Ombudsman's casebook

A monthly column of examples from the files of the Legal Services Ombudsman

Leasehold difficulties

About 5% of complaints to the ombudsman arise out of leasehold property disputes.

Sometimes, the problems that arise are more in the nature of general conveyancing or client care issues, as illustrated in this month's first case.

But on other occasions the problems are unique to leasehold property and call for a degree of specialist knowledge by the solicitor - and a recognition by the Office for the Supervision of Solicitors (OSS) that its investigations should be conducted by appropriately experienced caseworkers.

Redress not on the menu

Mr and Mrs B decided to sell their house and move to the coast, where they had bought a leasehold property which they intended to use as both a caf and a home.

The property subsequently proved to have major faults and they spent more than 20,000 on repairs - with further costs likely because the landlords were now threatening to take action over a dilapidations claim.

Mr and Mrs B complained to the OSS that their solicitors had failed to advise that the property should be surveyed before they took the lease on and that the solicitors had not given them any information on costs.

The solicitors eventually conceded the costs information point and offered to reduce their bill by almost 300.

The OSS finished its investigation and an adjudicator decided that the solicitors had indeed failed to provide Mr and Mrs B with costs information at the outset and that the solicitors could not demonstrate that they had advised their clients to obtain a surveyor's report.

For both failings, the adjudicator directed the solicitors to pay 250 to Mr and Mrs B for distress.

Even more upset, Mr and Mrs B asked the ombudsman to review the OSS decision, particularly the amount of compensation which they said was 'an insult'.

The ombudsman expressed surprise that, given the emphasis that the Law Society had placed on costs information in recent years, there are still cases where solicitors are in clear breach of the rules.

The ombudsman decided that the OSS decision was unreasonable - the solicitors' offer to reduce costs was worth nearly 300 to Mr and Mrs B, yet for that failing and lack of advice over the survey the OSS had awarded only 250.

The ombudsman commented that, in this case, the need for a surveyor's report was fundamental - a point which was picked up by the landlord's own surveyors.

There was also a need to confirm in writing advice on such matters, particularly where the clients were inexperienced.

The ombudsman recommended that the OSS reconsider the question of compensation.

Experience required

Ms H and other leaseholders in a block of flats decided to buy their freehold and some garages at the invitation of the landlords, who were following a statutory procedure.

The cost to Ms H would be about 36,000.

Solicitors were instructed and after a survey, Ms H accepted the landlords' offer.

A few months later, the landlords served another statutory notice, but this time the price had gone up to 50,000.

About a year later, Ms H's solicitors served a notice on the landlords saying that their client wanted to buy the freehold for a lesser price.

Unfortunately for Ms H, the landlords stuck to their guns and insisted on the full asking price - which Ms H felt forced to pay.

Subsequently, she learnt that the garages were not included in the sale.

Upset that the solicitors had apparently taken on her case without the necessary experience in leasehold enfranchisement - particularly regarding the notice procedures and a failure to apply to a tribunal - Ms H complained to the OSS.

Following the briefest of investigations by its customer assistance unit, the OSS decided the solicitors had provided an adequate service.

The ombudsman took the view that the handling of Ms H's complaint was unsatisfactory.

It was clear from the papers that the complaint was not straightforward.

Therefore, it was surprising that the matter was looked at in the OSS's customer assistance unit rather than in its client relations office.

The ombudsman said that it was unacceptable for the OSS simply to say that, because the solicitors had responded to the complaint, their service was not inadequate.

The OSS should have explained to Ms H what aspects of her complaint it was able to deal with and, in respect of each of those matters, should have expressed a view on the adequacy or otherwise of the solicitors' service.

Accordingly, the ombudsman recommended that the OSS reconsider Ms H's complaint in order to provide her with a proper assessment.