A recent study conducted by London law firm, RPC has revealed the number of professional negligence cases that have been delivered within High Court within the UK has nearly trebled in just one year, from 143 to 413. What is to blame for this staggering surge?
A large number of these cases are claims being made against the property and conveyancing industry. RPC puts this significant surge partly down to regulators encouraging claimants to come forward, while other industry experts are claiming the more openly accessible litigation funding is also to blame.
Following the introduction of Compliance Officers by the Solicitors Regulation Authority (SRA) right on law firms’ doorsteps, is this finally bringing vital issues to light or is this causing greater distrust within the property sector?
The research does highlight the six year time restriction on filing such claims, and issues within transactions from the financial crisis in 2008 are likely to be affecting figures now. Many of these cases will be due to expire, thus giving affected parties the need to step up.
Many of the claimants are said to be subprime mortgage lenders against legal and conveyancing firms. Typical cases highlighted within the research include failures to carry out sufficient money laundering and mortgage fraud checks, along with failures in identifying the mis-selling of products and services, and offering adequate advice.
One of the more recent instances of professional negligence litigation was the Redstone Mortgages v B Legal Ltd case, where loans secured with residential property mortgages were transferred to Redstone, with the legal aspects of the process being managed by the B Legal conveyancing firm.
A negligence claim was sent to High Court for failures of the firm to adequately advise the lender on aspects that directly affected the position of the borrower. This included not relaying information about the property shared ownership status, meaning the borrower didn’t have sole authorisation to sell. There were also a number of restrictions on the borrower that were said to affect the value of the property.
Conveyancers are therefore urged to be vigilant when disclosing and retaining necessary information to third parties during property transactions, with particular care being taken with regards to restrictions and shared ownership – communication is key.
