Buying or selling a home is stressful enough at the best of times, but having to change to a new solicitor during a conveyancing transaction can make it even worse. Sometimes the process can be quick and simple but unfortunately not always.
We hope you will not have to change conveyancing solicitor but appreciate that sometimes this does become necessary. It may be because a client loses confidence in the property lawyer acting for them. Sometimes it is necessary because a firm is no longer able to act for a particular client or even because the original firm is closed down. This article will explain how to transfer your work as painlessly as possible.
If you lose confidence in your solicitor for whatever reason, the best course of action is to speak to a senior member of the firm to try and sort things out before changing solicitor. It may be that your case can simply be transferred to another solicitor within the firm who will be better able to handle your work.
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How does the transfer work?
Most firms should be happy to try and sort out any problems with their clients. However, if that is not possible, then you should lose no time in transferring your work to another firm. It is in no-one's interest for you to stick with a firm with which you are unhappy. As a general rule, it is easiest to transfer work earlier in the course of a transaction. Once contracts have been exchanged, it becomes much harder, since a completion date will have been fixed. Any delay then can lead to financial penalties being incurred, so deciding to change conveyancing solicitor after exchange is not recommended. If you find yourself in the unfortunate position of having to find another conveyancing solicitor because the original one is no longer able to act for you for whatever reason, you may also require advice on obtaining compensation. It is essential to find a firm who can take over your work as seamlessly as possible and Homeward Legal can assist by arranging the services of a leading conveyancing solicitor for you. There are a number of questions that must be asked when changing your lawyer, whether or not voluntarily:
- will I have to pay the first solicitor and if so, how much?
- does the first solicitor have to pass paperwork and money on to the new firm?
- how quickly can the new firm get moving with my transaction?
- will this affect my mortgage offer?
- will there be any penalties if completion is delayed?
- can I get compensation if a law firm is closed down?
Will I have to pay for work already done?
One thing to consider before changing is whether you will have to pay the first Sslicitor for work that has already been done and, if so, how much? This will depend upon the terms of your agreement with the solicitor, which should have been given to you in writing.
Many firms now handle conveyancing work on a ‘no completion, no fee' basis. This usually means they won't make any charge if your sale or purchase doesn't complete for some reason outside your control. But if you decide to change to another firm, you may have to pay the first firm for work they have already done even though completion has not taken place.
If a firm decides they can no longer act for you or has closed down for whatever reason, this does not necessarily mean you will not have to pay for work that has already been carried out. Again this will depend on the terms of engagement with the original solicitor.
How easy is it to get documents and paperwork transferred?
You may find the original law firm won't release any paperwork they are holding until they have been paid for the work they have already done. They are entitled to do this because they have a lien - a sort of mortgage over the papers.
In many cases, this need not hold things up. A new firm can often take over the work without having all the correspondence and documents held by the first firm, provided contracts have not been exchanged. The solicitors acting for the other party may be prepared to send further copies of documents to the new firm. If you are selling, the new solicitors can get another copy of your title direct from the Land Registry.
If your title is unregistered and the first firm is holding the title deeds, they will need to pass them to the new solicitor. However, if there is a mortgage on the property, it may be necessary for the deeds to be returned to the lender first, otherwise the lender will have to authorise the transfer before they can be released.
When does the SRA get involved?
When the Solicitors Regulation Authority (SRA) closes down or "intervenes" in a solicitor or a law firm they regulate, another law firm will be appointed to act as the Authority's agent. This can also happen if a solicitor who is a sole practitioner dies or becomes unable to continue working.
In most cases, the firm appointed as agents will only hold the file until the client instructs another firm. It is therefore essential for clients to instruct a new firm prepared to take over a case at short notice and get it completed without further delay. Unfortunately, it can take some time for them to sort out the files, and in any case, they will require the client's written authority to send the file to the new firm.
What happens if a solicitor is holding money for you?
If changing solicitor after you have handed them any part of the purchase money or after they have received any money on your behalf, there should be no problem in getting the money transferred to your new solicitor. When a solicitor holds money on behalf of clients, that money must be held in a separate bank account. The solicitor should therefore transfer it to another firm upon request.
This will not apply if the money is a mortgage advance received from a lender. In that case, the money will belong to the lender until completion, so it would have to be returned to the lender.
When a firm is closed down and holds money on behalf of clients, arrangements have to be made for it to be transferred to the clients or to new solicitors acting for them. Unfortunately, this can often take some time, since the agent firm will need to have access to the closed firm's accounts and records before it can verify who the money belongs to.
The buyer's solicitor may be closed down after a purchase has been completed but before stamp duty has been paid or a transfer registered. If this happens, the buyer will still need to appoint another solicitor to complete these formalities. The solicitor should be able to obtain the duty and Land Registry fees from the SRA's agents, but this can take some time.
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When a mortgage offer is then issued, this will state the name of the solicitor acting for the lender. In most cases, this will be the same firm as that acting for the buyer. So, if the buyer then wants to change solicitors, it will be necessary to consider how the mortgage offer will be affected.
Of course, if the lender was not prepared to instruct the firm originally chosen by the buyer and the buyer changes to the firm instructed by the lender, there will not be a problem. But if the lender has instructed the buyer's solicitor and the buyer then changes solicitor, the lender will not automatically transfer its instructions.
In that situation, the buyer could accept that the original firm will continue to act in connection with the completion of the mortgage (in which case they will expect to be paid for this work.) Alternatively the buyer could inform the lender and ask for a new mortgage offer to be issued in the name of the new firm - but that would cause further delay.
If the firm named in the mortgage offer has been intervened by the SRA, then the lender will have to be informed and asked to issue a new offer as quickly as possible.
Will any penalties be incurred?
Until contracts for a sale and purchase are exchanged, it is unlikely that any penalties (as opposed to additional fees) would become payable if one party wants to change conveyancing solicitors. However, once contracts have been exchanged, penalties will be incurred if completion is delayed as a result of a change of solicitors.
If a buyer fails to complete on the contractual completion date, interest becomes payable at the contract rate - often 5 percent or more over base lending rate. Furthermore, the seller could rescind the contract altogether and keep any deposit already paid if the buyer fails to complete after expiry of a notice to complete. The seller can also sue for other contractual remedies and losses.
When a seller fails to complete on the due date, the buyer can also deduct interest from the purchase price when completion does take place and has the same rights to rescind and sue for losses and damages.
Can I get compensation if a law firm is closed down?
When a law firm is closed down, money they have been holding on behalf of a client should be safe and can be recovered by the client. Unfortunately, that is not always the case. If clients' money is missing, it will be necessary to make a claim against the solicitors' compensation fund.
Details for making claims can be seen on the SRA's website.
Clients may also incur additional costs and expenses as a result of a firm being closed down, such as additional legal costs or a penalty incurred because Stamp Duty Land Tax (SDLT) was not paid within 30 days of completion.
The compensation fund exists principally to reimburse money that has been misappropriated by a solicitor, so such expenses cannot necessarily be recovered from the fund.
In some cases, it is possible to make a claim against the firm's indemnity insurance. This can be a difficult process and take some considerable time, and further professional advice may well be required.
Homeward Legal will be happy to help if you want to change conveyancing solicitor, especially when a change has been forced upon you.
We appreciate you will want the change to happen as quickly as possible and that your new firm will do their best to ensure your purchase or sale is completed with as little delay as possible. Call us now on to discuss your requirements.
Read more: 4 Questions to Ask Yourself when Choosing a Conveyancer or call us on to discuss any queries you might have at any stage of your conveyancing.