Summary
Summary ULAW LPC, Real Estate Chapter Readings
- Module
- Real Estate (RE)
- Institution
- University Of Law (ULaw)
ULAW LPC, Real Estate Chapter Readings
[Show more]
Seller
Follow
Content preview
RE WS1 – Tasking Instructions TIFF LIAOChapter 5 – Conduct Issues Relevant to Conveyancing page 49
SUMMARY
A Solicitor CANNOT act for more than one party in a property transaction if there is a conflict of interest/significant risk of.
Acting for a BUYER and SELLER in the same transaction carries a high risk of conflict of interest and should not occur routinely.
It will often be possible to act for both in a residential transaction IF the mortgage is on standard terms.
In commercial transactions, the lender will usually be represented separately – it may be possible for the solicitor to act for both IF
the mortgage is on standard terms
A solicitor should follow the guidelines laid down in Royal Bank of Scotland v Etridge (No 2) and other appeals [2001] if acting for
joint borrowers.
A solicitor must, in most circumstances, keep the affairs of their client confidential.
A solicitor dealing with more than one byer in a ‘contract race’ must comply with Paras 1.2 and 1.4 of SRA Codes.
Undertakings are freq given in property transactions, but a failure to comply with an undertaking constitutes professional
misconduct.
The Legal Services Act 2007 makes it an offence for an unqualified person to prepare a property contract, transfer or charge.
The Money Laundering, Terrorist Financing and Transfer of Funds(Information on the Payer) Regulations 2017 impose
customer due diligence requirements on property lawyers.
A solicitor must be able to spot the warning signs of money laundering, mortgage fraud, property fraud and title fraud, and
should read the Law Society’s guidance on these subjects.
INTRODUCTION
Summary of the conduct issues most likely to be encountered during the course of a conveyancing transaction.
Solicitors are regulated by the Solicitors Regulation Authority (SRA), which publishes Codes of Conduct that must be complied with.
A failure to comply with the rules contained in the SRA Codes may lead to the SRA taking regulatory action against:
(a) the solicitor who is acting,
(b) the firm itself as an entity, or
(c) its managers or compliance officers.
= The SRA has issued guidance to assist in the practical application of SRA Codes.
1
TIFF LIAO
, RE WS1 – Tasking Instructions TIFF LIAO
Chapter 5 – Conduct Issues Relevant to Conveyancing page 49
ACTING FOR THE SELLER AND BUYER
Will often happy where the parties fele that the deal has been done at the outset when the terms of the sale and purchase are
recorded by the selling agent and thereafter can avoid duplication of time and expenses if one solicitor/firm does the work for both
the buyer’s and seller’s solicitors OR both have been clients of the same firm and neither want to instruct a new firm.
Paragraph 6.2 SRA Code Supports Principle 7
- Subject to certain exceptions, a solicitor/firm CANNOT act if the solicitor/firm has a conflict of interest/significant risk to such.
- Conflict of interest = ‘a situation where your separate duties to act in the best interests of two or more clients conflict’.
- May exist right from the start, or may arise during the transaction, (for example where the parties start off with an agreed deal but
something comes to light as a result of the searches and enquiries which causes the buyer to want to reduce the purchase
price or insert conditionality clauses into the contract).
- The decision as to whether acting for buyer and seller does or is likely to involve a conflict of interest rests with the solicitor and
the firm.
- Whilst the SRA Codes DO NOT PROHIBIT acting for both buyer and seller, it is worth noting that guidance issued by the SRA in
relation to the SRA Codes states that one client selling or leasing an asset to another client is an example of a circumstance that can
give rise to a conflict of interest or a significant risk of one.
The guidance goes on to say that ‘you should not normally act for two or more clients in these scenarios’.
Law Society guidance issued on 18 June 2020 states that ‘there is a high risk of a conflict of interest if you act
for both a buyer and a seller’.
- Factors to take into account when determining whether a conflict of interest exists, or is likely to arise, include the:
(a) Complexity of the matter and length of the conveyancing chain involved
The more complex the transaction, the greater the risk of a conflict of interest;
(b) Likelihood of negotiations having to take place.
In higher value or complex transactions, there is a greater likelihood of substantial contract negotiations, increasing the risk of a
conflict;
(c) Bargaining power of the parties and any particular vulnerability of either party.
Where there is unequal bargaining power, it makes it more difficult to act in the best interests of both clients.
EXAMPLES: Where a solicitor/firm would have a conflict of interest if acting for both.
(a) where a BUYER should be advised (b) where a term in the contract would be advisable to protect the interests of one
to renegotiate the purchase price party but detrimental to the other
following an adverse survey or search
result; (for example, a term requiring the seller to bear the risk of any VAT liability in the event of
the VAT status of the transaction changing between exchange and completion).
= Such advice would clearly be to the detriment
of the seller and so the duty to act in both their = Neither the firm nor solicitor can act in the best interests of both clients in this situation: if
interests would conflict; you advise the buyer to insert the term, you are not acting in the best interests of the seller; if
you stay silent, you may not be acting in the best interests of the buyer.
2
TIFF LIAO
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller tiffany_liao. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £7.16. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67474 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now