Conveyancing Solicitors, a question......

[Quicksilver]

Would a conveyancing solicitor as part of their job normally check the balance of the mortgage taken out on the property being sold, so as to ensure the sale of the property allows enough funds to repay the mortgage?
Also, would the solicitor, on behalf of their client, be expected to check that there is no early repayment charge (redemption fee) on the mortgage. So that, if notice needs to be given to avoid the repayment charge, there is sufficient time for this to be done before completion and thus early repayment?

Any advice from those in the know would be greatly appreciated.

 

[tony84]

Just to clarify are you talking about the buyers Solicitor or sellers solicitor?

 

[Quicksilver]

Sellers solicitor. Should the sellers solicitor, on behalf of their client, check to see if there are any redemption penalties linked to the mortgage they will be paying off in full on completion of the sale?

 

[tony84]

I just started to write a message and it probably got a bit overly complicated.

So i did a quick search and found this which might be useful...
http://www.thackraywilliams.com/Selling%20a%20property.aspx

Just to note, i have nothing to do with these people, theyre at the other end of the country to me.

 

[Quicksilver]

Ok, so its at exchange of contracts that the solicitor finds out the final figure to clear the existing mortgage and this is the time whrn they would find out if there is any redemption fee. And this is standard practice.
Surely it would be an idea to do this earlier on in the process. Its normally not long after exchange of contracts that completion happens and any notice period that needed to be served to avoid the redemption fee would only hold up what is already a painfully drawn out process.
Shouldn't it become common practice that solicitors check this as part of the conveyancing process seeing as they are appointed to deal with all the aspects of selling the property and are supposed to work in their clients best interest.

 

[tony84]

The problem is Mortgage lenders usually charge interest on a daily basis.

So they give a figure based on the date you are expecting to complete which would usually include any redemption fees and interest upto that date. With mortgages so much can go wrong and usually at the last minute so if they do it any earlier a lot of the time it will be man hours wasted.

 

[Today's Conveyancer]

Some lenders also charge for second and subsequent redemption statements if they are ordered closely together and it may not be in the clients best interest to be charged additional fees.

So there is a balance to be struck between early information collection which will quickly be out of date and potentially cost more money and later collection of data that may be more accurate but remind the borrower at a late stage that they signed up to a deal with an early redemption charge or didnt realise just how much they borrowed in the first place.

 

[internetspaceships]

Sellers solicitor. Should the sellers solicitor, on behalf of their client, check to see if there are any redemption penalties linked to the mortgage they will be paying off in full on completion of the sale?

The seller themselves should know this really before even selling the house.

Really. After all they signed up for the mortgage in the first place.

 

[Quicksilver]

Surely the cost of an additional statement would always be a lot lower than a redemption fee, and a statement isn't whats needed early on it's an answer as to whether there is a redemption fee, and if so is it avoidable by giving a notice period.
Seeing as the solicitor is responsible for transfering the monies to the mortgage company surely that means they should also be responsible for checking everything that goes with the mortgage. To have one person responsible for part of the process but then turn around and say certain parts should be done by someone else without warning or the client being told it's upto them personally to check certain details only confuses matters. The solicitor should deal with all aspects of the conveyancing, therefore if they are dealing with the existing mortgage, surely they should deal with all aspects of the existing mortgage. Thus checking any redemption fees or notice periods early on.

 

[internetspaceships]

I was answering your point about the solicitor checking to see it there were any redemptions fees.

My answer was based on the fact that anyone selling a house with a mortgage should have a pretty good idea themselves of what redemption fees they should be paying the mortgage company before they even sell the house.

Otherwise how can they even know if they are making any money.

Yes of course the solicitor can tie it all up as completion approaches, and give you (I'm assuming you have the problem here unless corrected) the final figures. You however shoud know enough to roughly approximate those figures, especially if redemption figures are involved.

 

[Quicksilver]

The seller themselves should know this really before even selling the house.

Really. After all they signed up for the mortgage in the first place.

Yes, maybe the seller should know before they sell the house. But, isn't the whole point of using a solicitor rather than deal with the whole process personally, so that all the details can be checked.
There's a lot of things that the seller does or should know, but when the details are checked by a professional the facts are different.

 

[tony84]

An early redemption fee is only really charged if the mortgage is replaced within the first x years usually the deal that you siged up for (ie fixed at x% for 2 years or whatever it may be).

