What is a Report on Title?
A report on title is a legal document prepared by a conveyancing lawyer and addressed to their Buyer client; it contains the conveyancer’s findings and advice based on a review of the legal documentation relating to a property asset. It is an important document which a purchaser client is entitled to rely on in making decisions about the purchase and negotiating the price.
Recently, the Solicitors Disciplinary Tribunal found that David Carter Hughes, of Manchester law firm Bannister Preston solicitors wrongly advised 115 clients about the duration of their rent reviews. The solicitor admitted giving incorrect advice for over six years and reached an agreed outcome with the Solicitors Regulation Authority (SRA), which the Solicitors Disciplinary Tribunal (SDT) approved.
Deficient Doubling Ground Rent Clause Advice
The mistake made was that templated precedent advice was given that clients’ ground rent on leasehold Taylor Wimpey properties they were buying would double every 25 years. However in reality the lease contained a clause that the ground rent would double every 10 years. This can have a huge impact on the mortgage ability and saleability of a property and reduce the true market valuation as the costs of the ground rent become hugely excessive.
The SRA have noted earlier this year that some conveyancing clients are not receiving appropriate advice on onerous clauses in leases:
“We have seen this arise most frequently in the context of ground rent clauses for newbuild properties. Depending on their wording, such clauses can result in an increase in the ground rent payable by the lessee from a few hundred pounds a year to more than, for example, £70,000 a year, over the course of the first hundred years of a lease. Such clauses can have a significant impact on the lessee due to the unexpectedly high costs and impact on the future value and saleability of the leasehold.“
The SDT Judgment & comment on Professional Negligence Claims
The tribunal report records that 115 clients were adversely impacted and that this had led to litigation.
The full extent of direct harm caused by Mr Hughes’ misconduct was not known given the extant parallel civil proceedings arising out of his misconduct. It was known that 115 clients had been detrimentally impacted by the erroneous advice given by Mr Hughes which led to litigation, and the attendant stress/expense that entails, which would not have been necessary were it not for Mr Hughes’ misconduct. Claims had been made to insurers and to the Solicitors Compensation Fund which consequentially caused harm to the reputation of the profession.SDT Judgment, Case No. 12330-2022
The tribunal found that the solicitor knew or ought to have known that inattention to detail could result in a breach of his professional obligations and duties.
Hughes admitted that clients should have received the correct advice and explained that there had been an internal system and control failure which led to the mistakes.
Negligent Energy Performance Certificate (EPC) Advice
While not a feature of this case, we have seen other recent cases where conveyancing lawyers have included an Energy Performance Certificate (EPC) in their Report-On-Title but failed to advise their purchaser Buy To Let Landlord on the UK Government’s 2018 ‘Minimum Level of Energy Efficiency’ standard (EPC band E).
To improve a property’s EPC to a rentable standard that is compliant with the ‘Domestic Minimum Energy Efficiency Standard (MEES) Regulations’ can involve tens of thousands of pounds in costs which could have otherwise been reduced from the purchase price or an alternative property could have been purchased. Compensation can potentially be claimed for these losses from the conveyancers.
Book a Meeting with our Professional Negligence Lawyers
If you have a claim against a property conveyancing professional and want expert legal advice, get in touch so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of leading Professional Negligence Solicitors & Barristers can provide urgent help, advice or representation to you.