Professional Negligence Update: Conveyancers Beware

By August 1, 2016January 29th, 2021Litigation

Picture the scene – between exchange and completion of a property purchase…the vendor of the property is made bankrupt. Unaware of the position the transaction proceeds to completion and funds are transferred in the normal way.

The transaction is void on exchange…pursuant to section 284 Insolvency Act 1986 (‘IA86’) and void on completion because the vendor had no power to deal with the property then under the control of the Official Receiver by virtue of section 287 IA86.

Is the purchaser’s solicitor negligent? …the position highlighted in the case of Edward Wong Finance Co Ltd v Johnson Stokes and Master [1984] 2 WLR 1… it is relatively straightforward to see how a Court would find the purchaser’s solicitor to be negligent. A property purchaser might expect a reasonably competent conveyancing solicitor to add this simple step to the completion process.

Recent decisions in the civil court seek to be extending the duty of care conveyancers owed to their clients.  In Purrunsing v. A’Court & Co (a firm) and House Owners Conveyancers Limited (2016) EWHC 789 (Ch) it was held that both the buyer’s and seller’s conveyancing solicitors were jointly liable to the Claimant buyer for a breach of trust arising out of a property fraud.This is an important decision because this is one of the few occasions where a seller’s conveyancing solicitor, who does not usually owe any duty of care to a buyer, has been found to be liable to the buyer in circumstances where the seller’s solicitors have not been dishonest.Then there is the recent commentary advanced by Jonathan Titmuss, Harwicke Chambers in reference to the insovency of sellers when acting for buyers as set out below.Sadly fraud and insolvency happen and conveyancers have a duty to assist in preventing loss to their client.  If you feel your conveyancer has been negligent then please contact us for a free appraisal.

Alison Rocca

Author Alison Rocca

Alison is a solicitor in our Litigation department.

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