyancing practice to ask such questions’.

In Orientfield Holdings Ltd v Bird & Bird LLP [2015] EWHC 1963 (Ch), the buyer’s solicitor failed to fully report information revealed by ‘Plansearch’ to their client. In the words of His Honour Judge Pelling QC: ‘I am prepared to accept that the defendants could not be criticised if in fact they had not carried out a Plansearch… if in fact a solicitor acquires information that may be of importance to a client, then it is the duty of the solicitor to bring that information to the attention of the client.’

Contrast these cases with Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch), where the buyer paid a deposit well in excess of the usual 10 per cent, and agreed to its being released to the seller, despite a specific written warning from his solicitor, only to subsequently discover that a bankruptcy petition had been issued against the seller. It was argued that the buyer’s solicitor should have carried out a bankruptcy search, but this was rejected by His Honour Judge David Cooke: ‘The Law Society’s Conveyancing Handbook was plainly a good guide to accepted practice, and its recommendation was only that in a case where a deposit was to be released the client should be advised of the risks. No other work had been cited to suggest the solicitor should go further without instructions and investigate the extent of those risks.’

These principles are not new. Cottingham v Attey Bower & Jones [2000] PNLR 557 featured a failure to pursue enquiries and to advise the client. The judge focused on the fact that, while enforcement under section 36(1) or (2) of the Building Act 1984 was limited to 12 months, enforcement by injunction proceedings under section 36(6) was not subject to the same restriction.

He decided that the defendants should have warned the buyers that they faced at least some risk of injunction proceedings. (In reality, injunction proceedings under section 36(6) are rare, and are usually reserved for situations involving a serious threat to life and safety.)

A different way?

From the above (and other) cases, it would seem not unreasonable to draw two conclusions.

1. The Conveyancing Handbook is likely to be regarded by courts as ‘best practice’.

2. You must pass on any information which you receive to your client if it may be important to them.

In respect of searches, the Conveyancing Handbook lists only local and water authority searches as being ‘usual’ and required in every transaction, with a number of others being undertaken as ‘appropriate to the property, taking into account its locality and other features’ (Conveyancing Handbook, 22nd edition, section B10.4).

In practice, many conveyancers will accept a ‘bundle’ of searches from their search provider. These will invariably include an environmental search, with a growing list of other options. How wide should the conveyancing process be allowed to develop? Is there an argument for saying that it should be restricted to the basic responsibility of ensuring the buyer obtains a good and marketable title to the property and that the retainer should be limited accordingly? The client can be advised as to the availability of other sources of information which they may wish to pursue, and if necessary, be advised on – for which an appropriate charge would be payable.

The more enquiries we make, the longer it is likely to take to obtain that information, especially if some of the responses require further investigation. Most clients only want the answer to one question: ‘When can I pick up the keys and move in?’.

Given the call for evidence on the homebuying process, should we be looking at making the process as simple as possible, by limiting enquiries and searches to those that are essential? This might have the added benefits of reducing the risk to the conveyancer and possibly reducing the time that the process takes.

The idea behind home information packs had much to commend it. Surely a prospective buyer ought to be provided with as much relevant information as is reasonably available when they first view a property? Before it is marketed, the estate agent could assimilate all of the straightforward information that is readily available; environmental searches, Plansearch and so on could form part of the marketing pack. If the environmental search is ‘referred’, it should be the seller’s responsibility to resolve the problem before the property is marketed, rather than delay a long chain of transactions while the issue is dealt with.

Another issue to address is fraud: perhaps the biggest challenge facing conveyancers today. The responsibility for identifying a party to a conveyancing transaction seems to rest with the conveyancer, who will often not meet that party. Isn’t it time that the government accepted that there is a national problem, which needs a national solution?

Going forward

Conveyancers need to resist the temptation to assume more and more responsibility and thereby more and more potential liability for parts of the process with which they should not need to concern themselves. Let’s simplify the conveyancing process by proper pre-conveyancing preparation, leaving the conveyancer to add the real value which only they can bring. Without enforceable undertakings given between members of the legal profession, the system does not work. For many years now, we have gravely undervalued our role in the process. Let’s define what it should be, charge accordingly, and leave others to deal with the peripheral matters.