Master Policy cover continues meantime for letters of obligation

Solicitors in Scotland can continue to rely on professional indemnity insurance cover if they grant a "classic" letter of obligation, the Law Society of Scotland has confirmed.

Letters of obligation, granted by a seller's solicitor, have traditionally been used in property transactions as a protection for a purchaser until they can register their own title. Since the Land Registration (Scotland) Act 2012 came into force last December, the new system of advance notices gives priority for registration to a deed registered within a certain time after the notice takes effect, and in most cases it will no longer be necessary to grant a letter of obligation. That will not always be the case, however, and the Society initially announced that for the rest of the insurance year to October 2015, there would be no change to Master Policy cover.

It was said that once practice developed under the 2012 Act, the position "may be reviewed" at renewal of the Master Policy in 2015.

According to an update on the Society's website from the Professional Practice team, the Master Policy brokers Marsh have now confirmed that the position will continue after October 2015 "for the time being, in respect of letters of obligation in the classic form".