Inside a Conveyancer’s Brain

I recall a conversation with a client many years ago which went along the lines of ‘I want to buy the property; the seller wants to sell it – why is this so difficult?’

Fast forward a few years, it’s National Conveyancing Week and a conversation with one of my colleagues shows the situation remains the same. Clients and agents struggle to grasp the complexity of the conveyancing process and challenges faced by conveyancers every day. The purpose of this article is to highlight some of the issues a conveyancer must consider during the course of a standard conveyancing transaction.

Of course, one of the best aspects of dealing with residential property is the variety. No two matters are the same. Property titles, lender requirements and client expectations make every transaction unique and so this isn’t an exhaustive list but should give an indication of the concerns a conveyancer carries around in their head.

Fee Estimates 

Before a file is opened, even before instructions are confirmed, conveyancers must have those initial conversations about cost and provide a comprehensive fee estimate. The SRA Transparency Rules set out the requirements for clear fees on solicitor’s websites. However, conveyancers need to speak to clients to fully understand their objective and the complexity of the transaction. Conveyancers may be asking themselves these questions?

• How much should I charge?
• Is this going to be as straight-forward as everyone is saying?
• How do I explain all the technical aspect of a conveyancing transaction on that initial call with the client?
• Do I have the capacity to take on more work?
• What is the risk of taking on this matter?

Setting fee levels is not easy, especially when the current system means a conveyancer will not have all the information they require to assess the complexity of the transaction. Up-front information and cultural change towards instructing conveyancers early-on could enable conveyancers to set their fees out more accurately and provide better transparency for clients.

Onboarding 

Onboarding clients is becoming an increasingly complex. As property fraudsters continue to find new methods to scam clients, tighter regulations have been introduced to make identifying clients, tracing source of funds and wealth and preventing money-laundering more stringent. This means the onboarding process is more complicated and takes longer.

At this time the conveyancer will also be receiving a vast amount of information from the client and must analyse this carefully. The balance between the principle of buyer beware and the seller’s duty to disclose has been discussed in countless cases, recently a Japanese Knotweed case, one key issue was the seller ticked ‘no’ instead of ‘don’t know’ on a property information form. A simple form-filling exercise for a client can raise any number of concerns for a conveyancer. At this time, conveyancers will be considering:

• How well do I know the client?
• What steps can I take to confirm their identity?
• Is there an adult occupier?
• Is the property subject to a tenancy
• In what capacity is the seller selling?
• Is the client receiving a gift?

Awareness of potential red flags for money-laundering and fraud is not limited to the onboarding process. Conveyancers must be mindful of this through the process and report any suspicions. Many conveyancers will tell of a time when they had to report a suspicion, which cannot be disclosed to a client, but still had to speak to a client to explain the delay.

Problems with Titles

There is no way to list all the possible title problems which could be identified in a conveyancing transaction. Understanding how easements, covenants, rights and restrictions apply is at the heart of residential property law, but that’s not all. In an initial analysis a conveyancer may be considering;

• Is the seller the same as the registered proprietor? If not, how is this explained?
• What rights will the client need to enjoy the property and are these adequately reflected in the title?
• Are there any restrictions which may affect the client’s intended use of the property?
• Are there mortgages on the property? If selling, how much is required to redeem the mortgage?
• Are there any unusual entries, notices, restrictions or charges which need to be addressed as part of the transaction?
• Does the client agree that the title plan adequately shows the property being purchased?

Analysing a title in and of itself is only part of the picture, this information must considered alongside the search results and information provided by the seller and the client.

Indemnity Insurance

Sometimes indemnity insurance can be used where there is a legal problem and to satisfy a lender’s requirement. However, there is more to this than simply getting a quote and putting the policy on risk. The Insurance Distribution Directive requires those arranging insurance to provide sufficient information to clients about the arrangement, accordingly conveyancers must consider;

• Is an indemnity policy an adequate solution? Is there an alternative solution which may be better for the client?
• How do I inform the client about the arrangement of the insurance?
• What are the conditions and excesses of the policy? Do they affect whether the policy is adequate for the client’s purposes?
• What does the policy cover?
• How may the policy need to be changed in the future?
• Who is going to pay for the policy?

Indemnity insurance does not resolve an issue but can provide financial assistance when there is a viable claim. Furthermore, indemnity insurance is not always appropriate when the issue which is being insured against can itself be resolved, which is a better situation for clients when they come to sell the property. For example, I recall a time when I was being pressured to obtain a missing deeds indemnity policy, but the deed wasn’t missing, we were just waiting for it to come in from the Land Registry. Although indemnity insurance may be used to enable a matter to proceed, despite a legal issue, it gives no assurance about the physical issues with the property. A loft conversion may lack building regulations approval and an indemnity policy may overcome the issue to allow the purchase to proceed, but this does not mean the loft space is safe to use.

Leasehold 

Before you even begin to understand a leasehold title, you must understand the leasehold structure. These are again unique in every case – freehold, head-leases, tri-parte leases, management companies, right-to-manage companies, sub-leases and lease extensions – each with title documents and plans. Once this is understood, a conveyancer still needs to read and analyse the lease with the following considerations;

• Who are the various parties to the lease? How are the interests connected? Are there currently any disputes between the parties?
• Who collects service charge and ground rent? How much is payable?
• Has the building been adequately managed? Is the service charge budgeted correctly?
• Are there any anticipated large items of expenditure relating to the maintenance of the building? Is there a reserve fund which could be used to pay for this?
• Does the lease provide adequate rights (such as access, services, rights to use parking spaces, gardens and bin-stores)
• Does the lease correctly identify the property?
• Does the lease meet the lender’s requirements?

