Law Society introduces new Code
On 1 May 2019, a new Code was implemented which underlines the fact that the burden of detecting fraudulent sellers falls squarely on the sellers’ solicitors.
The new Code for Completion by Post 2019 has been updated to reflect last year’s Court of Appeal judgment in Dreamvar (UK) Ltd v Mishcon de Reya and P&P Property Ltd v Owen Catlin LLP. The new Code clarifies the meaning of the undertakings in the Code and the meaning of the term “seller”.
Selling a property is a big task in today’s society and the risk of fraudulent property sales has been a hot topic for many years. Often the fraud is only detected following completion when the buyer has nothing to show for their purchase.
It’s an unfortunate situation to be in but the buyer will have potential claims against their conveyancers as well as the solicitors who acted for the fraudulent seller.
A breach of undertaking claim will normally arise from the language of the Code. If the Code applies then the seller’s solicitor will be deemed to have provided an undertaking before completion that they had the seller’s authority to receive the purchase money. However, does the term “seller” in the Code mean the true legal owner of the property or just the imposter purporting to sell it?
Last year, the Court of Appeal gave a clear answer to that question in the joined cases of Dreamvar (UK) Ltd v Mishcon de Reya and P&P Property Ltd v Owen Catlin LLP. In short, the court found that the term “seller” in the Code means the true legal owner (not the fraudsters). Consequently, in cases of this kind, where the Code applies, the solicitors who acted for the fraudulent “sellers” are bound to be found in breach of the undertaking in the Code.
Following the Court of Appeal’s judgment, the Law Society has acted to update the Code. The new version of the Code states that references to “Seller” in the Code means “the person or persons who will be at the point of completion entitled to convey the legal and/or equitable title to the property” – in other words, the true legal owners, not the imposters.
Conveyancers who act for sellers on transactions where the Code applies can now be in little doubt as to the nature and scope of the undertakings they will be required to provide and the risks they will be exposed to if their clients turn out to be fraudsters.
Here at Coles we can assure you that we have strict fraud and money laundering procedures to ensure that your assets are protected at all times.
Should you have any questions regarding this blog our Conveyancing Team will be more than happy to speak to you on 0800 160 10 10.