How well do you know your solicitor?
Many will have read the recent and poignant story of a family from Sidcup in Kent who purchased their dream family home for £400,000 in August 2011. 6 months later and after spending £70,000 of their savings on renovations they discovered that they in fact did not own the property and it was subsequently repossessed.
Who is to blame?
It would appear that the two solicitors that had acted on behalf of the seller of the property had fled with the purchase monies and failed to redeem the money on the existing charges over the property. The family are now left homeless and destitute and as yet, without any prospect of recovery of their money.
The property was originally being marketed for offers around £500,000 but given that the family only had £400,000 available in cash they were told by the estate agent that if they were able to complete in 10 days then the house was theirs. An offer too good to refuse? Monies were transferred to complete the purchase but what happened to these monies thereafter remains a mystery.
Investigations have revealed that the sellers of the property had £542,000 outstanding in relation to mortgages over the property, which has prevented the property being transferred and registered in the name of the family. This is said to have been concealed by the Seller’s solicitors.
The family have tried to recover their money and have made a professional negligence claim against the solicitor’s professional indemnity insurer however an exclusion clause contained within such a policy has meant that the insurers do not have to meet the claim if both partners of the firm of solicitors were fraudulent.
The Solicitors Regulation Authority (SRA) has now closed down the practice of the offending solicitors and a court order prevents the firm being named and shamed. No doubt there are many other people in similar situations who have been similarly “duped” and investigations are said to be ongoing. Although the two solicitors are said to be on the run, others have been arrested in connection with the scam. One man has pleaded guilty to two counts of fraud by misrepresentation in relation to setting up bank accounts in the name of the solicitors and another has pleaded guilty to offences of money laundering.
This is a worrying tale but unfortunately this is one that is not uncommon. Land and property is usually the most valuable assets people own and both lenders and homeowners need to be alert and vigilant against mortgage fraud.
For anyone looking to enter into a property purchase or sale, it is strongly advised that you carry out some simple research of a firm of solicitors which ensure that a sham firm does not either represent you, the lender or as in the example above, acts for the other side in the transaction. This information can be obtained from the Law Society website or the SRA.
These are some “warning signs” and tips to assist in protection your position:
– Always take your time and do not feel pressurised or rush into a transaction. If it is too good to be true, it usually is, especially when it comes to mortgages and finance;
– Check and double check contracts;
– Research any companies that are involved at Companies House (www.companieshouse.gov.uk);
– Do your own checks – are they a recommended firm of solicitors? Do they advertise locally? Have your friends and family heard/used them before?
– Instruct a reputable and established solicitor to look over and advise in respect of any contracts, paperwork or settlement.
– Check the firm carries appropriate Professional Indemnity Insurance.
The emphasis has been on solicitors to “know their client” but the truth is, how well does the client know their solicitor?
If you have experienced issues with your solicitor and require advice on what to do next, please do not hesitate to contact Levi Solicitors for a free initial informal chat on 0113 244 9931.