Clients need to be made aware of what it means to own a leasehold property as well as the specific set up and potential liabilities.

Searches

Lenders require ‘all usual and necessary searches’ which are normally a cause of significant delay. Sometimes no-search indemnity policies can be used but this may leave the client blind-sided when they come to sell the property and their buyer identifies some issue from the searches. Here are some of the potential queries conveyancers may identify through the searches;

• Is the planning history consistent with what I have been told by the seller?
• Are there any planning or other restrictions which may affect the client’s intentions for the property?
• Is the road adopted? If not, how is it maintained and what is my client’s potential liability?
• Is the property connected to the main sewers? If not, is there a septic tank or similar arrangement – does the property have the rights to use the septic tank, how is it maintained and what is the cost liability? Will this affect my client’s decision to purchase the property?
• Are there environmental issues affecting the property? If so, how will this affect the value of the property?
• Are there any local planning applications which may affect my client’s enjoyment of the property?
• Is the property at risk of flooding? How will this affect insuring the property?

There are other searches which could be undertaken and different products, search providers and data sets which can make navigating decisions about which searches to conduct, and how to present this information to clients, very tricky. We are expecting a practice note from the Law Society on a conveyancer’s duty to inform clients on how climate change may affect the property and search providers already have products available to address this issue. Conveyancers will need to understand how to analyse these searches and present the results to clients. Lenders may also have additional requirements.

Reporting to Clients

Most clients, once they have made the decision to move, want the conveyancing process completed as quickly as possible. One challenge for conveyancers is how to present the technical and sheer amount of information to the client and ensure that they read and understand all the risks, liability and potential issues which may affect the property at the time of purchase and in the future. Some of the questions they may be asking include.

• How can I ensure my client is understanding what I am telling them?
• How do I explain the remaining part of the process?
• How do I set out the different options available to them?
• What do I require from the client to complete the transaction?

Technology providers have recognised that reporting to clients is an area where efficiency gains could be made. However, there is tension in adopting these new technologies when the only thing which could stand between the conveyancer and a negligence claim is their property report.

Physical Aspects

Inspecting a property physically is extremely rare, instead a conveyancer must rely on agent particulars, surveyor’s reports and their client’s recollection to get a sense of potential issues. Although many conveyancers will scope the physical condition out of their retainer and reports, they still need to highlight potential issues and point the client in the direction of specialists who may provide further information.

• Has any of my due diligence found an issue with the physical aspect of the property?
• Do I need to refer anything to a surveyor or valuer to see if the affects the value of the property?
• Do I need to ask the client to inspect the property?
• Does the client need to engage specialists (gas fitters, electricians, or damp specialists) to make an assessment?

Although most conveyancers recommend a survey, there is no obligation for a client to instruct one and many times they look to their conveyancer to make them aware of potential issues. As the way in which we use our homes changes, so does the potential problems in conveyancing transactions. Spray foam in loft spaces and new fire safety regulations are the latest in a long list of topics which conveyancers must learn and spot in their transactions.

Lenders

Conveyancers have a difficult time with lenders, mainly down to the communication. Lenders set out their requirements in the UK Finance Lender’s Handbook with special conditions in the mortgage offer itself. A conveyancer must carefully check the mortgage documentation and ensure their client is aware of the terms and conditions. They may be considering the following:

• What do I need to report to the lender?
• Have the lender’s requirements changed in the course of the transaction?
• What do I need to tell my client about their mortgage?
• How will future changes, such as changes in interest rates, affect my client?
• 
  

Recently the UK Finance Lender’s Handbook introduced new requirements in connection with the Building Safety Act 2022. Conveyancers are facing a difficult time in understanding the lender’s requirements which seem to go over and above the purpose of the Act.

Practicalities

There are many complications to a conveyancer transaction, but sometimes the biggest cause of stress are the little processes and practical requirements of moving funds and getting clients into their property. Considerations include:

• How do I explain what I require from the client?
• How do I verify bank details?
• How do I ensure all the funds are in place for the completion day?
• What is my client going to need to access the property on the day of completion?
• How am I going to keep track of the various deadlines relating to SDLT payment, registration, etc. and ensure I meet them?

…and everything else

Conveyancers receive hundred of emails every day. Together with telephone calls and meetings with clients and colleague, many feel they do not have time to fit everything in. This results in them using their work hours to field calls and respond to emails, leaving the analysis, research and report writing to the evening when they should be unwinding and spending time with their families. In addition, conveyancers may be asked to become involved in business development, supervision, research, lender panel management and must complete mandatory and other training to remain competent. The pandemic, home-working and the pressures of the SDLT holiday have resulted in many conveyancers experiencing burnout, poor mental health and leaving the profession. Conveyancers may be asking themselves.

• How do I prioritise my workload?
• How do I ensure my clients receive the best service while juggling my other work requirements?
• How do I handle stress and look after my mental health?

Conclusion

Listing the tasks, challenges and concerns of a conveyancer clearly shows how difficult this job has become. This article was not intended to ask for pity or make conveyancers feel their challenges are insurmountable. Instead, we should celebrate. Despite these difficulties, every day conveyancers are managing to get people in their property. Let’s use National Conveyancing Week to put these achievements on centre stage and say thank you and well done.