The Council of Mortgage Lenders (CML) has said that separate conveyancing should be the exception, not the rule.
In July the CML introduced new instructions for conveyancers acting on behalf of lenders in transactions in which a separate conveyancer represents the interests of the property buyer. The new instructions for separate representation came into effect on 2 July and apply to transactions in England and Wales.
The lender body notes that, in the overwhelming majority of transactions the interests of lenders and borrowers are aligned, so the same conveyancer can act for both. It therefore expects this arrangement to continue in most cases.
In some cases, however, the borrower may want to use a conveyancer who is not on the lender’s panel of approved practitioners. The CML said that in a minority of other cases, there may be a conflict of interest that requires the lender and the buyer to be represented separately or there may be other factors like, for example, the high value or complexity of the transaction, that make separate representation more appropriate. In such cases, it is important that there is clarity on what is required and that is what the new instructions are intended to deliver, the CML said.
In recent years, lenders have been more active in managing the list of conveyancers they are prepared to instruct to act on their behalf. As a result, there may now be more instances in which a buyer wants to use a conveyancer who is not on a lender’s panel. There are a number of reasons for this, including:
- instances where the buyer wants to use a firms that is small, new or has undertaken only a small volumes of conveyancing;
- differences in the ability of firms to deliver services that are specifically required by the lender;
- lender concerns over the quality and probity of work; and
- the commercial arrangements of the lender.
- The instructions have been published for the small number of cases in which joint representation is not possible. They are supported by the Law Society of England and Wales and the Council for Licensed Conveyancers.
The CML said it is also important to bear in mind that the absence of a conveyancing firm from a lender’s panel should not necessarily deter a borrower who wants to use it.
The trade body has expressed concern about the recent decision by the Law Society of Scotland to consider moving to compulsory separate conveyancing representation for lenders and buyers in every transaction. In the CML’s opinion, separate representation is only necessary for the kinds of reasons cited above, or in cases where the buyer’s and lender’s choice of conveyancer differs.
As in the rest of the UK, the CML favours joint representation wherever possible. It is cheaper and more efficient for the lender and buyer, and enables transactions to be completed as quickly and smoothly as possible. Joint representation therefore remains the best option for lenders and borrowers in the overwhelming majority of cases, it said.