The solicitor shouldnt have to tell the client whether there is a redemption fee - the client should know this already. Its the figure that you might not expect the seller to be aware of but its usually around 2-3% of the mortgage amount.

I suppose im looking at this from an advisors perspective where i would explain all of that to my client, if you buy off a coparison site then its unlikely to be made as clear unless you read through all of the paperwork,

 

[Quicksilver]

I was answering your point about the solicitor checking to see it there were any redemptions fees.

My answer was based on the fact that anyone selling a house with a mortgage should have a pretty good idea themselves of what redemption fees they should be paying the mortgage company before they even sell the house.

Otherwise how can they even know if they are making any money.

Yes of course the solicitor can tie it all up as completion approaches, and give you (I'm assuming you have the problem here unless corrected) the final figures. You however shoud know enough to roughly approximate those figures, especially if redemption figures are involved.

Generally people know how much the original mortgage was for and how long they've been paying it so have a good idea of what the balance is. I'm talking about the details. Would it not be an idea for solicitors to check every detail.
Surely someone has to check that there is enough capital from the sale to clear the mortgage? and this should be done early on along with any redemption fees?

 

[internetspaceships]

Generally people know how much the original mortgage was for and how long they've been paying it so have a good idea of what the balance is. I'm talking about the details. Would it not be an idea for solicitors to check every detail.
Surely someone has to check that there is enough capital from the sale to clear the mortgage? and this should be done early on along with any redemption fees?

As these figures should be a part of the decision process involved in selling the house in the first place, the seller should have worked these out themselves before agreeing to sell at a certain price.

It's all laid out on their mortgage offer documents.

 

[tony84]

Im going to presume here that your house is in negative equity, you have sold your house and there isnt enough to pay the mortgage off along side everything else involved.

As the seller its your responsibility to ensure there is enough to cover all of these or you have money in the bank to pay off the remainder. If your unsure then you can contact the mortgage lender beforehand to find out what is outstanding and if you were to sell you house within x number of months ROUGHLY how much will be outstanding then.

Appologies if i have presumed wrongly.

 

[Quicksilver]

As these figures should be a part of the decision process involved in selling the house in the first place, the seller should have worked these out themselves before agreeing to sell at a certain price.

It's all laid out on their mortgage offer documents.

Yes, But shouldn't the solicitor check all this for you. Not assume that you know it. The same way as they check all the details on a property you are buying and inform you of everything, not assume you know everything

 

[Quicksilver]

Im going to presume here that your house is in negative equity, you have sold your house and there isnt enough to pay the mortgage off along side everything else involved.

As the seller its your responsibility to ensure there is enough to cover all of these or you have money in the bank to pay off the remainder. If your unsure then you can contact the mortgage lender beforehand to find out what is outstanding and if you were to sell you house within x number of months ROUGHLY how much will be outstanding then.

Appologies if i have presumed wrongly.

We're not in negative equity, we knew the property is worth a lot more than we payed for it. We knew we had a repayment mortgage, therefore owed less than originally borrowed. We knew roughly how much was left to pay on the mortgage and that we can now afford to pay more per month, therefore we decide to move up the ladder.
We employ a solicitor to deal with the conveyancing, both for the sale and purchase.
The solicitor does request the balance to be paid on the existing mortgage but not until the last minute. My arguement is, why isn't this checked earlier on? If we give our mortgage company 4 weeks notice then we don't have to pay a redemption fee. Therefore if this had been checked earlier on in the process we could have given notice and avoided the fee.
Whether we should know ourselves or not doesn't matter. We employed a solicitor to deal with, we believed, all aspects of the sale and purchase. And I believe the existing mortgage is related to this, therefore checking the details should be done. I understand that they do, but not early enough in the process

 

[tony84]

It would have been easier if you had said you had remortgaged.

Have you taken this up with your solicitor?

Send them a letter stating your concerns. They will respond, if your not happy then they will tell you how to progress further.

Most lenders will allow you to pay an extra 10% without any fees. So you may not have needed to re-mortgage.
This is another reason why you should get an advisor, we have to get it past our compliance people and to ensure its in your best interests, therefore we have to check any redemption fees etc.

 

[Quicksilver]

It would have been easier if you had said you had remortgaged.

Have you taken this up with your solicitor?

Send them a letter stating your concerns. They will respond, if your not happy then they will tell you how to progress further.

