The legal profession cannot guarantee to protect homebuyers if their solicitor fails to secure a valid title to their property, an official review has admitted.


The report for the Law Society of Scotland by former Sheriff Principal Edward Bowen QC, which was prompted by The Herald's campaign on this issue, has confirmed that consumer protection needs to be strengthened, and the law clarified or amended.

But it holds out no promise of resolution for the four West Lothian families now without title to their homes for 15 years, or for the Aberdeen man facing eviction from his home by a bankrupt's trustee.

Sheriff Bowen says: "In both cases the purchasers have been unable to obtain a registered title to the subjects which were purchased and have had to resist court proceedings which may result in loss of the properties that they paid for entirely in good faith. The proceedings have been extremely protracted and stressful for those involved. It is worth emphasising at the outset that I have not been tasked with resolving these cases, and it is not appropriate for me to attempt to do so."

As The Herald highlighted in October 2013, the turning-point in the case of the four families at Happy Valley Road, Blackburn, came in 2006, six years after they bought their new homes only to find they had no valid title to the properties.

The homes bought for around £250,000 in total had been built on the wrong land, which now belonged to a developer, who was asking for a total £445,000 to sell the land back to the people living on it.

On bringing actions for negligence against their conveyancing solicitors, who are all indemnified by the Law Society's Master Policy, the families reached the Court of Session in 2006 only to be told that insurers RSA had professorial legal opinion that there had been no negligence. That was in direct opposition to an opinion from another leading expert Professor Robert Rennie. It has led to a further nine years, and counting, of misery at Happy Valley Road.

The report confirms that in November 2006 RSA agreed to conduct the defence of court actions against the families brought by the developer Crannog, and that the process went on for seven years, with legal costs of £250,000, until Crannog ran out of money in 2014 and was forced into liquidation.

The Herald understands that the disputed land now belongs to two financiers, and has been valued at over £500,000. The families have had no communication from RSA as to its intentions.

The sheriff notes that recent changes to Land Registry processes demonstrate that better protection for buyers of new-build property was needed.

Sheriff Bowen says conflict of opinion is not unusual in professional fields. "But 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." The sheriff suggests that "it is not entirely clear what a house purchaser should be entitled to expect by way of legal duty on the part of his solicitor" - and urges the profession to clarify it.

In the Aberdeen case, TV designer Sinclair Brebner was told last autumn he had to defend an action in the Court of Session, at a potential cost of £50,000, which was highly likely to result in the loss the £350,000 flat which he bought 12 years ago.

His case falls foul of a controversial Law Lords judgement in 2004 which awarded the house of Aberdeenshire couple the Graingers to the trustee of their bankrupt seller, on the grounds that unknown to the buyers the title had never been properly transferred.

Sheriff Bowen says: "The right of a trustee or liquidator to receive a 'windfall' which has resulted from the bankrupt's fraud is one which is regarded in many quarters as unsatisfactory. If Mr Brebner can rightly be described as being the victim of a law which allows "an offside goal", then it is for the Scottish Parliament to look at that in the light of due consideration by The Scottish Law Commission."

But meanwhile Mr Brebner can only appeal to the Law Society's Guarantee Fund, set up to help victims of solicitor fraud, which the sheriff says should be renamed a compensation fund and made less restrictive.

The sheriff says Mr Brebner has had some help but been left to fight the case for 10 years entirely at his own expense. "Having paid for a professional service for what was a straightforward house purchase, he has had to cover those expenses yet still faces losing the property and financial ruin."

He goes on: "Mr Brebner has still been required, before resorting to the fund, to go through the whole procedure of exhausting other possible remedies. The need to do that has protracted the situation as well as creating the perception of members of the legal profession pointing the finger of blame at each other with no one prepared to take ultimate responsibility."

The report also notes: "One critical question, yet to be determined, is what (the) Trustee will require to settle the Court of Session action."

Although the sheriff says the Guarantee Fund can pay out only when there is a conviction for fraud or "evidence leading to an inevitable presumption of dishonesty", which created problems in this case, he omits to note that the solicitor in question Russell Taylor was struck off in 2010 by the Scottish Solicitors Discipline Tribunal for "deceiving clients, fellow agents and lenders" in a "systematic, disgraceful and dishonourable way".

Alistair Morris, President of the Law Society of Scotland, said the cases were extraordinary and the overall findings were "reassuring for both the legal profession and members of the public who rely on the knowledge and expertise of their solicitor when buying a new home". He went on: "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 carrying out a review of the Guarantee Fund, the society would look at other recommendations in the report, while any protection for homebuyers from builders who went bust would be a matter for Scottish ministers.

A spokesperson for RSA said: "The terms of the report are noted. Given the sensitivity of the issues we have no further comment to make."