Solicitors have voted in favour of the principle of changing the current practice whereby a solicitor can act for both buyer and mortgage lender in property transactions.
At the Law Society’s annual general meeting today, Friday, 22 March 2013, 58 solicitors voted to remove the current exception to Law Society conflict of interest rules, which permits a single solicitor to carry out work for a client wishing to buy a property and their mortgage lender. There were 27 against and three abstentions. Proxy votes were not cast. Acting for both the borrower and the lender has been the norm since 1986.
The Law Society will now bring forward new practice rules for its members to vote on at a special general meeting (SGM) in September. If voted through at the SGM and subject to approval by the Lord President, solicitors will no longer be able to act for both buyer and lender.
Austin Lafferty, president of the Law Society, said: “This was a highly important debate to have and I thank everyone for their contributions. We can view today’s vote as just the start of a move towards reforming and improving conveyancing practice and we intend to hold further discussions with the Council of Mortgage Lenders and others. The exception to the rules was introduced in 1986 to help ensure a smooth transaction but the world is a very different place now. The severe economic downturn, increasingly complex transactions, increasing risk of mortgage fraud and the additional pressures from lenders mean that it is no longer appropriate, and indeed is arguably not in the public interest to continue.
“Solicitors provide conveyancing services for communities the length and breadth of Scotland and we are fully aware of the potential for increased costs for buyers and increased paperwork for solicitors. However these costs are not the borrowers, they are costs associated with lenders satisfying themselves on their own lending risk – and it will be for the lenders to decide on whether they are prepared to pass on these costs to their customers.
“The recession meant a greatly reduced the property market, however the risk on a loan has been largely borne by solicitors as banks and building societies have increased the number of claims on the legal profession’s indemnity insurance where things have gone wrong – for example if a client has defaulted on payment or in a repossession case, negative equity means there is a loss to the lender.
“Additionally, we know there have been situations where conflict of interest arises and the protection of borrower client interests as well as the lender simply do not align.”
Recent changes introduced by lenders have also meant that solicitors are no longer automatically permitted to act for clients who have chosen a particular mortgage product.
Lafferty added: “It’s now the case that if a solicitor no longer on the lender’s solicitor panel, they are not entitled to do the work for both parties which means the client can choose to retain their own solicitor of choice and pay an additional fee, or use the lender’s solicitor.
“It’s in everyone’s interests, particularly the prospective housebuyer, to provide efficient and cost effective services. Technology has improved things enormously and it’s worth remembering that conveyancing fees in Scotland are moderate compared to elsewhere – it can be up to three times as much in Ireland. Market forces will also play a role and undoubtedly determine a new fee structure so, while the borrower and lender will each pay for the work of their own solicitor, I do not foresee any astronomical price rises.”
Founding Editor of The Edinburgh Reporter.
Edinburgh-born multimedia journalist and iPhoneographer.
Disillusioned by Democracy- Made into a scapegoat.
I fell in love with the Scottish Hills and wish I could live in Scotland. I applaud Scottish Solicitors who are voting for independent legal advice should be statutory for both the borrower and the lender to prevent conflict of interest in favour of the lenders. Ambiguous Incentives offered by lenders to pay all legal costs giving the false illusion that legal advice in all common sense would be part of the package as we all know there are two sides to Property conveyance the legal side and the financial side.
If I had benefited from legal advice then I would have made other choices before accepting to re-mortgage twice in two years for loan consolidation as I got more and more heavily in debt. Hands on my heart If I had befitted from independent legal advice so many errors would not have been made by them and I would not have forced myself to seek the redress in Court down the line when things went wrong; first to defend a super fast eviction, when I was recuperating after the hit and run accident in 2006 and then in 2009 shortly after my mother passed. The only error I made was to blind trust the group of professionals who turned my world upside down and took away the Liberty of my kids and myself in our home. Two traumatic events in a person life where one needed the solace of a home and not a prison wall, or the ugly noose of eviction!
Borrowers are not accepting charity from lenders when taking a mortgage, they are pay for the roof with hard work and their rights should be protected equally. The ultimate responsibility should be on the shoulders of the lenders as not only is their money at risk if things go wrong, the borrowers home and investment for their kids is also put at risk. A Home, for a home buyer it is a roof to live under, and should be a safe place to live free from the Financial Criminals whose sole purpose is to confuse and sell products that are unfit for purpose. Taking a home mortgage is the most important financial commitment as it is the roof under which a family unit lives, or will live. The financial security of this ‘family unit should be paramount’ as this unit forms a base of what a good Democratic society ought to be in all good faith.