Most lenders will allow you to pay an extra 10% without any fees. So you may not have needed to re-mortgage.
This is another reason why you should get an advisor, we have to get it past our compliance people and to ensure its in your best interests, therefore we have to check any redemption fees etc.

Sorry, 'pay more per month' meaning get a new mortgage on a larger property. Not remortgage the existing one

 

[tony84]

Ah ok.

Well, im still in the camp that its not the solicitors job to ensure your house sells for enough to cover the outstanding mortgage.

The reason being is that not all mortgages are standard repayment mortgages.

Some mortgages are where people have ISAs or Investments in place to clear the mortgage. So instead of paying off the mortgage they do interest only and put the rest into some sort of savings vehicle - on the sale of the property they use this to clear the balance.

Its not down to the solicitor to check you have this in place.

It probably would be a good service if he did, but im not sure they have to tell you the figures - they would presume you had done your calculations.

 

[Steve Sellers]

Would a conveyancing solicitor as part of their job normally check the balance of the mortgage taken out on the property being sold, so as to ensure the sale of the property allows enough funds to repay the mortgage?
Also, would the solicitor, on behalf of their client, be expected to check that there is no early repayment charge (redemption fee) on the mortgage. So that, if notice needs to be given to avoid the repayment charge, there is sufficient time for this to be done before completion and thus early repayment?

Any advice from those in the know would be greatly appreciated.

Yes and yes otherwise the solicitor would be negligent.

 

[Mike tells it like it is]

Yes and yes otherwise the solicitor would be negligent.

Very often it isn't actually a solicitor that does the work.

 

[Steve Sellers]

Very often it isn't actually a solicitor that does the work.

True, but the liability always falls on the supervising solicitor/partners

 

[Quicksilver]

Ah ok.

Well, im still in the camp that its not the solicitors job to ensure your house sells for enough to cover the outstanding mortgage.

The reason being is that not all mortgages are standard repayment mortgages.

Some mortgages are where people have ISAs or Investments in place to clear the mortgage. So instead of paying off the mortgage they do interest only and put the rest into some sort of savings vehicle - on the sale of the property they use this to clear the balance.

Its not down to the solicitor to check you have this in place.

It probably would be a good service if he did, but im not sure they have to tell you the figures - they would presume you had done your calculations.

This would be part of the buyers solicitors duty.

 

[Mike tells it like it is]

True, but the liability always falls on the supervising solicitor/partners

I know when I sold a house and bought a flat 18 months ago they did not send a deed of transfer.

Hardly something out of the ordinary.

I wrote a letter to the partner-I was not amused.

 

[Quicksilver]

Yes and yes otherwise the solicitor would be negligent.

So, in your opinion, whether there is a redemption fee to be paid on our existing mortgage should be checked as part of the conveyencing for the sale of our property. And that it should be checked early on in the process, not the balance figure but redemption details, as standard practice?

 

[Mike tells it like it is]

So, in your opinion, whether there is a redemption fee to be paid on our existing mortgage should be checked as part of the conveyencing for the sale of our property. And that it should be checked early on in the process, not the balance figure but redemption details, as standard practice?

Lawyers seem to be self regulating to me...

The law society ...

 

[Quicksilver]

They do have an answer for everything. Unfortunately, I no longer trust my solicitor so won't take what he says for granted. The whole conveyancing process is ridiculous and there is no need for it to be the way it is. It just seems that's the way conveyancing solictitors work

 

[Mike tells it like it is]

They do have an answer for everything. Unfortunately, I no longer trust my solicitor so won't take what he says for granted. The whole conveyancing process is ridiculous and there is no need for it to be the way it is. It just seems that's the way conveyancing solictitors work

A lot of people never did. I could not possibly comment.

Well I am not suggesting any lack of integrity-but a lot of people point out that the more complicated the more money the solicitor makes.

Again this is just a view I have heard other people say and I can not comment-but it is considered very foolish to use a solicitor with a shop front next to the estate agents.

I of course could not possibly comment on the validity of this statement.

 

[KM-Tiger]

The whole conveyancing process is ridiculous and there is no need for it to be the way it is.

Must agree. Over the years I've seen excellent, exemplary service, but also downright bad. The worst was for a remortgage where one had no choice but to use the firm of solicitors appointed by the lender. I still remember telephoning to complain and speaking to a "solicitor" who refused to identify themselves other than by their first name, faxes being lost, a whole kaboodle of unaccountable incompetence.

