The Law Society Conveyancing Protocol

1. The Law Society Conveyancing Protocol CQS Supporter

2. Introduction Law Society Conveyancing Protocol Welcome to this online training course by Andrew Crawford and Peter Reekie. This course and assessment have been designed to train conveyancers on the new Law Society Conveyancing Protocol and to provide part of the mandatory training for members of the Law Society’s Conveyancing Quality Scheme (the ‘CQS’). The course comprises an introduction to the new Protocol, a discussion of some of its key elements and assessment questions to test understanding. You should be familiar with the Protocol before starting this course. You may download the Protocol here. This online course will take approximately 1 hour to complete.

3. Benefits of the Conveyancing Protocol Taking this course will provide an understanding of the following: • the purpose of the Protocol; • how the Protocol is intended to operate; • the relationship between the Protocol and the CQS; • the legal and regulatory basis for the Protocol’s procedures; • the key issues covered by the Protocol; • how the Protocol’s procedures are organised; • which documents are used in conjunction with the Protocol; • where to find more information. This course (including the assessment questions and answers) has been approved and certified as meeting the mandatory training requirements of the CQS.

4. Special Instructions for CQS Applicants All relevant members of staff of practices that have applied to join the CQS are required to undertake mandatory training on the Protocol. Completing this online course and passing the assessment fulfils this training requirement. • In addition to this training course, there is one other mandatory training course for certain staff in firms which have applied to join the CQS: • The Senior Responsible Officer in the practice is required to attend a course to outline the duties and responsibilities of this role. • Training in the Core Practice Management Standards is also recommended for practices without Lexcel accreditation. All mandatory training must be completed within six months from the date when the practice is notified that it has been assessed as suitable.

5. About the CQS The CQS is a new quality standard for firms regulated by the Solicitors Regulation Authority that undertake residential conveyancing. Achievement of membership is intended to help firms establish a level of credibility with stakeholders including regulators, lenders, insurers and clients.

6. About the CQS • The credibility of member firms will be achieved primarily by focusing on: • the integrity of the Senior Responsible Officer within the practice and that of other relevant members of staff; • adherence to good practice management, financial and risk procedures; • adherence to prudent and efficient residential conveyancing procedures contained in the new Protocol; and • a robust monitoring and enforcement procedure. An eligible practice regulated by the Solicitors Regulatory Authority can apply for membership of the CQS by completing a membership application form. This is processed by the Law Society and may result in the firm being accepted, failing to be accepted, or the application being referred for further consideration.

7. About the CQS • Practices that apply for membership of the CQS are required to sign up to comply with the Protocol as well as with the other requirements of the scheme. These include: • the Client Service Charter; • management standards; • mandatory training; • the enforcement procedures that operate under the scheme. The aim is to provide a ‘trusted community’ of qualified conveyancers, which will deter fraud and increase competence, standards and client service levels. This is intended to enhance the reputation of qualified conveyancers, allowing them to retain market share and develop and grow their business.

8. About the Course Authors Click each box to learn more. Andrew Crawford Peter Reekie

9. About the Course Authors Click each image to learn more. Andrew Crawford Peter Reekie Andrew Crawford has worked in private practice throughout his career. He qualified in 1980 and became a partner with Thomas Eggar LLP in 1986. He was responsible for a large residential property team based on five sites. Andrew is a past President of Chichester District Law Society. He has been involved in training for many years and is well known on the lecture circuit. Andrew left practice in 2010 to concentrate on his lecturing work, and he now works mainly for Central Law Training delivering a range of practical courses on residential conveyancing designed to help delegates be more efficient and knowledgeable in the office.