I welcome the stricter rules to be put in place by the FSA later this year 2013 to prevent the indifference, the brow bashing of millions of innocent consumers trapped by the wrong advice given by brokers or bank managers, or their designated company solicitors who are employed to protect their interests alone. The FSA should do more to make changes to the Mortgage Conditions 2004 E& Wales is an instrument that condones conflict of interest in favour of the lender contrary to Statutes in the Law of Property Act 1925 E& Wales.
The urgent revision of the Mortgage Conditions 2004 E& Wales should be revised to exclude, and remove all clauses that give rise to conflict of interest in favour of the lenders… Allowing any amounts of money to the mortgage at any time, taking a power of attorney without permission, home owners rights to rent the home if need be when kids move home, interest rates should be fixed during the fixed interest period and two sets of interests be charged one via DD and the other added to the principle sum from the moment of inception, the consequences of charges when in arrears, how many months in arrears would constitute breach of contract, in addition what help would be there for borrowers caught up in the aftermath of sudden illness or unemployment preventing super fast eviction obtained by perjury. There should be more legal protection during the whole term of the mortgage for the home owner and the homeowner should be told of the importance of the mortgage conditions booklet and each clause explained in layperson’s terms.
I was forced into taking court action to first get a refund on unfair charges added to the principle sum without informing me when I briefly got into arrears. The lenders denied all liability and refused a full refund until I requested that conflict of interest be added to this case as I found several errors. Immediately they agreed to give me the full refund and reduced the principle sum to derail my case.
I was taken on a wild goose chase for three years to get all disclosure I needed and it took three years for the Court to decide I was wasting Courts time. Applications and bundles conveniently began going missing in court and I was made into a scapegoat a circus clown taking advantage of the fact that I was a litigant in person. The Court was convinced I did not understand the law and dismissed a valid claim against the lender, based on personal opinion and biased judgment.
I was on a normal repayment mortgage when I was advised to switch to an interest only mortgage it was pushed on me by the broker to take it for two years to benefit from lower monthly payments and then switch to another lender. Six months later came the aftermath of the hit and run car accident and the immediate blacklisting that followed.
The lenders designated company solicitors who were instructed to represent us both on a re-mortgage for loan consolidation did not protect my rights at all. The half empty application forms processed by them that did not specify the repayment vehicle as a statutory condition and how the principle sum was to be paid at the end of term…would the property be sold etc. Both these boxes were left blank.
After failing to put together a duly signed financial contract that stipulates all the terms and conditions to accompany the deed especially the end date when the amount has to be repaid, that should be in place in not only new sales of mortgage but also re-mortgage when a re-mortgage is passed on from one lender to the other. A fresh financial contract should be in place in addition to the Mortgage conditions booklet as no booklet can be taken to be or have the same weight of a contract. There should be an agreement in place signed by both the lender and the borrower as to the start and end dates of contract.
I was not told the end date of the contract until the legal costs were added in 2012 after my case was unfairly thrown out, the re-mortgage was taken out in June 2005. The deed does not incorporate the end date, and the jurisdiction of the Mortgage Condition.
Dragged into Court due to continued mistreatment from 2006-2009 stonewalled from disclosure by the same individuals who were responsible to put all the aspects of a legal mortgage in place. I have been burdened with the legal costs of £50,000/- £42,000/- of which already added to my mortgage with no conscience by the lenders or by the Judge that threw a valid claim out, based on personal opinion alone, and prevented me from seeking redress in High Court by adding his opinion that my claim was not of High Court matter, this could be seen as I understood as openly influencing the High Court Judge even before an independent Judge is allowed to consider the merits of the case, who stated that the Court had not ordered the above costs, and that the defendant was relying upon a contract. He was referring to the powers of the Mortgage conditions 2004 E& W booklet.
