A review of how solicitors offer conveyancing services has raised concerns over how open they are about costs and whether they are doing enough to make sure buyers understand any potential contractual obligations.
The SRA’s “Residential Conveyancing Thematic Review” found that while most solicitors are doing what they should, there are a number of areas of concern.
While all the firms reviewed gave clients quotes before agreeing to work with them, the SRA found that in one third of cases (34%) these initial quotes did not include fees for additional work which should have been reasonably anticipated at the outset.
Typically, these missing costs related to processing bank transfers, accessing online portals, mortgage administration fees, electronic ID checks or administering gifted deposits.
Not only can this leave buyers having to pay unexpected costs, but there is a concern that some firms may be providing unrealistic initial quotes in order to win business.
The SRA also found that 37% of firms failed to be transparent about the mark-ups they added to the fee a bank charged for making a telegraphic transfer. In some cases, this led to clients being charged as much as 10 times the fee set by the bank.
There were also issues about solicitors not properly explaining the long-term implications of complex contractual clauses. In nearly a quarter (23%) of leasehold purchases it was found that solicitors did not explain the difference between freehold and leasehold models of ownership, instead relying on their client to get this information from elsewhere.
This is of particular concern, as leasehold purchasers can find themselves liable for fast rising charges, such as ground rents. In the long term, such payments may not only become unaffordable, but they may make it very difficult to sell the lease on.
Anna Bradley, SRA Chair, said: “It is disappointing to see examples of poor practice in conveyancing, which is so important to so many people. While many law firms and solicitors provide a good service and act in their clients’ best interests, those who don’t are letting down not only their clients, but also the profession as whole.
“People should be able to rely on their solicitors to be open about what their services will cost, and to explain the potential financial and legal implications of any transaction. When solicitors fail to do this, for example in relation to long term leasehold charges, they may be leaving their clients open to ever increasing and potentially unaffordable financial liabilities.
“We will now be looking closely at how firms are publishing their pricing for conveyancing through our programme of monitoring firms’ websites. We have already published information for the public on the issue of leaseholds and we will be sharing this report with the Government as it considers leasehold reform.”
As a direct result of the review six law firms were referred to the SRA’s internal disciplinary processes.
Other key findings of the review included:
- All firms visited proactively communicated with clients at key stages and are increasingly using innovative techniques such as text, social media and online portals to do so.
- 91% of firms acknowledged they had received requisitions from HM Land Registry that could have been avoided.
- Nearly two-thirds (63%) of firms are already preparing for the move to HM Land Registry’s planned e-conveyancing platform.
In compiling the thematic review, the SRA visited a representative sample of 40 firms offering conveyancing services and conducted detailed analysis of 80 property deals. The review report will be shared widely so that law firms across England and Wales can learn from both the good and poor practice that it sets out.