I don't think people complain enough, but it's not a service anyone uses frequently, and the relief at having finally jumped through all the hoops overwhelms the desire to complain.

 

[Mike tells it like it is]

I agree people in this country do not complain enough.

But the again I can understand why people don't bother...

FSA
OFT

Trading standards

I know not of an official institution in this country that is fit for purpose.

I mean how many serious errors can the tax office make before someone is fired.

One rule for them and another for the rest of us I'm afraid

 

[Steve Sellers]

So, in your opinion, whether there is a redemption fee to be paid on our existing mortgage should be checked as part of the conveyencing for the sale of our property. And that it should be checked early on in the process, not the balance figure but redemption details, as standard practice?

I'm not a property solicitor and it's been a while since I have done any property work, however I asked my mate who is a specialist property solicitor and his words exactly "It should be checked in all cases, otherwise negligence"

 

[Quicksilver]

Thanks Mr Sellers,

The problem would still be 'at what stage in the process should this be checked?'.
In our case it has been checked, and we were informed by our solicitor that there is a redemption fee, but it was on the day of completion when the exact remaining balance was requested.
I will seek further advice, but this is a positive start. Thanks for your efforts.

 

[Steve Sellers]

Please, call me Steve. No set time to check so long as it done before completion. My pal says he does it as soon as he opens a file.

 

[internetspaceships]

I'm a little confused here. Are you basically trying to blame the solicitor because you owed overall more than you thought on the mortgage?

 

[Quicksilver]

I'm a little confused here. Are you basically trying to blame the solicitor because you owed overall more than you thought on the mortgage?

Nope, I'm blaming the solicitor for not checking if there is a redemption fee for early repayment of the mortgage. If he had done this we could have given our motgage company notice (our mortgage states that if we give 4 weeks notice then there is no redemption to be paid) that we would be repaying it and avoided the redemption fee.

 

[Steve Sellers]

My arguement is, why isn't this checked earlier on? If we give our mortgage company 4 weeks notice then we don't have to pay a redemption fee. Therefore if this had been checked earlier on in the process we could have given notice and avoided the fee.

I'm a little confused here. Are you basically trying to blame the solicitor because you owed overall more than you thought on the mortgage?

I think there lies the OP's main gripe. One reason for your solicitor checking when opening you file would be to advise you of any negative equity implications etc, which he wouldn't be able to do if he doesn't have the financials.

 

[internetspaceships]

I don't think you have a leg to stand on. You've got a copy of your mortgage offer and should have read it yourself when you took the mortgage out. You signed it didn't you?

I think you're trying to blame someone else for your own shortcomings on this. I don't like solicitors much but heck man up. You failed to read your own mortgage details.

I guess it's the UK though. Blame someone else for your own errors. It'll probably work in some weird way too.

 

[Quicksilver]

I don't think you have a leg to stand on. You've got a copy of your mortgage offer and should have read it yourself when you took the mortgage out. You signed it didn't you?

I think you're trying to blame someone else for your own shortcomings on this. I don't like solicitors much but heck man up. You failed to read your own mortgage details.

I guess it's the UK though. Blame someone else for your own errors. It'll probably work in some weird way too.

I'm happy to take the blame. But, to pay someone to deal with something and them turn around and say they don't do that particular part seems wrong. No-one said 'yes we'll deal with the conveyancing, but it's upto you to check mortgage etc'. If they had then I would of checked it, not assumed that it is part of the whole process which is what he is paid for.
Maybe to check this should be written into the solicitors handbook as general practice

 

[internetspaceships]

I'm happy to take the blame. But, to pay someone to deal with something and them turn around and say they don't do that particular part seems wrong. No-one said 'yes we'll deal with the conveyancing, but it's upto you to check mortgage etc'. If they had then I would of checked it, not assumed that it is part of the whole process which is what he is paid for.
Maybe to check this should be written into the solicitors handbook as general practice

Good reply mate. Maybe that's where we differ. I would have checked it anyway, regardless of whether I was paying him to do it or not.

I'm not sure that paying a Solicitor to convey a sale encompasses checking that the client has read his own mortgage details though.

Good luck with it but I can't see how you would get very far with a claim. At least it's a learning experience.

Jon