Entrapment to benefit: the lenders who turn a deliberate blind eye to the faulty financial products as we have seen the Mortgage protection Insurance etc, wrong mortgage home loans, sold by agents of their choice, to whom they paid a fee to, so as to procure financial scapegoats on the gravy train. Faulty products are marketed for financial gain alone for them. If rules have been broken by the lenders with substantiated evidence, they have to be penalized and if it means that financial ruination of the lender, by the mortgage made void by the Court so be it as for too long good hardworking citizens have been hoodwinked of their homes and businesses too quick by super fast eviction condoned by the Courts as I have experienced. The ‘heart’ has to be put back into the spirit of Democracy,’ ripped out by the greed of such financial agents who all collude to defraud.
The Financial laws should be clear to the Judges who undertake such cases to stem the abuse and ignorance or bias should not be used as an excuse. The Judges should know and uphold what is right and should know what is wrong. Sound judgement should be passed and not those that are contaminated with bias or personal opinion.
Today’s solicitors, Judges and Politicians should look hard into the eyes of their children and grandchildren. For it is their duty to protect their future of not only their kids but the future generations. What happened to me could happen to them down the line. No one buys a home with intentions to lose it as any time other than when the borrowers face a marital divorce. A home loan should be a happy home and not a one made in hell.
Legal redress should be in place all the way when things have gone wrong, for litigants in persons and those who are fortunate to have legal representation deliberately duped by the lenders, their designated company solicitors and later their attorneys who go on to deliberately and pervert the course of Justice with sole purpose to win. The sanctity of Statements of Truth should remain so and those who mislead by this Oath should face the wrath of the law and not the other way around.
The borrower who is already at a significant disadvantage should have an independent legal conveyance lawyer representation to explain all the terms on the product that the broker is offering and all the terms and conditions not added in the Key Facts hidden in the Mortgage Conditions Booklet and to oversee that all paperwork is in order. Even if it means it will cost £500 more you are paying for the peace of mind knowing that you have been explained the terms and conditions and you accept them.
The lenders designated company solicitors swore and Oath that they had never been asked by the lender to give me legal advice. The deed was signed by proxy, in arms length on behalf of the lenders by an unnamed designated company solicitor. Knowing that the Key Facts would also be drafted legally by them had clearly stated all the ambiguous all legal costs would be an incentive, with no clear guidelines what exceptions there were to these legal costs. No guidelines for me to get independent representation.
This re-mortgage should have been signed in the presence of independent witnesses, was signed in front of my broker acted as a witness, who coerced me into signing the deed, when I attempted to change my mind as I was told by him that the lenders legal representative would be present that day and they were not. He informed me I would still be liable to pay all his fees and cancellation charges etc. And convinced me everything would be OK to trust him. He went on to get a wrong Mortgage Protection Policy for me and this wrong policy was accepted by the lenders. No questions asked as to why the boxes were left blank un-ticked which concerned the repayment of the loan by sale of property at end of term, and what repayment vehicle was to be put in place as a statutory condition.
What I have had to experience has made me personally disillusioned by Democracy and all the goodness of Democracy that I grew to be in awe of. This is an absolute mockery of the sanctity of the Property Act of 1925 and a very cruel joke handled by those in power to protect the law of the land. Looking at the evidence and half filled application forms processed by the broker and the lenders designated company solicitors is shocking. No demands were made to put a repayment plan in place from 2005-2013.
Eight years down the line and knowing that no statutory provisions to put a repayment plan in place was made at the inception of this mortgage, the audacity of the lenders who now demand that I put a repayment vehicle to protect the additional legal costs now added to the total amount. Now forced into negative equity and burdened to pay a higher monthly mortgage and I will be forced to sell my home to repay this loan when the term ends in fourteen years.
I am paying for the errors made by those who are allowed to trade, these lenders and all their agents still continue to trade DID NOT GET IT RIGHT when the responsibility was solely theirs alone AND DID NOTHING TO PROTECT MY RIGHTS. I am burdened by a predatory style mortgage prevalent in America. I will live the rest of my life in this ugly shadow until my case is re-opened and reviewed independently and I am able to seek redress and damages.
By an appeal letter dated 23 Sept 2012 sent by recorded delivery to the various Heads of Departments and I still await a reply of acknowledgement from David Cameron and Nick Clegg, and the FSA we are now in April 2013.
As I still hope and am slowly dying in despair that the Democracy I grew up to love, and cherish has let me down and millions like me. I am baffled with what I have had to experience in a country that flags the banner for Human Rights to the world yet cannot secure the homeowners rights for their own.
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