Are estate agents liable if they pick the wrong conveyancer?

There has been a great deal of concern among solicitors recently about the nature of the conveyancing solicitor they are dealing with.

The pressure on solicitors
was decreased slightly by the Court of Appeal decision in Davisons Solicitors (a firm) v Nationwide Building Society [2012] EWCA Civ 1626,
although this case did cause a great deal of concern with the emergence of the fact that the SRA and Law Society websites were not necessarily reliable indicators of who was a proper solicitor operating from an approved office.

However, a solicitor is not
the only party who must deal with this situation. Estate
agents also work with solicitors.
Indeed, a significant number
of conveyancing solicitors are retained by clients on the
basis of a recommendation
from an estate agent.

What, therefore, is the extent of an estate agent’s liability for the kind of situation that Davisons has already encountered?

Limited liability

There are perhaps three scenarios.

1. The agent is involved in the scam and has instructed
the solicitor to pursue this.

2. the agent is a victim and has had no involvement in the recommendation as the solicitor has been found by the vendor or purchaser; or

3. the agent is a victim but has actively recommended the dubious solicitor to the vendor or purchaser.

The first two scenarios are probably not worth further consideration. In the first, the estate agent is liable, but they are unlikely to be around to discuss the situation. In the second, the agent could not
be liable as they would have had no involvement in the selection of the conveyancer.

It is the third scenario that is
of true interest. An agent who recommends a conveyancer to his own vendor client or to the purchaser may be liable for a negligent failure to consider whether the conveyancer is properly authorised. It is accepted that a property agent owes a duty to a landlord to take reasonable steps to ensure that
a recommended tenant can afford the rent.

The completion and title transfer of the property itself is not part of an estate agent’s role. This technically ends at the time that contracts are exchanged and their fee falls due.

However, the process up to exchange, which will involve a conveyancer, is within their remit and so any recommendation an estate agent makes to their client as to a suitable person to carry this work out must be made with due skill and care.

Skill level

The question then is what level of skill and care can be expected from an estate agent? An agent should be aware of the key changes and issues within
their field.

Given the increasingly well-publicised issues surrounding phoney solicitors and fake offices, it would be logical to expect an estate agent to use reasonable care to ensure that the recommendation made was actually approved by a suitable professional body.

This would therefore extend, as it did for Davisons, to a check on the website of the SRA or other relevant professional body as recommended by the Council of Mortgage Lenders. It would probably not be required for
an estate agent to go further
and consider the solvency
or professional skill of the conveyancer concerned.

However, where the estate agent suspected that the conveyancer did not have the proper skill, such as a history
of bad transactions, then the recommendation may well
be negligent.

The other important area
to consider is that of estate agent’s employees. It is not uncommon in the high staff turnover associated with estate agency work to find occasional individuals popping up who
will seek to defraud their employers and clients.

Alternatively, it is not unknown for agents to secure private
deals for direct rewards with conveyancers to recommend them, rather than the company-approved conveyancer.

In any of the three scenarios described, employee malpractice could make the estate agent business liable. The employee would be acting in the course of their employment as an estate agent, which is usually sufficient.

Conveyancers with recommendations from
estate agents should highlight
to them the importance of recommending a quality conveyancer with solid credentials rather than
the first person who offers
them a commission.

Those advising agents
should make sure that their clients understand the need
to consider who it is they are recommending and the need to take steps to ensure that staff are following company policy. SJ

David Smith is a partner at Anthony Gold