SIMON BAIN
RAGOUT PLEASE TO JULY 26 2014 - PAGE 27
LAWYERS have been urged to clarify a solicitor's responsibility in property purchases after some families were left without legal ownership of their homes more than a decade after moving in.
A senior sheriff has highlighted significant defects in consumer protection for homebuyers, in a report for the profession's governing body which was prompted by The Herald's investigations into two cases.
In one case four families on the Happy Valley Road estate in Blackburn, West Lothian, are still waiting for the title deeds to new build homes they bought in 2001.
In the other, a TV designer faces losing an Aberdeen flat he thought he had legally purchased in 2002, only to find it belongs to the trustee of his bankrupt seller.
In a report for the Law Society of Scotland, former Sheriff Principal Edward Bowen QC said the duty of a solicitor towards their client in a sale is unclear, leaving too much room for legal conflict over their liability.
He said it is "not desirable to have the potential for such conflict in an area as commonplace as house purchase, particularly in the case of the purchase of a new house from a builder".
He has urged the profession to "clarify the legal duty of a solicitor acting for a purchaser in similar transactions".
The report calls for the Law Society's Guarantee Fund to be widened and renamed to follow English practice.
The sheriff also urges the Scottish Parliament and Scottish Law Commission to examine a widely-criticised Law Lords judgement 11 years ago, which enables a trustee to expropriate the home of someone who bought it in good faith from a bankrupt.
Sheriff Bowen says the two differing cases are extraordinary and not indicative of a systemic problem in conveyancing practice.
He added: "However, both have resulted in processes which have been protracted, expensive and highly stressful for consumers of a routine legal service, and neither displays immediate prospect of resolution. They are very damaging to the image of the legal profession."
In Happy Valley Road, four families are still without title to the new homes they bought in 2001 from Braid Homes, which went bust soon after wrongly building them on a strip of land owned by a farmer and sold on to a developer.
In 2006 RSA, insurers to the Law Society's Master Policy protecting solicitors, resisted any claims for solicitor negligence in the house purchases, on the basis of a professorial legal opinion, and refused to settle with the developer Crannog.
However the report confirms that RSA, confronted with an opposing professorial legal opinion, then embarked on funding the defence of the families against actions brought by Crannog.
The insurer spent some £250,000 on court costs between 2008 and last year, when the developer was forced into liquidation, leaving the fate of the strip of land unclear and the families still without their deeds.
In the Aberdeen case, Sinclair Brebner, a TV designer, stands to lose the flat he bought in 2002 for £136,000 and now worth £350,000.
The legal owner is Ewen Alexander of accountants Johnston Carmichael, the trustee for bankrupt developer David Pocock.
The sheriff says an "unsatisfactory" Law Lords judgement against an Aberdeenshire couple in 2004 has delivered a "windfall" to trustees (for creditors) at the expense of bona fide owners, even when fraud has been involved. Mr Pocock's solicitor Russell Taylor was struck off for fraud in 2010.
Ian Reid, one of the West Lothian householders, said: "If your solicitor is not responsible, where does that leave anybody buying a house? After 15 years, we would like to get communication from the Law Society that it is going to get resolved."
Alistair Morris, president of the Law Society of Scotland, said: "Overall, the report provides reassurance that there are no fundamental or underlying problems with Scots property law and solicitors' conveyancing practice."
Mr Morris added: "We fully appreciate however, that it does not provide much comfort for the people currently going through the dispute over ownership of what they thought were their homes. We are continuing to liaise with those concerned to discuss how outstanding issues can be progressed."
He said KPMG was reviewing the Guarantee Fund, and the society would be acting on other recommendations. RSA said it would study the report.
RAGOUT PLEASE TO JULY 26 2014 - PAGE 27
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