10. About the Course Authors Click each image to learn more. Andrew Crawford Peter Reekie Professor Peter Reekie is Property Training Consultant with Penningtons and Visiting Professor at The College of Law. Peter is also director of Peter Reekie Associates Ltd., which provides legal training services to lawyers and other professionals. Previously he spent some years in private practice dealing with residential and commercial property work, worked for the College of Law and was managing director of Legal Network Television. Peter writes for publication and lectures extensively at property law conferences, seminars and related events. He is Consultant Materials Editor for the College of Law’s Structured Commercial Property Programme and Consultant Editor of The Conveyancing Handbook 17th edition (The Law Society, 2010)

11. Overview of the Protocol Section 1: Overview of the Protocol

12. Overview of the Protocol Click each point to learn more. • Background to the Protocol • Introduction of the new Protocol • Structure of the new Protocol • Use of the new Protocol • Logos

13. Overview of the Protocol Click each point to learn more. The Law Society’s National Conveyancing Protocol was launched on 21 March 1990. The Council of the Law Society recommended the use of the Protocol by solicitors acting in domestic conveyancing transactions of freehold and leasehold property. The Protocol formed a part of the Law Society’s TransAction Scheme. ‘TransAction’ was the brand name created by the Law Society for use by solicitors who adopted the Protocol. The Protocol also required the use of the Law Society’s TransAction forms, such as the Property Information Form. The National Conveyancing Protocol was last updated on 30 November 2004. • Background to the Protocol • Introduction of the new Protocol • Structure of the new Protocol • Use of the new Protocol • Logos

14. Overview of the Protocol Click each point to learn more. The National Conveyancing Protocol 5th edition was replaced by the Law Society Conveyancing Protocol on 1 April 2011. The Protocol contains a set of standard conveyancing procedures for the solicitor acting for the seller and the solicitor acting for the buyer. It also has a new set of overriding principles, which are designed to underpin the procedures, called “general obligations”. • Background to the Protocol • Introduction of the new Protocol • Structure of the new Protocol • Use of the new Protocol • Logos

15. Overview of the Protocol Click each point to learn more. The Protocol is organised according to the stages in a typical transaction (taking instructions, pre-exchange, pre-completion, etc). However, it is recognised that the particular sequence of steps to be followed in some transactions will vary. It includes, where appropriate, references to others, such as lenders, agents and brokers, who may be involved in a transaction. • Background to the Protocol • Introduction of the new Protocol • Structure of the new Protocol • Use of the new Protocol • Logos

16. Overview of the Protocol Click each point to learn more. The Protocol is a general guide and is not intended to provide an exhaustive checklist for the steps in a conveyancing transaction. It will only be fully effective if both parties’ solicitors adopt it. However, it can still be used if the other party does not adopt it. The CQS requires its members to adopt the new Protocol, where appropriate to the transaction at hand, from 1 April 2011. • Background to the Protocol • Introduction of the new Protocol • Structure of the new Protocol • Use of the new Protocol • Logos

17. Overview of the Protocol Click each point to learn more. The blue TransAction logo which has been in use since 1990 has been replaced by a new ‘Conveyancing Quality’ logo. The use of the new logo is restricted to members of the CQS. • Background to the Protocol • Introduction of the new Protocol • Structure of the new Protocol • Use of the new Protocol • Logos

18. Protocol Forms and Documents The Protocol is designed to work in conjunction with a series of standard forms and documents. It’s important that you’re familiar with these before continuing with this course. We’ll explore each of the documents and forms you see below in the following screens. Formulae for Exchange of Contracts Other Relevant Documents Transaction Forms Standard Conditions of Sale Code for Completion by Post

19. Protocol Forms and Documents TransAction Forms The TransAction forms (TA forms) were first introduced in 1990 for use with the National Conveyancing Protocol. The forms were last updated in April 2007. The following TA forms remain in use and will continue to be used in conveyancing and in conjunction with the new Protocol: TA6 Property Information Form TA7 Leasehold Information Form TA8 New Home Information Form TA10 Fittings and Contents TA13 Completion Information and Requisitions on Title The previously used TransAction logo has been removed from all TA forms on sale from January 2011. Form TA13 is currently being updated by the Law Society. Transaction Forms

20. Protocol Forms and Documents Standard Conditions of Sale The Standard Conditions of Sale (SCS) is currently being updated by the Law Society and the Solicitors Law Stationery Society. It is anticipated that a 5th edition of the SCS will be available from April 2011. The Law Society and the Solicitors Law Stationery Society will also publish a standard ‘Contract’ that incorporates the SCS, which will be available from April 2011. Standard Conditions of Sale The most up-to-date edition of the SCS must be used by firms which adopt the Law Society Conveyancing Protocol (Protocol: item 24(1)).

