The regulatory pitfalls in post-completion

There is a lot of emphasis on the importance of undertaking the correct anti-money laundering and other compliance procedures at the start of a property transaction. However, less importance is given to the post-completion duties following a conveyancing transaction. These too can result in a significant regulatory breach, yet there is little focus on the improper practices that can occur if post-completion, particularly where duties are not undertaken with care.

The case studies below illustrate how events post-completion can fall below regulators’ expectations of solicitor conduct and raises some of the questions that your post-completion staff need to discuss.

Staff members performing post-completion procedures should be aware of the lessons these examples raise, and of the regulatory requirements that underpin them.

Backdating a mortgage deed

It was reported in 2020 that Mr Nicholas St John Gething missed the deadlines of two property transactions that required a fixed and floating charge to be registered at Companies House. Mr Gething amended the date on the mortgage deed after Companies House returned the incorrectly completed forms. The Solicitors Disciplinary Tribunal (SDT) commented “… it was inherently unacceptable to change the date on the legal charges being filed on behalf of clients …” and that “it was absolutely sacrosanct that solicitors did not in any way mislead third parties, who relied on the veracity and integrity of documents submitted by solicitors.”

Mr Gething was ordered to pay costs of £5,700 and struck off despite the observation by the SDT that he was “… someone who would not knowingly have acted dishonestly”.

Two years later it was reported that Mr Michael Robert Thompson’s claim that he had been shown how to amend documents with Tipp-Ex as a trainee was rejected based on his current role as a partner, being qualified for seven years and, if acted honestly, knew this behaviour would have been “unacceptable”.

He admitted telling a trainee solicitor to amend the date on a mortgage deed on the belief that he did nothing wrong, due to his previous training.

The date on the mortgage deed was first altered to fabricate compliance with the 21-day deadline to register the mortgage deed at Companies House and was altered again when submitted to HM Land Registry (HMLR). The SDT also uncovered further misconduct namely that untrue replies were given to HMLR when requisitions were raised. While it was acknowledged that Mr Thompson was under “significant personal and professional stress”, the SDT found his actions amounted to a grave breach of his responsibilities. He paid £22,200 in costs and was struck off.

Property practitioners need to understand the implications of falsely dated documents, as they cannot purport to be a true reflection of the transaction when altered. Bad judgment, unawareness of the severity of the regulatory breach or the excuse that it was an isolated incident hold no weight as a defence.

In another case it was reported that Mr Aymer Hutton called the seller’s legal representatives to amend the completion date after missing the stamp duty holiday deadline. Despite trying to save his clients an estimated £6k in stamp duty land tax, one could argue he was acting in the best interest of his client. However, such a dishonest action was grave enough to cost him his career.

All these examples demonstrate that important dates on mortgage deeds must not in any circumstance be altered including any document that has been exchanged and completed upon. To do so is a clear breach of the Solicitors Regulation Authority’s (SRA) Standards and Regulations, in particular principles 4 (acting with honesty) and 5 (acting with integrity).

Amending forms with no client consent

Another recent case outlined how Ms Laura Sainsbury removed the signature page of a transfer deed and attached it to an amended form, without the client’s consent or knowledge. She submitted this document to HMLR. She also failed to obtain instructions on the value of the property, resulting in the wrong figure being entered on the completed registration of title. In this case the SRA considered a fine to be a suitable remedy (£10,146 plus costs of £1,350).

In mitigation, the solicitor had admitted her misconduct, made efforts to remedy the situation and shown “genuine insight and remorse”, to the tribunal who said,

“She had not acted dishonestly, or deliberately set out to circumvent her regulatory obligations. There was no suggestion that Ms Sainsbury had acted for her own benefit.”

Although the tribunal or the regulator can consider mitigating circumstances, showing remorse, demonstrating good character or attributing behaviour to unusual circumstances, this does not exonerate or excuse improper practices.

To conclude, post-completion duties need to reflect a true and accurate picture of the disposition of a property. Anything that deviates from this could be considered a breach of professional conduct and may result in a loss of livelihood.