My last post but one was a moan about how conveyancing solicitors are relying more on the Law Society’s Conveyancing Protocol than on the law underpinning conveyancing transactions. In doing so, I think they undermine their own value as lawyers, and therefore the value of using lawyers to carry out conveyancing.
Another example of this is over-reliance on indemnity insurance policies. Many buyers’ lawyers (solicitors and licensed conveyancers alike) insist on the seller paying for indemnity insurance cover against a perceived risk (eg, enforcement action for a breach of covenant or for a breach of planning control) when an analysis of the legal issues shows that there is, in fact, no risk of such enforcement action because it is time-barred. Even when this is pointed out, they still insist on having money paid to insurers – money for nothing, in effect.
A classic example recently related to access to a property. This was over a strip of land that was neither part of the property nor part of the highway – though crucially it was not common land, which raises issues of its own. As the property had been in existence for about 50 years, and the seller could, by various means, show that access had been gained across this strip of land continuously and without challenge for more than 20 years (the period required to acquire a legal right of way by long usage), there was – in law – no problem. Despite this, the buyer’s lawyer insisted on the seller paying for an indemnity insurance policy against a risk of enforcement that could never arise.
In the context of that transaction, the significance was not huge: £300 for a policy out of a sale price of nearly £1M is neither here nor there. However, now a precedent has been set and, when the buyer comes to sell, he will have to disclose the existence of the policy; he can hardly argue it was unnecessary as his lawyer – on his behalf – isisted on it, so he will have to pay for the cover to be increased in line with the increase in the value of the property and endure the delay while this is arranged.
But even that is only an irritant. What is worse (in my view) is that, by failing to analyse the legal position first, so they only require insurance where a risk does in fact exist, lawyers are in danger of making the involvement of lawyers in conveyancing transactions pointless. Instead, estate agents will be able to arrange all the practicalities and take out indemnity insurance against any risk that could exist – whether or not it does – and a knowledge of the law will be redundant.