"One size" is a dodgy fit

Having been conveying property for over 30 years, I am at risk of grumpy old conveyancer’s syndrome (recognisable to trainees and secretaries everywhere). In gentler times, I had an article published in the Journal, February 1993, 60, criticising both the philosophy and the content of the early attempts at standard missives. Despite a rearguard action by many experienced practitioners, standard missives seem to be here to stay. The latest version, the Combined Standard Clauses (“CSC”), unites Glasgow and Edinburgh practice, a small miracle in itself.

There are some benefits to standard missives, but I worry about specific aspects of the CSC, and that the use of standard missives generally will lead to lazy conveyancing practice, resulting in stress to clients and a higher incidence of claims under the Master Policy.

This article is not meant to be an academic one. Rather its purpose is to alert conveyancers to concerns expressed widely by practising solicitors, and to invite a discussion. Hopefully that discussion might lead to some changes in the content of standard missives, and how they are used. The issues are not black and white, but rather a question of balance. With due respect to those who drafted and approved the CSC, and other standard missives, I feel that the balance is wrong in some areas.

Certainty v speed

These are mutually exclusive goals, and I would submit that the CSC, and other standard missives, have exchanged speed of conclusion of the bargain, which might be termed “uncertain certainty”, for genuine certainty. A quickly concluded CSC bargain will have numerous suspensive clauses. The main ones relate to alterations (clause 7), title conditions (clause 15), the property enquiry certificate (clause 19), and the coal report (clause 20).

Clause 7, relating to alterations, is a minefield for the unwary. In these days of home reports, the alterations noted by the surveyor are clear for all to see at an early stage. With the longer lead-in time to sales, the selling solicitor should be ordering up the titles at an early stage, clarifying with the seller what additional work has been done, and checking all available documentation. The seller’s solicitor should then forward all documentation with his qualified acceptance, so both sides have full knowledge of any issues.

In addition to this general observation, clause 7 is weak in specific areas. As an example, clause 7(a)(ii) requires the seller to produce “an unqualified… Letter of Comfort”. Virtually all letters of comfort are qualified to some extent. Far better, for certainty, that the letter of comfort is available and exhibited. At the very least the wording of clause 7(a)(ii) should refer to a letter of comfort “in the standard form of the relevant Local Authority at the time of granting”. As a minor point, stamped building warrant plans are very rare, and there are copyright issues with local authorities and architects.

In relation to title conditions, since a copy land certificate may be obtained immediately from Registers Direct, it must surely be preferable to exhibit this with a qualified acceptance. Such exhibition would cover not only the issues dealt with

in clause 15, but the extent of the property would be specifically referred to, with the purchaser obliged to satisfy himself on that extent. Acting for a seller, I recently had a purchaser attempt to resile on the basis of the extent of common ground within the property title. I was able to point to the qualified acceptance, where I had enclosed the land certificate, and incorporated a provision indicating that acceptance included satisfaction on extent. The purchaser duly settled.

Clauses 19 and 20 have similar elephant traps. The property and coal reports can be exhibited almost at the date of settlement, but the purchaser then has 10 days to consider them, and if there is a problem, the seller then has six weeks to rectify the problem. In theory, therefore, two months could pass following the date of entry with both sides unsure of whether there is a bargain or not. In a chain situation, that could be a disaster. Again, in these email days, why not exhibit the reports with the qualified acceptance? An additional benefit is that early knowledge of problems will allow tidy-up work to be done long before an offer is even received.

Conclusion: a bargain with few, if any, suspensive conditions, taking slightly longer to conclude, is far preferable to a fast, standard missive, bargain, with loose time limits and numerous “outs” for a reluctant purchaser. What is the rush? Purchasers’ solicitors are taking longer and longer to conclude a bargain anyway.

Style v substance

At seminars on the CSC, their wonders were extolled. I think we have all bought good “stuff” which lies, dust-sprinkled, in the garage, because we do not have the expertise to use it. Any missive is only as good as the person using it. The conclusion of truly mutually-agreed missives is not a question of having the “best” missive (although that helps), but being able to understand the various clauses, what they can do, and what they can’t do. Classically, the purpose of a good offer is to extract information from the seller.