21. Protocol Forms and Documents Formulae for Exchange of Contracts The Law Society’s Formulae for Exchanging Contracts by Telephone, Fax or Telex was last updated in 1996. Formulae for Exchange of Contracts The Law Society recommends the use of the formulae to all firms acting in residential conveyancing transactions. The use of the appropriate Law Society formula is also required by item 51 of the Protocol, unless a personal exchange is conducted.

22. Protocol Forms and Documents Code for Completion by Post The Law Society Code for Completion by Post was introduced in 1984 and, at time of writing this course, is currently being updated by the Law Society. If completion is to be by post, firms that adopt the Protocol are required to comply with the Code for Completion by Post (Protocol: item 61). Code for Completion by Post Use of the Code for Completion by Post, where it is appropriate to the transaction, is recommended by the Law Society.

23. Protocol Forms and Documents • Other Relevant Documents • The SRA Code of Conduct 2011 • The CML Lenders’ Handbook (England and Wales) • Building Society Association’s Mortgage Instructions • Relevant Land Registry Practice Guidance • Relevant Law Society Practice Notes • Relevant Law Society practice information • Solicitors Regulation Authority Warning Cards • Law Society Contaminated Land Warning Card • Throughout this course, references are given, where appropriate, to the provisions of the CML Lenders’ Handbook. There are very similar provisions contained in the BSA Mortgage Instructions, which have been omitted to avoid repetition. Other Relevant Documents

24. General Obligations Section 2: General Obligations

25. General Obligations The new Protocol requires those who adopt it to adhere to a set of 12 ‘general obligations’. We will explore some of these obligations in the following screens.

26. General Obligations Whether your client is buying, selling or both, you should first make it clear to them the basis on which you will act for them and the extent of your professional obligations. You should obtain their agreement for you to act in accordance with the Protocol (general obligation 1). When also acting for lenders, it’s important to always bear in mind that the duties owed to both clients are equally important (general obligation 2).

27. General Obligations Part of the key to a smooth and speedy conveyancing transaction is open and clear communication between all those involved. The Protocol therefore requires you to share information with others to assist in the efficient management of each transaction or chain of transactions, in so far as this is permitted by the client (general obligation 7). The SRA Code of Conduct requires (and the Protocol reminds solicitors in its general obligations) that care must always be taken to avoid any breach of your duty of confidentiality owed to your client. Therefore, the client may always refuse to permit you to disclose any information and this will outweigh your obligations under the Protocol. However, the buyer/seller should not be encouraged to withhold authority to disclose information unless there are exceptional circumstances.

28. General Obligations In order to avoid any unnecessary delay, it is important that you respond to all communications promptly. The ‘Protocol framework’ suggests that consideration should be given to agreeing a timing structure for the transaction. Also, where something is to be dealt with in a different order or by alternative means, this should be made clear to those who are affected as soon as it is possible to do so (general obligation 8). Absences of the person dealing with the transaction in your firm should be covered. The Protocol requires there to be proper arrangements in place for file management during any period of planned or unplanned absence (general obligation 12). Throughout the transaction, the steps of the Protocol should always be followed with care and consideration. There is also general obligation to co-operate with others and treat them with respect (general obligation 6).

29. General Obligations Case management systems or other automated data handling or scanning processes within your firm may require particular consideration. The Protocol requires that data should be loaded onto these systems and made available to the person dealing with the matter within a day of receipt (general obligation 10).

30. General Obligations Finally, as a general principle, it’s important to be vigilant and guard against fraudulent or any other illegal behaviour by any participant in the conveyancing process (general obligation 4).

