Conveyancing Protocol: an update
Introduction:
The new Law Society Conveyancing Protocol (“the Protocol”)1 for residential conveyancing was
formally launched on 1 April 2011.
The Protocol comes hot on the heels of the Law Society’s Conveyancing Quality Scheme
(CQS) which was launched in January of this year and has proved popular with conveyancing
solicitors. To date, there have been almost 700 applications2 by firms hoping for CQS
accreditation.
The aim of both the CQS and the Protocol are to raise standards throughout the conveyancing
process and equip practitioners with a set of principles to standardise and improve
conveyancing procedure.
Whilst the Protocol is not compulsory, the Law Society have indicated that it is their intention
that all solicitors who undertake conveyancing will utilise the Protocol. In addition, its
implementation is compulsory for those firms wishing to be CQS accredited. Given the
pressures faced by conveyancing firms in the current climate, it is likely that CQS accreditation
will become an important tool in attracting new customers and in particular, is likely to become a
minimum requirement for firms applying for membership of lenders’ panels.
In addition, from a risk management perspective, the implementation of the Protocol and the
adoption of standard contracts shows that firms are taking a pro-active approach to managing
the risks of conveyancing transactions.
The Law Society Conveyancing Protocol:
The Protocol supersedes the 2004 edition of the Protocol and Standard Conditions of Sale.
Whilst it does not prescribe specific rules which conveyancers are required to follow, it sets out
a ‘best practice’ procedure which ought to be followed to progress a conveyancing transaction
smoothly. It aims to ensure that both the seller’s and buyer’s solicitors have an agreed method
of dealing when entering into a conveyancing transaction leading to better communication and
co-operation between the parties and preventing unnecessary delay.
The Protocol describes itself as a “conveyancing checklist”. It begins with 12 general obligations
which are designed to remind practitioners of the standards expected of them, it also
emphasises the overriding obligation to act in the best interests of the client, which takes
precedence over the Protocol.
The general obligations are:1
Disclose to the buyer/seller that there are professional obligations which apply to the sale
and/or purchase. Obtain agreement and instructions to enable you to act in accordance with
the terms and spirit of the Protocol.
2
Where acting for a lender as well as for a buyer/solicitor, the duties owed to the lender are
no less important than they are for any buyer/seller, subject to the nature of the instruction.
3
There is potential for a conflict of interest to arise when acting for more than one party;
sellers, buyers and lenders. Careful consideration must be given to this.
4
Endeavour to maintain vigilance to protect and guard against fraudulent or other illegal
behaviour encountered in the conveyancing process.
5
Maintain high standards of courtesy and deal with others in a fair and honest manner.
6
Co-operate with others and treat them with respect.
7
Share information with others to assist in the efficient management of each transaction or
change of transaction. Requirements to provide and share information at each stage of the
Protocol are subject to client confidentiality obligation. If the borrower/seller consents to the
disclosure of information about the transaction/other transactions in the chain and/or
change in circumstances, this information should be disclosed. The buyer/seller should not
be encouraged to withhold authority to disclose information unless there are exceptional
circumstances.
8
Respond to all communications promptly or in accordance with agreed timeframe. Where
something is to be addressed in a different order or by different means, this should be
notified to those who are affected as soon as reasonably possible. Steps required by the
Protocol should be carried out as soon as reasonably possible.
9
Deal with transaction materials including correspondence, electronic or otherwise, efficiently
and with care and consideration. Where parties agree to deal on line, agree arrangements,
for example, to acknowledge receipt. Where documents are submitted by post, submit draft
documents in duplicate.
10 Ensure all incoming data is loaded on to the system and made available to the person
dealing within a day of receipt, where any automated data handling or scanning of
documents is used.
11 Use the most up to date version of forms, formulae and codes provided by the Law Society.
Follow the advice contained in SRA, guidance, Law Society practice notes and other
practice information. Update forms to accord with changes in the law if these have not been
updated by the Law Society.
12 Ensure proper arrangements are made for file management (including cover for absent
colleagues) during any period of planned or unplanned absence.
In addition, the Protocol requires the use of a Standard Form of Contract and updates the
Standard Conditions of Sale (5th Edition) accordingly.
In terms of procedure to be followed, there are unlikely to be any surprises for conveyancers.
One of the more significant changes, which is likely to be welcomed by conveyancers, is that
risk now passes to the buyer on exchange of contracts, rather than on completion. The other
changes are generally subtle but important, for example one requirement is for the seller’s
solicitor to update the register when submitting a contract.
In addition, it is hoped that a by-product of the Protocol will be a reduction in fraud and money
laundering in property transactions. The Protocol should prompt conveyancers to be especially
vigilant when undertaking client identity and money laundering checks.
Standard Conditions of Sale:
Some of the more significant changes are to the Standard Conditions of Sale (“SCS”). In the
past, conveyancers could adopt any contract they considered appropriate for a particular
transaction. Not only did the Law Society produce Standard Conditions of Sale, but regional law
societies often had their own amended versions and there were likely to be significant special
conditions added to contracts.
That not only led to confusion and delay, but in some cases, solicitors have been found
negligent for failing to advise their client on the terms of a contract, particularly when there have
3
been special conditions incorporated by the other party. In Sykes v Midland Bank the solicitors
were found to be in breach of duty for failing to advise on an unusual condition in a leasehold
contract which lead to their client being unable to sublet the premises.
The changes to the SCS are aimed at reducing the number of amendments that are routinely
made by the parties. Point 34 of the Protocol states, “the use of standard additional enquiries
may constitute a breach of this Protocol”. In that regard, the Protocol is clear in that it no longer
permits the addition of any ‘special’ conditions unless they are absolutely necessary for the
particular transaction.
Risk Management:
Although the Protocol is not intended to extend a conveyancers duty of care to their client, the
reality is that any departure from the obligations may be considered evidence of a breach of
duty in any professional negligence claim. Equally, if a conveyancer can show that they have
followed the ‘best practice’ procedure set out in the Protocol, and incorporated the standard
4
conditions of contract, they are at much lower risk of a finding of breach of duty .
In addition, the adoption of ‘best practice’ procedures such as the Protocol are likely to be
viewed positively by Professional Indemnity Insurers, who see pro-active risk management as
key to evaluating the risk of insuring particular firms.
Conclusion:
The Protocol is an extremely accessible guide to the steps which ought to be followed to
complete a residential conveyancing transaction. Whilst the Protocol is a voluntary framework
which the parties can, at present, choose to ignore, it is hoped by the Law Society that the
Protocol and standard conditions of sale will be adopted by all conveyancers in order to
standardise and streamline the procedure, and improve consumer confidence in the
conveyancing process. In addition, a greater degree of standardisation ought to reduce the risk
of mistakes being made and claims against conveyancers.
1
2
3
4
http://www.lawsociety.org.uk/new/documents/accreditation/cqs-protocol.pdf
Law Society Gazette – Making the grade: examining accreditation schemes – 31 March 2011
Sykes v Midland Bank Executor & Trustee Company [1971] 1 QB 113 & Boateng & Hughmans [2002] EWCA Civ
593
Walker v Boyle [1982] WLR 495 where it was held that it was “perfectly normal and proper for a solicitor to use
standard conditions of sale…I do not think he is called on to go through the small print of those somewhat lengthy
conditions with a toothcomb”.
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