Being open about higher costs will help justify a higher fee

Conveyancers should be brave enough to start charging clients for the additional work '¨they are expected to produce under the latest mortgage lenders' code, says John Coulter

As conveyancers we are often faced with dealing with various lenders' requirements for a transaction. '¨I have found that more recently, these requirements have become more varied and time consuming to deal with.

Of course, whenever we receive a client's mortgage offer we have a duty to review it, not to provide financial advice, but to ensure that the terms of the mortgage accord with the instructions we have received from the client. Further, we are required to check the lender's special conditions (if any) for specific instructions or conditions which may affect how the matter we are dealing '¨with progresses.

It is important to remember that the lender, in most cases, will also be our client. So, while you or the paying client, may consider that the conditions imposed by the lender are time consuming and bothersome, they must be carried out or else a conflict of interests can arise.

Accurate records

Outcomes 3.5, 3.6 and 3.7 of the SRA's Code of Conduct (2011) deal with the potential for conflicts of interest in these circumstances. It is important, therefore, to keep an up-to-date and accurate record of instructions and advice given on each matter in order to demonstrate your compliance with the SRA Handbook.

It is also vitally important, more recently than ever before, to check the Council of Mortgage Lenders Handbook Parts 1 and 2 each and every time you deal with a lender and even if a period of time has passed since the first time you checked; i.e. if there is a long period between receiving the mortgage offer and submission of the certificate of title.

The reason for this is that the CML Handbook has changed many times recently and individual lender's Part 2 requirements appear to be changing all the time.

On 2 July 2012 changes to the CML Handbook took place to include the following areas:

• Sub-contracting of work - i.e. a lender's instructions to a firm are personal to that firm and cannot be assigned or sub-contracted. This means, for example, that if your client decides to use another firm to complete the transaction, then you cannot simply send the existing mortgage instructions to the new firm. Instead you should inform the lender of the change and they will need to re-issue new instructions to that firm;
• Mortgage fraud - firms must follow the guidance in the Law Society's mortgage fraud practice note;
• Valuation reports - reference to Home Condition Reports has been removed;
• Seller not the owner or registered proprietor - there is a reporting requirement in these circumstances;
• Title deeds - holding title deeds to the lender's order is now mandatory rather '¨than optional.

Separate representation

A new Part 3 was added to the CML Handbook which contains '¨a set of specific instructions for circumstances where a conveyancer is representing the lender separately from the borrower in a residential transaction.

Among other things, Part 3 contains a sample Standard Requirements Letter which sets out what information the borrower's conveyancer needs to provide. This letter runs to approximately 7 pages and goes into more detail, perhaps, than you would if you were acting for lender and borrower.

The problem is that people will be reluctant to edit down the letter for fear of reprisal and so this places an extra burden on the borrower's conveyancer.

Let us not forget that the further implication of this is the effect of costs.

The additional and constantly changing lender requirements mean that conveyancers are spending more time dealing with these than ever before.

However, it appears, at least not that I have noticed, that conveyancers are not charging clients anything more for this additional work.

The fear of increasing costs is always that we lose the client. However, if we all explain to the client that there may be additional charges depending on the lender's requirements '’ as after all, they are our client too and their instructions say that we are to recover our fee for acting from the borrower - then we may find that client's are more accepting than we think. After all, we cannot all work '¨for free. SJ