31. Timetable and Chain Issues Section 3: Timetable and Chain Issues

32. Timetable and Chain Issues One of the important aspects of the new Protocol is its approach to a timetable for the transaction and the way it deals with the interaction of the parties in a chain. This section of the course brings together and discusses all the provisions of the Protocol dealing with timetable and chain issues. These provisions are explained under the following headings according to the relevant stage in a typical transaction. Before Exchange Synchronisation Providing Information to Others Completion After Completion

33. Timetable and Chain Issues Click each point to learn more. Before Exchange Synchronisation Providing Information to Others Completion After Completion The prospective timetable for the transaction is very important to many people moving home, and this is particularly important in the period before exchange of contracts. The Protocol addresses the question of the timetable for the transaction in the ‘Interpretation’ section. Essentially, it encourages a flexible approach, but recognises that, in some cases, it may be helpful to set time parameters. However, this should only be done when all the various factors that may affect the timescale are understood by all concerned.

34. Timetable and Chain Issues Click each point to learn more. Before Exchange Synchronisation Providing Information to Others Completion After Completion At the outset, whether acting for the buyer or seller, it is important to discuss with the client the details of any related transaction. The client may be selling or buying another property and may need the transactions to be contemporaneous, or they may be moving to or from rented accommodation and this may have to be synchronised to some extent (Protocol: item 4). One important factor that will govern the timeframe of the transaction will be whether the buyer needs a mortgage to fund the purchase (Protocol: item 5). The timeframe is likely to change as the transactions progress and the client and other parties should be kept fully informed. So, for example, it will be necessary to ask for and supply information about any related purchase or sale of the client, and of any other transactions in the chain where known. If the position changes, then it will be necessary to provide information about the change in circumstances (Protocol: items 25 and 27).

35. Timetable and Chain Issues Click each point to learn more. Before Exchange Synchronisation Providing Information to Others Completion After Completion From time to time full information as to the stage of the transaction prior to exchange of contracts will have to be given to all those involved. This will include the other party’s solicitors and estate agent, and may also relate to the stage of other transactions in the chain (Protocol: items 27, 28 and 43). There may be potential problems where your duty of confidentiality may conflict with this requirement for disclosure, as explained above. So, for example, if the client asks you not to reveal to the seller’s agent and solicitor that they have lost their buyer, then this must take precedence over the obligation to keep all informed. At the point of exchange it will be necessary to ensure that checks are made in relation to suggested completion dates with other solicitors acting in the chain and, where appropriate, any estate agents (Protocol: item 45).

36. Timetable and Chain Issues Click each point to learn more. Before Exchange Synchronisation Providing Information to Others Completion After Completion In order to orchestrate the move itself on completion day it is important to identify if there is likely to be any delay in the time of completion. This issue should be considered on the day before completion or as early as reasonably possible on the day of completion. If there is likely to be a delay then the solicitor on the other side should be notified and agreement reached about how communication will be handled on the day (Protocol: item 60).

37. Timetable and Chain Issues Click each point to learn more. Before Exchange Synchronisation Providing Information to Others Completion After Completion After completion all those concerned should be informed and the completion documents dispatched by the seller’s solicitor to the buyer’s solicitor. The buyer’s solicitor should then deal with any SDLT requirements and lodge the application for registration with the Land Registry within the priority period of the official search (Protocol: item 64). Finally all outstanding matters should be dealt with.

38. Regulatory Requirements Section 4: Regulatory Requirements

39. Regulatory Requirements – Identity Checks The Protocol refers to a number of regulatory issues, principally designed to prevent fraud and to ensure compliance with the SRA Code of Conduct 2011. It also contains reference to a number of checks needed to comply with the requirements of the CML Lenders’ Handbook, BSA Lenders’ Instructions and the Land Registry. We’ll take a look at identity checks on this screen and explore the other issues on the following screens. Click each person to learn more.

40. Regulatory Requirements – Identity Checks The Protocol refers to a number of regulatory issues, principally designed to prevent fraud and to ensure compliance with the SRA Code of Conduct 2011. It also contains reference to a number of checks needed to comply with the requirements of the CML Lenders’ Handbook, BSA Lenders’ Instructions and the Land Registry. We’ll take a look at identity checks onthis screen and explore the other issues on the following screens. Click each person to learn more. Identity Checks – Client It is always necessary to do various checks (and keep appropriate records) in relation to a prospective client’s identity. These are designed to be a precaution against mortgage fraud and money laundering. Lenders also require identity checks to be carried out against borrowers. (Protocol: Item 2).

