Residential conveyancing thematic review

A review about the service provided by solicitors to the public

Executive summary

Buying and selling a property is often the most expensive and important financial commitment a person makes in their life. Having access to reliable and good quality legal support really matters. It not only reduces stress and uncertainty, but potentially directly impacts on whether a purchase is completed, and what the long-term financial implications may be for all involved.

While most property transactions are completed relatively seamlessly, figures from the Legal Ombudsman (LeO) show that residential conveyancing accounted for nearly a quarter of all complaints it handled over the past three years.

Our own research of consumers, conducted in 2018, also identified that up to a quarter of recent home buyers were dissatisfied with some element of the service they received from their solicitor. One common area of concern was an apparent failure to fully explain the detail and implications of contractual commitments.

What we did

We carried out this thematic review to better understand how firms are delivering residential conveyancing services, and whether they are fulfilling their obligations to their clients.

We visited a sample of 40 law firms offering residential conveyancing services and conducted a detailed review of 80 case files.

What we found

We found that most firms were fulfilling their obligations. In particular, we found that:

  • all firms proactively communicated with clients at all key stages of a purchase, with the majority meeting them face-to-face at least once
  • all firms provided clients with clear information on their complaints procedures
  • firms are increasingly embracing technology, especially regarding how they communicate with clients.

However, we did identify areas for improvement. The two most significant and widespread were:

  • inaccurate initial cost estimates - 34% of firms failed to include all the services/fees a matter could reasonably expect to attract in their initial quotes
  • not being open about the real cost of third-party disbursement and their firm's mark-up on these - specifically telegraphic transfers. In 37% of cases firms failed to do this, with some charging up to 10 times the actual bank charge for processing the transfer.

Other areas where we identified potential concerns included:

  • not processing paperwork efficiently - especially in relation to requisitions raised by HM Land Registry
  • not explaining the difference between freehold and leasehold ownership
  • failing to double-check that a client understands the long-term implications of contractual obligations and fees.

Conclusions

This review clearly found that in the majority of cases, conveyancing firms actively engage with their clients and fulfil their obligations to them. Property deals progress in a timely and efficient manner and clients feel informed and supported throughout.

But sadly, this is not always the case.

Whether its providing unrealistic or incomplete quotes, or failing to make sure contractual information has been fully understood, solicitors are potentially leaving their clients exposed to significant risk or potential financial hardship.

Next steps

This thematic review took place during 2018. In December the same year, we introduced new transparency rules which require firms offering conveyancing services to publish detailed price and services information, and their complaints procedures online.

The requirement to provide clear pricing information was not new. However, these rules, and associated guidance, now provide the profession with absolute clarity on our expectations for how they should be publishing price information.

These requirements include:

  • outlining all known and potential costs a transaction may attract from the outset
  • specifying all charges being added to the actual cost of any third-party disbursements.

As part of our ongoing work, we will continue to review compliance with these rules and will consider further action where necessary to make sure they are being followed.

On the specific subject of making sure solicitors explain contractual details to clients, especially in relation to leaseholds, we urge all firms to make sure that their clients understand their obligations. If we find evidence that people were not made aware of onerous clauses in their leasehold contracts, such as the regular doubling of ground rents, we will take robust action.

Following this review, we referred six firms onto our internal disciplinary processes. Five of these referrals included concerns about failing to declare that the stated telegraphic transfers fees included an additional charge/mark-up.

Open all
  1. Regular payments made by the holder of a leasehold property
  2. A charge made for maintenance of a leased property
  3. Where we talk about the relationship between an individual and a firm, we use the term client. Outside of this context, we use the term consumer
  4. Principle 4 of the SRA Handbook
  5. Principle 5 of the SRA Handbook
  6. Principle 5 of the SRA Handbook
  7. Principle 4 of the SRA Handbook
  8. Outcome 1.2 of the SRA Handbook
  9. Outcome 1.5 of the SRA Handbook
  10. Outcome 1.9 of the SRA Handbook
  11. Outcome 1.10 of the SRA Handbook
  12. The 35 firms were sorted into three groups depending on their volume of files
  13. Commonhold properties are where a building has individual properties but shared services and common areas, for example lifts and entrances. While individuals own their specific property, areas of the building are owned and maintained by a commonhold association. The individual will be liable to contribute towards the costs of the commonhold association
  14. Leasehold enfranchisement is a process which allows the leaseholder to either extend their lease or purchase a share of the freehold
  15. A right to cross or otherwise use someone else's land for a specified purpose
  16. A legal right to pass along a specific route through grounds or property belonging to another
  17. Conditions which determine what a homeowner can or cannot do with their house or land in particular circumstances
  18. An indemnity policy is an insurance policy that protects the buyer against future losses that may be incurred because of specific defects in the property title
  19. https://www.gov.uk/guidance/hm-land-registry-requisitions
  20. Principle 5 of the SRA Handbook
  21. Principle 2 of the SRA Handbook
  22. Principle 4 of the SRA Handbook
  23. Principle 5 of the SRA Handbook
  24. Outcome 1.3 of the SRA Handbook
  25. IB 1.14
  26. IB 1.15
  27. IB 1.19
  28. IB 1.21
  29. https://www.lawsociety.org.uk/support-services/advice/practice-notes/telegraphic-transfer-fees/
  30. http://www.sra.org.uk/solicitors/guidance/ethics-guidance/price-transparency.page
  31. Findings from the survey were further explored through four targeted focus groups with first time buyers, people who had bought and/or sold a leasehold property and people with previous experience of the process
  32. The Land Registration (Amendment) Rules 2018 which came into force on 6 April 2018 amend the Land Registration Rules 2003 to allow for the continued development of e-conveyancing
  33. https://www.lawsociety.org.uk/news/documents/horizon-scanning-artificial-intelligence-and-the-legal-profession/
  34. Trustpilot.com is a website which publishes reviews about online businesses
  35. Artificial Intelligence (AI) and the Legal Profession - Horizon scanning report (PDF 789KB)
  36. Residual balances are client money that a solicitor holds at the conclusion of a matter. Solicitors must return this money to the client as soon as there is no longer a proper reason for holding it