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Better safeguards now protecting house-buyers, says Law Society

Scotland's house- buying system is "radically different" now from a decade ago with a raft of better safeguards for consumers, the Law Society of Scotland's conveyancing convener has said.

Ross MacKay was commenting indirectly on The Herald's revelations about Happy Valley Road in Blackburn, West Lothian, where four families are still without valid title to the houses for which they paid up to £80,000 in 1999 to 2000.

"The conveyancing world is a completely different landscape now," Mr MacKay said. "We have client relations partners, complaint guidance, all that sort of thing, the SLCC (Scottish Legal Complaints Commission), which is not to say mistakes won't happen, but the underlying structure is much more robust now."

After years of legal wrangling over the ownership of part of their land by a developer, the West Lothian families took their purchasing solicitors to court in 2006 believing the lawyers would be indemnified by the Law Society's master policy. But the case was defended by the insurers RSA on the grounds that no professional negligence had taken place, and never reached court.

Mr MacKay said: "The basic role of a solicitor in any transaction is to make sure the seller has a valid title. The master policy is there to provide cover for solicitors if they are negligent."

He said the Law Society had been criticised in the past for allegedly getting involved in individual claims and there was now a "clear divide" with the insurers.

"The vast majority of claims are settled without going to court, to everyone's satisfaction," he said. "RSA would be able to tell you how many are settled."

RSA has so far declined to make any comment .

The Happy Valley errors were due partly to unclear mapping and registration of the new development land with the Land Registry. Mr MacKay said new legislation would ensure that "all registered titles will be on an electronic map after November 2014". He added: "Registrars expect builders to go to them in advance, there is a lot more discussion now to avoid those sorts of issues."

The Herald has also reported on two cases, one in 2010 and one recently, where homebuyers were deprived of title to their homes by a seller's bankruptcy trustee acting on behalf of creditors. In the recent case in Aberdeen, the buyer has been stuck in litigation for 11 years to prove his right to the flat for which he paid £350,000, with no apparent comeback against any solicitor.

Mr MacKay said: "You have got to get your title registered as quickly as possible, that happens in 99.99% of cases. Solicitors have a personal obligation to cover the gap between search and presentation of title for a period of 14 days, and the profession has done that for 200 years."

He said 2007 legislation had extended protection to 28 days if the seller was declared bankrupt on the day of the sale. If a proper title had not been registered, "the purchaser's solicitor has questions to answer".

It is understood that no complaint was ever made against the solicitor in Aberdeen, on advice given in 2003 by another law firm.

In a surprisingly public clash with the Council of Mortgage Lenders, the Law Society had been poised in the summer to insist on separate representation for buyers and sellers in every residential property transaction, but in the end members voted narrowly in October to keep the status quo. The CML had accused the society of protectionism and trying to keep small firms afloat in a low-margin world - the Edinburgh Solicitors Property Centre for instance reported a 60% fall in profits in the year to May 2013.

Mr MacKay, who championed the proposal, said: "That was never the case. It is a matter of principle for a lot of people, the lenders put a lot of onus on us to do things... lenders are in favour of separate representation on their own terms."

He said since the crunch lenders had excluded firms from previously open panels. "My personal view is that due to the changes over the last few years, it is increasingly hard to act for a borrower and a lender without there being a conflict...but a lot of people think (change) would cause more problems than it would solve."

Last July the society set up a working group on conveyancing which is due to produce an interim report early next year. Mr MacKay said hoped-for improvements included the introduction of digital signatures, e-mail contracts, and an electronic 'dealing room' for documents. He admits the aim is to "get our members into the twenty-first century".

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