Costly corporates
The process of selling and buying a home is time consuming and stressful enough for people without there being the additional stress of sharp practice by some involved in the profession. This article is intended to provide some information as to the practices we have heard about from our clients.
When putting your house on the market you will undoubtedly contact a number of local agents to obtain valuation advice and to compare fees. There are some national agents who, at this time, may encourage you to use their legal services. There is nothing wrong with this but it is up to you who you instruct as your legal advisor in any property transaction. Signing up to a particular solicitor cannot be a pre-condition of any instruction you give an agent.
When looking at the agency agreement you must always read the small print. I recall from selling my own house through a national agent that you are encouraged to almost sign up immediately without being given an opportunity to check all the terms and conditions in the agency agreement. We often find with clients that the small print can go unnoticed and in particular, the termination clause. Termination clauses can sometimes be restrictive and you are within your rights to try and negotiate more favourable terms not only in this regard but with all the elements of an agency agreement. Do not sign anything until you have read the terms and conditions and until you are happy with these.
When choosing a solicitor, there may be many factors which influence your decision. You are free to choose your own representation and as I mention above, you do not have to choose anyone an agent, or indeed anyone else, recommends to you and this applies to buyers as well. We have heard of clients who have effectively not been able to make an offer on a house without signing up to the agent’s recommended solicitor. Not only would a property seller be horrified to hear that offers were being blocked on this basis but this practice flies in the face of all industry standards.
You will undoubtedly contact solicitors to obtain quotes for the work involved in the conveyancing process. As with any service, you must be clear about what costs are involved. Whilst solicitors are obliged to be transparent and clear about costs we have heard from clients where some firms have quoted a low headline fee but buried in the small print are additional costs and charges for the work necessary to complete a sale or a purchase.
Where you are buying a property with a mortgage, many lenders insist that you use a law firm who is on their panel. When you instruct a solicitor to act on the purchase of a property, your solicitor acts not only for you but also for the lender. The vast majority of lenders maintain panels of solicitors who are able to act on their behalf in such a situation. Anderson Longmore & Higham remains on many of the major lenders’ panels.
HSBC has recently announced a new policy regarding its panel membership. HSBC has significantly reduced the number of law firms on its panel to a total of 43 nationwide and has appointed Countrywide to act as its panel manager. Again, you do not have to use a solicitor on the HSBC panel but if you choose your own solicitor, HSBC will require a firm from its panel to act on its behalf. What this means in practice is that HSBC will charge you for this work so in effect, it is restricting your ability to choose your own solicitor by levying additional charges. It is also extremely likely that your chosen solicitor will need to increase their fees to cover the extra work involved in dealing with HSBC’s solicitors.
The further complication with HSBC’s position is that if you still decide to instruct your own solicitor on a purchase, your solicitor will need to give a series of undertakings, which are effectively binding promises, to HSBC’s solicitor. A number of these undertakings are impossible to give as they relate to matters outside the control of your solicitor. The Law Society has entered into discussions with HSBC to see if it will change its position but the worry is that other lenders may follow suit which will severely restrict consumers’ ability to make free choices as to their legal representation.
Whilst this article paints a rather bleak picture of those involved in the conveyancing process, it is worth pointing out that there are a huge number of organisations who are upfront about charges and about their policies and practices. As a consumer, it pays to read the small print, to shop around and to not always be driven by price.
If you have any queries, please contact Holly Armstrong via email at ha@alhlawco.uk.
