Conveyancing Protocol update

The Conveyancing Quality Scheme (CQS) is building up a head of steam. The first firms have been accredited. Applications are coming in thick and fast.

The concept of raising standards is hardly controversial, but giving practitioners the tools to work within the scheme has been an essential part of ongoing work at the Law Society to support solicitors.

Expected standards

The new and updated Conveyancing Protocol, which will be formally launched on 1 April, was developed to coincide with CQS.

It has been written not just for solicitors but with others in mind. There is a list of obligations at the outset designed not only to remind practitioners, but also to show others the standards expected and required of practitioners.

Many, perhaps most practitioners, will already meet them, but having a common standard is essential if we want to compete as a profession.

There are some subtle changes to procedure: for example, requiring the seller’s solicitor to update the register when submitting a contract; providing practical advice on who should apply for copies of planning permissions from local authorities; and raising only those enquiries that are relevant, rather than volumes of pre-printed additional enquiries.

As some lenders are restricting their panels, it is acknowledged that there will be occasions when the buyer’s solicitor is not also representing the lender.

In those cases, solicitors adopting the protocol are required to cooperate with the solicitor acting for the lender, and vice versa, to ensure that the client is not prejudiced.

The CQS requires adherence to the protocol.

The protocol requires use of a standard form of contract; updating the standard conditions of sale to ensure that they are fit for practice was also an essential component of the CQS.

The conditions have been in use for some 20 years following an amalgamation of the Law Society’s Conditions and the National Conditions of Sale.

When examining how to improve the conveyancing process, it was identified that time was being spent, often unnecessarily, in negotiating the terms of what should otherwise be a standard contract.

Practices drifted away from having a standard form to developing their own variations.

Some of those amendments were sensible additions to the fourth edition; others sought to shift the balance in favour of the seller, so no longer provided a fair balance between seller and buyer.

New clauses have been incorporated in the fifth edition: for example, where there is a management company, the liability to pass over such documents as may be required for the purchaser to become a member of it.

Another clause incorporates a right for the seller to amend title guarantee where the property is leasehold and brings in an exclusion to the Contract (Rights of Third Parties) Act 1999.

Perhaps the largest change is a reversion to the position under the old National Conditions and Law Society Conditions (following on from the common law position) that the risk passes on exchange of contracts rather than completion.

There are clauses designed to deal with the position where both parties are insuring and also where the landlord (or tenant) may be insuring in a leasehold situation.

Deposit funds

The conditions now require that deposit funds and completion monies are paid to and from accounts held by a conveyancer.

This is designed to assist in anti-money laundering obligations, although of course it does not detract from the need for practitioners to be vigilant on this subject.

Misrepresentation clauses have long been a favourite for free drafting so there is now a simple formula stating that, excepting fraud or recklessness, the buyer or seller cannot rely on any statement other than those made in writing by either of them or their conveyancer.

By using this clause, the seller can control precisely what statements the seller can rely on.

Coupled with the entreaty in the protocol to raise only those enquiries that relate to the property and not those relating to the physical condition of the property, sellers should not be drawn into giving or receiving statements that are inappropriate, and so have a double layer of protection.

The special conditions will also have a standard occupier’s consent clause to save this having to be negotiated or endorsed on every occasion it is needed.

Other procedures being updated include the Law Society’s Code for Completion by Post.

Apart from ticking the box in replies to Completion Information and Requisitions on Title, completion for most is such a standard procedure that the framework may go unnoticed.

Since the last edition of the code, we have seen the introduction of land registry dematerialisation, identity procedures, electronic discharge and early completion.

All of those have a potential impact on the conveyancing procedure so the code has been updated accordingly.

The seller’s solicitor acts as the buyer’s solicitor’s agent on completion.

The new code clarifies that it is only for the purpose of that completion, so is not required to stand behind any of the terms of the contract.

The buyer’s solicitor is required to send all the monies payable under the contract, including compensation under the ‘Contract Rate’.

On receipt, the seller’s solicitor must complete it unless it has been agreed that money be held to order.

The seller’s solicitor must send the transfer or other deeds to the buyer’s solicitor.

The Completion Information and Requisitions on Title Form (TA13) is also being revised. As it contains few if any actual ‘requisitions’ it is now to be renamed ‘Completion Information and Undertakings’.

The code, echoing an obligation in the protocol, now requires the seller’s solicitor to produce replies to that form, rather than wait for the buyer’s solicitor to send a standard word-processed version and then send standard answers back.

Some may hold their hands up in horror at all these changes but I hope they will be pleased that the Society is working hard to make sure that solicitors and firms have the tools to do the job.

However, there is still much work to be done, including an intention to look very shortly at the Property Information Form to make sure it asks and answers the questions that should properly form part of the process.

Members of the CQS, among others, will be invited to contribute their views on this and other parts of the process. Comments should be sent to: protocolfeedback@lawsociety.org.uk.

Jonathan Smithers is vice-chair of the Conveyancing and Land Law Committee of the Law Society and was a member of the project board which set up the Conveyancing Quality Scheme