2011 Q2 Conveyancing Periodical- Spreading the Word

June 2011

By Lynn Osman, partner at Whitfields Solicitors

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Since 2002 we have seen changes to industry standards and building regulations which have caught many home owners by surprise - these changes affect replacement windows, cavity wall insulation, roof coverings, gas and electrical installations and many other common household improvements - the need for the right certification is often not recognised until the improved property is being sold.

In themselves, these amendments are helpful in clarifying and extending the regulations. However, they raise potential additional considerations for home sellers and buyers, adding to the complexity of a process which can already present a host of problems and risks. It is all about the 'unknown unknowns', against which solicitors have few obvious remedies. If a seller wilfully or inadvertently misrepresents the true nature of the status of building regulations or planning permissions applying to the property they are selling, buyers will remain unaware of any problems until it is too late. The consequences of this sort of situation could be expensive. 

So, we are acutely conscious of the need to inform our clients that they can indemnify themselves against this type of risk, if they wish. Since First Title introduced the Home Owners' Protection Policy®, we have encouraged our clients to consider it because it offers an all round solution, which goes further than the protection they could receive from our PII. Roughly 40% of our clients come to us for conveyancing advice and we see a lot of the problems that can arise when they are trying to buy and sell houses. Most of these clients are unsure about the really complex issues such as boundary disputes and mortgage fraud, and the Home Owners' Protection Policy® provides a very sound solution. It takes away any need for them to worry about these issues. 

It is particularly helpful when clients are trying to buy from a trustee in bankruptcy, mortgagee in possession or from the personal representatives of a deceased seller. With these properties, the potential for unknown risks to occur is relatively high and there is really nothing that, even as experienced solicitors, we can do to protect our clients from exposure when such issues come to light.

Because of our belief in the benefits of the Home Owners' Protection Policy®, we have now taken to incorporating the detail of the policy into our standard client communications. If the property they are looking at buying has obvious known risks, the client care letter we issue will contain information on the Home Owners' Protection Policy® as a matter of course. There is definitely merit in suggesting to clients who are going to need some form of title cover anyway that they might like to consider extending it. Then, typically we will receive client feedback at the conveyancing report stage of the process.

The first of our clients to opt for the Home Owners' Protection Policy® did so just before Christmas last year.  Since then several other clients have taken out the policy, and we have several more in the pipeline. There is little doubt that as the message spreads, clients will increasingly see the merits of putting in place an additional level of peace of mind. To date, the bulk of our conversations about the Home Owners' Protection Policy® have been with buyers, for obvious reasons. However, maybe we can also think creatively about how the policy could help sellers too. For example, could it help to smooth and speed up a transaction by keeping correspondence to an essential minimum? 

Whatever the future holds, the Home Owners' Protection Policy® won't just have positive repercussions for clients. Last year the Law Society and the SRA put considerable effort into improving conveyancing standards which, on the face of it, seem to have been largely welcomed by the legal profession. 

The Law Society's Conveyancing Quality Scheme will, more than likely, make a huge difference to the overall quality of service that clients receive from their solicitors. And it seems as though the Home Owners' Protection Policy® will sit very well alongside this new code of practice. Perhaps this insurance policy will act as an additional check or balance in the process of service improvements - it certainly has a role to play as a useful way of bridging the gap that sometimes exists between client and adviser.

If these merits were not reason enough for us all to become more active in informing our clients about the availability of the Home Owners' Protection Policy®, we should also consider the positive impact that increased mitigation of conveyancing risks could have on our PII premiums in the long term.

What now

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