Is conveyancer negligent?

[vcl00e]

Hi Everyone!

I've bought a flat 2 years ago (2015) and just discovered (from the freeholder) that there is a periodic rent review clause in the lease.

When I was purchasing the flat, I told my conveyancer via email that I wasn't able to find a figure for the ground rent when reviewing the lease. (I read the lease seriously and genuinely missed it)

My conveyancer reached out to the buyer’s solicitor about the ground rent, and after over a month of chasing my conveyancer forwarded me a letter from the buyer’s solicitor that said it has never been collected but they could offer me £300 which was the ground rent for 3 years in case they started collecting.

Today in 2017, (as someone in building was enquiring about lease extension) the freeholder wrote to me about a clause in the lease that states they could review the ground rent in 2013 based on the market value at the time. They retrospectively valued my property and demanded a ground rent of £500 per year back dated to when I purchased and going forward until the next review period.

Is my conveyancer negligent? If so, what should my plan of action be?

Many thanks for reading, sorry if it was a bit long!

[MonkeyJumping]

First step is check your lease - is the review clause actually there? Don't just rely on what the freeholder says.

If it's there, contact your solicitor and say you were surprised to note there is a rent review clause as you do not believe you were advised about this when purchasing the flat.

They may forward you a copy of their advice showing that they did mention it, and you've just forgotten (no offence but I'm a former conveyancer and this happened pretty often - clients all outraged that they weren't advised about something because they've just forgotten about it).

If you don't get a satisfactory response, go through the law firms complaints procedure (they have to tell you what it is if you ask). If you're still not happy you can complain to the solicitors regulatory authority or seeanother solicitor about brining a claim for professional negligence about the first solicitor.

If they genuinely didn't tell you there was any rent review clause, then yes they may be negligent.

[vcl00e]

Hi MonkeyJumping thanks for the lightning fast response!

Yes, your points are fair. I did check the contract and it does contain the rent review clause.

The reason I haven't gone back to the solicitors about the problem yet is because being a layman I am trying to get myself informed/educated best I can before I do so - I am concerned that being professionals doing this day in day out, they could put me in an unfair situation quite easily even if they were regulated.

I also think it's likely they may have missed something since the actual ground rent stated in the lease was £75/year and they didn't ask for clarification when the seller came back and said it was £100/year but never collected.

With regards to a satisfactory response, in your experience, (lets for arguments sake say they genuinely missed the clause) what sort of responses are they likely to come back with?

My gripe is that I delayed the exchange waiting for this information and would have changed my offer if I had known about this. Probably a 10-20k difference. Because not only is it an extra £500 a year until they next review in 20 years, it will proportionally increase the cost of lease renewal when the time comes - quite a lot of money. :(

[Larsitter]

I agree with Monkey. The solicitor's report on title would usually be very clear in relation to a lease of what on going financial obligations there (in the lease, not just based on a letter from the other side) are such as ground rent. Did they send you a written report on the property which includes a clause about what is said about service charges and ground rent?

[vcl00e]

Thanks Larsitter, I dug out my file and went over the set of documents we received via post from our solicitors when we purchased the property.

In it, was a detailed contract and property report which covers topics from contract, to property, to tenure, to searches, and even Chancel Repair Liability insurance.. but there is no mention of the ground rent review clause.

There was even a cover letter for the full contract and property report that draws our attention to a clause concerning arrangement of our deposit, but again no mention of the ground rent review clause.

I am quite nervous about going back to them - Thinking about it more - could they in theory just spin up a new document and claim that it was sent to be at the time of the sale?

[NeverTwerkNaked]

Sounds like negligence to me. It’s pretty obvious that ground rent is a key issue in a long lease.

I wouldn’t go and see your original conveyancer- go and see a new and totally independent solicitor. Ideally a property/litigation specialist.

[NeverTwerkNaked]

Re coming up with a new document - this would be a serious offence ! I hope there are few solicitors out there who would stoop that low

[namechangedtoday15]

No solicitor (unless they risk serious repercussions like being struck off) would fabricate a document like that.

So there was a section in the lease that said the ground rent was £75 a year and also a clause which set out (presumably in some detail) that there were review provisions - it would have set out the frequency of the review, market rate and usually what the process was in the event that it could not be agreed (usually referral to a surveyor). The report on title should have referred to these provisions.

You need to set out to the solicitor that you've since been informed of these provisions and as a pp suggests, go through their complaints procedure and request a full copy of their file. It will show what advice you received.

[vcl00e]

Hi everyone, thanks for the feedback.

I raised the enquiry with the solicitors as advised and long story short - they reviewed my file and confirmed there was a rent review clause in the lease and that they think I am liable to pay the rent increase. They are also trying to make it sound like they couldn't have known about the rent increase at the time, but that is impossible as it was written in the lease which they reviewed.

After ten emails and a phone call to try to get them on my side to help me, the conveyancer asked me to send all my correspondence with the freeholder to her for review and speak with the director to see what she could do. The response I got was quite disappointing - it sounded like they were trying to wash their hands off it again.

Below is their latest response. Any thoughts on what I should do? Is it time to follow complaints procedure?

Dear Xxxxx

I have now had the opportunity of reviewing the correspondence sent to you by the freeholder.

The freeholder have followed the correct procedure in reviewing the annual ground rent as notice of the review was sent to you on 17 August 2017. We are unable to challenge the desktop valuation the freeholder have used to calculate the ground rent as we do not know what a comparable market value would have been for the property in 2013. The freeholder have followed the correct procedure which I note was not challenged at the time of the rent review.

