Property Related Complaints And How You Can Avoid Them
We handle many complaints on behalf of property firms, so have a very good understanding of where things can go wrong when handling property transactions; we want to share some of these with you so you can try and avoid such complaints being made against you!
One of the sources of complaints comes from a lack of joined-up working where firms have different teams handling different parts of a transaction, for example, case set-up, searches, pre-exchange, pre-completion, and post-completion; such a way of operating may make processes more efficient on the ground but it can generate substantial complaints if the teams are operating as ‘silos’ and are not looking at the wider picture and what colleagues in other teams are or aren’t doing.
Headline complaint types
- Failure to keep the client informed
- Failure to advise
- Failure to progress
- Failure to reply
Common pitfall areas
- Help to Buy ISA/loan – failing to follow the Help to Buy procedures/guidance step by step.We have seen instances where the incorrect Help to Buy loan amount was redeemed on completion due to the value being based upon the Surveyor’s valuation, rather than the sale price. In one case, this left a shortfall of £400 (an offer of £200 was made to the clients on the basis that they had some responsibility to be aware of their obligations & liability under the Help to Buy Scheme). We have also seen an example of a failure to request the Help to Buy ISA bonus between exchange and completion, which resulted in the client losing out on the bonus of approximately £1,500.
- Leasehold – failing to advise on the wider implications of purchasing a leasehold property and long-term increases on onerous ground rent clauses. This is a growing area for negligence claims.
- Ground rent – failing to inform the client of when the ground rent was paid up until on completion, when it next fell due, who owned the freehold title, and who the ground rent was to be paid to. Also a failure to refer to the correct address for service as part of the registration process which in one instance led to the ground rent invoice being sent to the wrong address, a significant shortfall accruing over time before and a small claim being issued against the leaseholder by the management company for approximately £2,000.
- SDLT – failing to advise correctly on whether the higher or lower rate is payable – however the client may also be partly responsible for the incorrect amount being paid if they have misinformed the firm (see failure to advise example below).
- Client portals not being kept updated – where firms have a portal for clients to log into to track process on their transaction – we have seen this raised as part of a complaint.
- Registration – failure to register a charge against the freehold and leasehold title or register a purchase promptly at Land Registry.
- Service levels – failure to comply with internal service levels e.g. Terms of Business refer to responding to correspondence within 48 hours but the firm responds outside this.
- Lack of attention to detail – routine work is sometimes treated as a tick box exercise, which can lead to complacency. There may be spelling mistakes in documents/failure to cross refer spellings of clients’ names to ID docs etc, errors in report on title etc.
- Failure to manage clients’ expectations from the outset – in terms of outlining the key stages of a transaction, what information is required from them to progress the matter and estimated timescales for each stage and until conclusion. It is also important to clearly set out when the fee earner is likely to be in contact with a client.
- Lack of an organised file management system where key dates are clearly diarised and reminders are set to prompt fee earners to take next steps and proactively progress files.
- Fee earners lacking the relevant expertise and experience to handle the files they are responsible for, and a lack of regular supervision of junior staff.
- Delay/failure to progress/failure to reply to emails from client – minimal activity and contact with client over a 3-month period. A change of fee earner led to a flurry of activity the following month, which resulted in the purchase completing within 16 weeks overall. Client complained post completion regarding the delay. Offered £100 fee refund at initial investigation stage in recognition of the poor service over the initial 3 months – client has not confirmed if this is accepted as yet (current ongoing complaint).
- Failure to keep the client informed – failure to make follow-up calls and lack of updates on the day of completion. This is often raised as one of several issues that form part of a complaint for poor service – note that upon investigation it is not always upheld as the client may have painted a one-sided version of events or had extremely high expectations of daily contact for example, on the other hand, this could be managed by setting the client’s expectations on levels and frequency of communications at the outset.
- Leasehold issues – client complained that insufficient information was given to him as to potential problems he may encounter in purchasing a leasehold property and how this may impact on future saleability – it was accepted that further information on these points could have been given in the report on title or a supplementary leasehold guidance note could have been provided. He was offered £100 fee refund on initial investigation in recognition that the service provided could have been better. This was not accepted – the firm thereafter received a letter from another firm which referred to the client being provided with negligent advice and requesting a copy of the file.
At what stage are complaints resolved?
This can vary from firm to firm and their attitudes to complaint resolution.
We have seen a theme with one firm where a significant number of clients wanted to take their complaints to the appeal stage due to the firm not offering a fair and reasonable sum at the initial stage.
It is short-sighted to make low initial offers when clearly a complaint justifies more based on the guidelines issued by the LeO. The sooner you can resolve a complaint the better it will be, otherwise it may go to the LeO incurring a case fee as well as compensation; it could also result in the LeO referring the complaint to the SRA where it believes there has been misconduct.
Other points to note
- The link between complaints and claims – insurers may require notification of complaints – this could affect your firm’s risk profile where there are multiple service issues being raised. The insurer may want to be involved in the complaints process and approve the response letters. They may also require notification where any compensation is paid (sums above the fees paid).
- Delay in responding to a complaint/referring on to internal complaints handler/providing complaints procedure/failure to follow timescales set down in the firm’s internal complaints procedure – all of these can add more fuel to the fire by aggravating an already aggrieved client.
With the Legal Ombudsman looking to publish the full details of complaints it rules on, it is important to try and resolve matters at firm level if you can.