The CSC also do not avoid the need for the conveyancer to go through the terms of the bargain in detail with the client, explaining as required. I have heard it stated that all we need to do is send the client, or refer them to, a copy of the CSC, and possibly the client guide to the CSC. If we ask the client to come back to us with any questions, and they don’t, then “we are in the clear”.

In addition to being very dubious law, I think this is asking for misunderstanding and trouble. There is no substitute for a knowledgeable, experienced conveyancer going over missives in detail with a client. In that exchange of information, reflected in the substance of the subsequent formal letter, a conveyancer earns his fee.

I see a drift towards missives being concluded by less well qualified staff, part of the general process of making law a “commodity”, to be packaged up and sold to the lowest bidder. We do our profession a huge disservice by accepting this drift. It may be a valid response to competition and lower profits, but then the profession will polarise into volume and niche practitioners. How will the Society equitably regulate those respective interests? Should my niche practice continue to share the professional indemnity risk of the volume conveyancer, as happens now?

General points are always clearer when specific examples are given.

So, to give a specific example of style versus substance, I refer to clause 14 of the CSC, “New Home Warranty Schemes”. This looks good on the surface, and flexible. It refers to the provision of NHBC documentation, “or such equivalent new home warranty documentation as provided by any alternative warranty provider as approved by and acceptable to the Council of Mortgage Lenders”. The problem comes when one reads the actual provisions of the CML Handbook in relation to such alternative warranties. The handbook contains the different requirements of the various lenders. Some lenders will approve some alternative warranty providers, but not others. Some providers are acceptable to lenders if their warranty is “unconditional”, but not otherwise. It is not a major point, but one day a purchaser’s lender will not accept an alternative warranty, when it may be acceptable to another lender. Quid iuris?

Conclusion: unless the terms of standard missives are fully understood and intelligently applied to the particular circumstances of client and property, the risk is that more errors will arise. This will result in a higher claims incidence, and a general lowering of standards in the profession.

Clients’ interests v solicitors’ interests

There is a tension in conveyancing between the adversarial and the consensual, and there always will be. The philosophy underpinning standard missives is that of the reasonable selling solicitor and the reasonable purchasing solicitor, and the bargain they might come to over tea and crumpets. The problem is that our clients may not want us to be reasonable.

Our clients may not be reasonable people. They may have a questionable title, may quietly have removed a wall, or may have been fighting with their neighbours for years. If we all use the same missives, any departure from the norm will be obvious. Of course we all have professional obligations to one another, but these are limited, and our prime obligation is to act in the best interests of our clients. By advocating a standard form of missives, are we potentially putting our own interests above those of our clients?

I think we also have to be clear whether we are members of a profession, or just in business to maximise our profit levels. Frequently, at seminars, I hear clients spoken of as if they are the enemy. We are to put our defences in first, crafting our five-page terms of engagement letters to reduce risk practically to zero by putting our clients on notice of their responsibilities (high) and ours (minimal).

Of course there are valid reasons for making mutual responsibilities clear. However, in my opinion, standard missives are, like terms of engagement letters, seen as part of our defence, rather than part of our service to our clients. The argument is this: if we are all using the same missive, we can’t be negligent. So the avoidance of negligence becomes the prime concern, along with ease of conclusion of bargains. We gradually slide from being professionals to businessmen.

Magic words

Buying and selling property cannot be reduced to a formula. Standard missives have the potential for making us believe there is such a formula, and by using that formula (“magic words”), we somehow do the work without effort and intelligence. Without care, we will devalue our professional expertise, and fail our clients. I am gratified to see many independently-minded solicitors still using their own styles of offer. Some of the offers are 52 clauses long, and those solicitors ought to be charged a fee by the selling solicitor for the extra reading involved. Some of the offers have been distilled to 13 clauses, and are the most dangerous.

Michael Smith is principal of Mike Smith & Co, Solicitors, Lenzie

“Do not say, ‘Why were the old days better than these?’ For it is not wise to ask such questions”. (Ecclesiastes, 7.10)