I can see as the freeholder have back dated the ground rent to May 2015 as they have indicated you will only be charged the increased rent from the date you completed and not the date from when the review should have taken place. You did receive an allowance of £450 on completion towards the cost of any rent requested as at the time of your purchase the seller had not paid any rent nor had any been requested. Since your purchase you would then have been liable to the rent of £75 per annum as at that point no review had been implemented, such rent had not of course been collected.

In the circumstances as the Landlord was entitled to increase the rent but is not pursuing any increase prior to your purchase you have the benefit of the sum allowed by your seller. As no information was available at the time of your purchase no further enquiries were able to be raised regarding this aspect of the matter. I appreciate that the increase is an additional cost to you but without a challenge to their notification to you this would now be unlikely to be challenged.

[vcl00e]

Just wanted to add:

I did send a letter to the freeholder to enquire about the basis of the ground rent review within a month of the notice, and after a lot of back an forth, I told the freeholder that I would consult a professional and get back to them as I wasn't informed about any ground rent review clause in the lease.. So the note about ground rent not being challenged is also rubbish.

[AdiosPeaceOfRoast]

I think you might be best served going to anew solicitor regarding the performance of the current solicitor?

[UnrelentingFruitScoffer]

Go and get yourself a fresh solicitor who specialises in solicitor’s negligence on property matters.

They will very likely do this on a no win/ no fee basis. It will take 2.5 years to get a settlement but then your ground rent will be paid for the next umpty years.

You’ve done well. Specially since you obviously DID read the lease at the start and knew what was in it, but are going to claim on the basis that you are entitled to compensation for not being told by someone else what you had, in fact, read for yourself.

[MadeForThis]

The solicitor has structured the letter as a response to wether the freeholder is entitled complete a rent review rather than if they were negligent in missing that clause.

You need to get further advice and complain to the solicitor regarding their role in reviewing the contract.

[namechangedtoday15]

Agree with Madeforthis. You need to set out to solicitor that whilst the advice regarding the validity of the rent review is appreciated, the crux of the matter is that you were not properly advised of the tenant obligations prior to completion and as a result you will suffer a financial loss. This is the point you want them to address. Hi through the complaints procedure at the firm.

[vcl00e]

Hi everyone, thanks again for the support. You really are helping me with the stress.

namechangedtoday15 - thanks for summing it up nicely with legal language.

To summarise, I explained to them that I wasn't properly advised and suffered a financial loss as a result, and requested for their complaints procedure. A director who deals with the complaints got in touch via email and offered to schedule a chat over the phone, which I hadn't done yet as it felt quite daunting.

At this point, I suddenly realised I may not fully understand my financial loss as a result of not being advised of the rent review clause. Obviously I have to pay alot more ground rent, but the rent is reviewed every 25 years based on market value of property so its not a fixed figure. Plus the higher ground rent will affect the cost of lease renewal and property resale value. (Not sure if there's anything else I've not considered either)

Given the stance so far, I'd be lucky if they offered anything at all, but I'll probably need to tell the director what kind of financial loss I'm complaining about. I bet if I don't mention it they won't address it.

I've found a few professional negligence solicitor phone numbers for initial free advice that I will call, but I was wondering if the collective wisdom here had any wise advice to share.

Thoughts anyone?

[vcl00e]

Hi all,

Just wanted to let everyone know what happened as it really was hard to find information on similar cases online by myself.

So it turns out the complaints director was very polite and made me feel much better than i expected. She acknowledged that they were at fault, and agreed to pay a compensation for my financial loss.

The conveyancing firm was unable to provide an estimate on my financial loss, so it was down to me to find a surveyor to help me work it out. It was surprising hard to find a surveyor willing to help. I think I emailed an rang over 10 local ones from a directory and most of them didn't respond. The ones that did provided some free helpful advice over the phone, but were unable to help with coming up with a figure even as a paid service. Luckily, I eventually got in touch with a very kind surveyor who provided the estimate for free and explained the working out over the phone. He said my case was too small for him to charge a fee so he did it for free. The advice I was given by all the surveyors I spoke to was to use the increased cost of statutory lease extension due to the ground rent increase as a basis for the financial loss - because after a statutory lease extension, the ground rent goes to zero and cannot be reviewed.

The estimated financial loss came to about 20k. This is how much extra on top my of existing fees I now have to pay to extend my lease.

Long story short, having realised my financial loss was so great, the complaints director started to negotiate by coming up with her own calculation which came out at 6k but was completely wrong - I sent it to the surveyor who was chartered and even he said so.. but they wouldn't budge and asked to me complain at the Legal Ombudsman if I wasn't happy with the offer.

By this point it had already been a year since I started complaining about the loss, and I was already worn out with the whole thing - having to deal with this kind of negotiation on a day to day for a whole year wears you down bit by bit. Its hard especially with children and other things happening in life. I had the option to take it to the ombudsman, or hire a lawyer - but either way I wasn't prepared to go through the stress of explaining the whole thing again to a 3rd party - give them all the facts again and convince them again that the conveyancer was negligent. My worry is that the conveyancer might not admit to negligence with the 3rd party knowing that the claim is large, and we will again waste lots of time arguing. Having thought about it for some time, I reluctantly decided to settle with the 6k and get on with my life..

It really sucks to deal with solicitors, but hopefully this experience will help others in the same boat in the future. Again thanks everyone for helping me out, I am really grateful the journey wasn't as lonely as I thought it would be. :)