Clients lent £30k by consultant who acted in parents’ house sale
A fine has been issued to a former consultant who acted for clients that he had previously lent money to.
A notice from the Solicitors Regulation Authority states that £30,000 was lent by Allan Hudson to a couple known as Mr and Mrs B. Whilst there was no written loan agreement, it was generally understood that when the couple completed a re-mortgage on their home, the money would be repaid.
From 2012 to 2015, Hudson worked as a consultant at London based firm Howard Kennedy; during this time he was instructed to act for the parents of Mr and Mrs B in the sale of their property, taking instructions from Mrs B. In order to lease an annexe from Mr and Mrs B, the parents were to pay them an amount from the resulting proceeds of sale.
Prior to the sale’s completion, Hudson requested for his loan to be repaid using the amount paid for the lease. Mrs B agreed to this, giving him a letter of authority.
According to the SRA’s notice, the authority had not actually been verified by either of the sellers, despite the letter being signed by the mother. It emerged that the purpose of the letter was not fully understood by the mother, who stated that she’d had trouble in remembering what had occurred.
In relation to the granting of the lease, Hudson had advised Mrs B that legal advice should be sought by her parents. However, he did not tell them this directly.
The solicitor admitted that he had acted in a position which could potentially lead him to benefit from the transaction proceeds, as well as where client interests conflicted or had the potential to do so.
In regard to the monies which were used to repay the loan, further steps should have been taken to make sure that consent of the sellers was obtained. Hudson also failed to ensure that the Mrs B had necessary authority to give instructions as to the sale.
He stated that he trusted Mrs B enough to lend her the £30,000, largely given her status as a long-standing client. As Hudson trusted that Mrs B was safeguarding the interest of her parents, he failed to consider that they were vulnerable clients.
As well as being fined £1,500 by the SRA, Hudson was also rebuked. Additional costs of £300 were also ordered.