Conveyancing instructions move on-line

The second edition of the Council of Mortgage Lenders Handbook will be available only on-line.

Andrew Hopkins previews other changes in store for conveyancersThe Second Edition of the Council of Mortgage Lenders (CML) handbook for England and Wales will be introduced on 1 October this year.The handbook provides comprehensive instructions for solicitors and licensed conveyancers acting on behalf of both borrowers and lenders in conveyancing transactions.Proposed changes to the handbook have resulted from both developments in case law and feedback from conveyancers and lenders on how the handbook has operated in practice.

The CML has also held detailed discussions with the Law Society.The most fundamental change is that the second edition of the handbook will only be available from the CML's Web site (www.cml.org.uk/handbook) and therefore conveyancing firms will need to have access to the Internet by no later than1 October 2002 to view it.Lenders are firmly committed to the concept of electronic conveyancing, and across their businesses they are striving to interact with third party suppliers on-line, including conveyancers.Many solicitors have urged the CML to bring both part 1 of the handbook (which includes the main instructions) and all the lenders' individual part 2 instructions together to facilitate more streamlined access and cross-referencing.By making the complete handbook available on-line with all the respective instructions, the CML is striving to meet this demand.

The new Web site layout will also increase the speed and ease of downloading the instructions, should conveyancers want to print a copy.A Web site-based handbook will also allow greater flexibility, so that amendments can be implemented more efficiently and conveyancers are not left to juggle different notifications of changes.

Additional changes are likely to be in the pipeline in the run-up to the regulation of the mortgage market by the Financial Services Authority and new legislation, for example, commonhold and leasehold reform.It is clear that a significant proportion of solicitors already has access to the Internet and that this is growing.

To allow sufficient time for both conveyancing firms to prepare for these changes and the CML to finalise the new Web site, the revised handbook will not come into operation for six months.

In the interim, both the CML and lenders will be reminding panel law firms of when and how the new instructions come into force.The revised text of the handbook will be available on the CML Web site from 1 July 2002.

Therefore, conveyancers should have plenty of time to become acquainted with the instructions.The amendmentsIt is not possible here to detail every amended paragraph in the handbook.

The main ones are:3 - SafeguardWith the introduction of the UK photo-card driving licence, conveyancers suggested that this should be included as an acceptable form of identification.

The new licence has now been added to list A in the handbook.5.2 - Searches and reportsThe existing requirement that searches must be no more than three months old at exchange and six months old at completion has been deleted.

All searches, except where there is a priority period, must not be more than three months old at exchange of contracts (or at completion on a remortgage).With the increase in the number of firms offering environmental and contaminated land reports, lenders will stipulate in their part 2 whether or not they want to see these.

Where a lender does not want to see such reports, the handbook confirms that the conveyancer does not need to make these enquiries on the lender's behalf.However, lenders will still want to be advised of any adverse entries highlighted in a local authority search.

The CML also recognises that there are new providers of local searches, a move which has in part been prompted by the introduction of the National Land Information Service.

Again, lenders will identify in their part 2 instructions what type of searches they will accept.5.3 - PlanningThis section has been amended to make it clear that if the conveyancer's enquiries reveal that work has been carried out on a property, then the property must have the benefit of any necessary planning and building regulation consents and there should be no evidence of any breach of the conditions of any consent or certificate.5.7 - Restrictive covenantsThe existing requirement to obtain indemnity insurance where a conveyancer cannot provide an unqualified certificate of title as a result of the risk of enforceability has been reviewed by some lenders.

Conveyancers will now need to check part 2 to see whether all lenders will accept indemnity insurance as a backstop option.

However, the CML is not aware that many lenders intend to move away from accepting indemnity insurance in these circumstances.5.10 - Leasehold propertyThe paragraphs in this section have been redrafted to improve the layout and help clarify lenders' requirements.

Conveyancers will still be required to give notice of the mortgage to the landlord and any management company following completion.However, difficulties arise where landlords fail to acknowledge receipt of the notice.

To address this situation, the handbook has been amended so if receipt of the notice cannot be obtained from the landlord then, as a last resort, suitable evidence of service on the landlord should be provided.5.11 - Management companyThe CML has deleted the definition of 'an interest in land' in paragraph 5.11.1 and instead requires that the management company should simply have a legal right to enter the property.This should provide greater flexibility taking into account the plethora of arrangements which arise with leasehold properties.6.6 - New properties and building standards indemnity schemes.

Taking into account entrants in the new home warranty sector, the CML has added premier guarantee for private housing and completed housing to the list of home warranty schemes named in paragraph 6.6.1.

Lenders will also be able to list any other home warranty schemes they find acceptable in their individualpart 2 instructions.With regard to new homes, concern has recently been expressed that home buyers have been moving into homes before they have been satisfactorily completed.

This has in turn led to difficulties where it is unclear who is responsible for rectifying problems with the property.Supported by the housing minister, Lord Falconer, the CML is involved in discussions with the new home warranty schemes, the house builders and the Law Society to agree a co-ordinated approach to address this problem.

The overriding objective is to ensure that any new procedures are clear for all the parties and do not lead to delays.6.13 - InsuranceAs some lenders no longer require conveyancers to confirm the insurance arrangements where the cover is taken out with a third party insurer, lenders will confirm in part 2 where these checks should be carried out.10 - Loan and certificate of titleTo provide greater transparency as to how the advance will be paid, conveyancers will be asked to check part 2 to see whether the mortgage advance will be paid electronically or by cheque and the minimum number of days notice lenders require.Conveyancers can now also refer to part 2 to see whether there are any standard deductions which may be made from the mortgage advance.It is clear that the handbook will evolve over time.

By continuing to work closely with the Law Society and the Council for Licensed Conveyancers, the CML should be able to identify how it can be developed and improved taking account of conveyancers' experience at the front end of transactions.Andrew Hopkins is the legal adviser at the Council of Mortgage Lenders