41. Regulatory Requirements – Identity Checks The Protocol refers to a number of regulatory issues, principally designed to prevent fraud and to ensure compliance with the SRA Code of Conduct 2011. It also contains reference to a number of checks needed to comply with the requirements of the CML Lenders’ Handbook, BSA Lenders’ Instructions and the Land Registry. We’ll take a look at identity checks on this screen and explore the other issues on the following screens. Identity Checks - Solicitor For similar reasons it is necessary to check the identity of the solicitor acting for the other side (Protocol: item 21). Note also the requirements of the CML Handbook Lenders’ Handbook Part 1, which provides: ‘3.1.4 If you are not familiar with the seller's solicitors or licensed conveyancers, you must verify that they appear in a legal directory or they are currently on record with the Solicitors Regulation Authority or Council for Licensed Conveyancers as practising at the address shown on their note paper. Check part 2 to see whether we require you to notify us of the name and address of the solicitors firm or licensed conveyancers firm acting for the seller.’ See also:The Solicitors' Code of Conduct 2007, rule 3.19. Click each person to learn more.

42. Regulatory Requirements – Source of Funds The source of deposit funds and purchase monies should be checked by a buyer’s solicitor. It’s necessary to check whether any financial contribution is to be made by a third party and if so any separate external advice should be obtained by them. It’s also necessary to consider the advice to be given to the lender about any contributions of this nature. (Protocol: item 7).

43. Regulatory Requirements – Law Society Practice Notes The Protocol contains a general provision requiring adherence to the advice contained in SRA warning cards, guidance, Law Society practice notes and other practice information. (Protocol: general obligation 11). The Law Society Practice notes relevant to identity which contain advice that should be followed include: Property and registration fraud Anti-money laundering Mortgage fraud

44. Regulatory Requirements – Client relations • The Protocol assists solicitors to comply with the requirements of Chapter 1 of the SRA Code of Conduct in relation to the following matters: • The need to submit an estimate of your fees and disbursements to the client (Protocol: item 2). • The requirement to set out the terms and conditions relating to the basis on which you will act for the client (Protocol: item 2). • The need in appropriate cases to check the legal capacity of the client in relation to the transaction (Protocol: item 2). • The requirement to ensure that the client is given, in writing, the name and status of the person dealing with the matter and the name of the person responsible for its overall supervision (Protocol: item 3). • The need to give the client written details of the firm’s complaints procedure (Protocol: item 3).

45. Regulatory Requirements – Conflict of Interest It is also necessary to check that there is no conflict of interest that may preclude acting in the transaction (Protocol: item 2). Practitioners will be aware of the current rules in the SRA Code of Conduct 2011 relating to conflicts (Chapter 3) and exemptions from the current rules.

46. Regulatory Requirements – Authority to Act If there is more than one client, e.g. where the property is in joint names, it’s important to check the scope of the authority to act in this situation (Procotol: item 2).

47. Title Issues Section 5: Title Issues

48. Title Issues - Introduction The Protocol sets out how matters relating to the title to the property being sold should be dealt with. In the following screens, we explore a few of the more important points relating to this.

49. Title Issues – Example Example: ‘Form A’ Restriction Where a “Form A” restriction (which, broadly, requires a transfer to be signed by at least two trustees or a trust corporation) appears in the register, then, before exchange of contracts, assuming you are acting as the seller’s solicitor, you should consider how this will be dealt with. Where a Form A restriction exists but there is only one surviving proprietor then you should consider appointing a second trustee. If the matter is urgent then the contract could contain a clause providing that a second trustee will be appointed. In appropriate circumstances the actual appointment of the new trustee can be made in the transfer to the buyer. (See Land Registry Practice Guide 21, para 6.2).

50. Title Issues – Leasehold Title If the property is leasehold then particular attention should be made to the provisions of the lease. So, for example, if the landlord will need to consent to the sale then the position in relation to this will need to be checked by the seller; and any costs of obtaining this consent will need to be established and paid (normally by the seller) (Protocol: item 12(5)). Official copies of the freehold and any intermediate titles should be contained in the pre-contract package prepared by the solicitor acting for the seller of a leasehold property (Protocol: item 24(8)(iii)).