Risk management

Local search problemsConveyancing mistakes still account for a substantial number of claims against solicitors.Although the number of claims by lending institutions has receded, they are still a threat.

Such claims tend to be recession-led.

Reductions in house values means that the security of the lender is reduced, and there may be insufficient money in the property to enable the lender to recover their loan and other ancillary losses.

That is when the solicitors' conduct will come under close scrutiny.

The mistakes being made today will be the claims of tomorrow.

Ensure that you and your staff are complying with all of the lender's requirements.

Keep up-to-date with changes in the protocol and the Council of Mortgage Lenders handbook.At present claims are mainly from purchasers relating to errors made in the conveyancing process.

Local searches are a good exampleRemember, to most lay clients a local search means what it says - that it is a search in respect of the property and the local area.

It is not.

Make sure the clients are made aware of this, manage their expectations.

Find out why the client is buying the property.

If it is because the property is surrounded by fields or enjoys unobstructed views, then you may have to make further enquiries of the local authority as to proposed development in the vicinity, or check the local structure plan.

Alternatively, warn the client to make additional enquiries, and confirm this in writing.Claims also arise because solicitors:l Make a search, but fail to read it properly or at all;l Make a search, read it, but fail to report adverse entries to the client;l Fail to make a search.Ted had to exchange in five days.

He received the result of the search, but in the rush to exchange contracts, overlooked reading it.

When he did, he saw that there was a public footpath traversing the garden.Angela received the result of her search, noted the proposed road widening scheme 75 metres from the property, but overlooked telling the client.

She could not understand how she had managed to do this.Jon just forgot to do the search.

The client wanted to carry out extensive alterations to the property.

The property was listed.

The few improvements that the client could carry out involved considerable expense.In all of the cases above, had the clients been made aware of the entries, then they would not have bought the properties.

Claims followed.l Explain to the client the area that the search relates to.l Read the search result to the client, and make a note this has been done.l Having sent the search result to the client, make sure you explain the entries.l Find out why the client is buying the property to determine which factors would influence the purchasing decision.l Where necessary, make additional enquiries of the local authority.l Always check before exchange that you have carried out the search and reported on it to the client.l This column was prepared by the St.

Paul risk management team.