Why you must check your conveyancing solicitor's lender panel membership
Before choosing a solicitor for a home purchase, you must check they are on your mortgage lender's panel. Failure to do so could seriously delay your move.
Why does a lender need to instruct a solicitor on my home purchase?
When you buy a property with a mortgage, your lender will need to ensure that the money they are lending is "safe".
When you take out a mortgage, the loan is 'secured' on the property being purchased.
If you do not keep up the mortgage payments, the lender will repossess the property and sell it to recover the outstanding amount of the loan
A mortgage lender must therefore be satisfied that the property has a ‘good and marketable title’ if they do ultimately need to sell it.
A ‘good and marketable title’ will ensure that the property can be sold without legal issue. The solicitor must also register the mortgage as a legal ‘charge’ against the owner's title. This charge is registered at HM Land Registry.
The lender will need to confirm that the value of the property if sold will be cover the mortgage plus the lender’s costs and interest.
Most solicitors aren't on all lender panels
There are around 100 mortgage lenders on the UK.
Each lender has a set of specific requirements that a solicitor must fulfil in order to be able to represent the lender.
Whether a solicitor's firm is or is not on the panel of a particular lender is not usually a reflection of the competence of the firm.
Some lenders will only appoint firms with three or more partners. Some lenders will only work with firms that regularly handle a certain volume of residential conveyancing.
Other lenders require panel firms to be accredited by the Law Society's Quality Conveyancing Scheme.
There are a few ‘niche’ lenders which only have a very restricted panel, or may even only employ one firm to complete their mortgages.
If you do want to get a mortgage from one of these niche lenders then you will probably need to instruct your own solicitor as well (and expect to pay two sets of costs) since these lenders' solicitors often do not act for individual buyers as well as the lender.
What if my broker recommends a solicitor?
Buyers who use a broker to obtain a mortgage (whether via the seller's estate agents or an independent firm) may find that the broker recommends a solicitor.
This will not necessarily be because the firm is any better or cheaper than another solicitor you want to use, but because the broker or agents are getting a commission from the solicitor. The broker should inform you if this is the case.
Most solicitors won’t tell you until it’s too late
Don't assume that a solicitor will check they can act for your lender before taking you on as a client. It is very rare for a solicitor to even ask who your lender is until the conveyancing process is semi-progressed.
Most solicitors firms don’t even maintain a central lender panel membership list. As a result the potential inability for a solicitor to represent a buyer’s lender often only becomes apparent when the lender makes a formal mortgage offer - possibly weeks into the process.
If the solicitor then discovers they are not on the panel, there is last-minute panic to find another solicitor to handle the legal work for the lender.
This can lead to serious delays.
How can I avoid falling into this trap?
When you plan to buy a home, it is a good idea to think about your choice of solicitor at the earliest stage. This will give you time to compare quotes and make enquiries.
Most firms work on a "no sale, no fee" basis, so you can even instruct a solicitor before you find a property if you wish.
If you know who your lender is at the point of choosing a solicitor you should categorically ask the solicitor if they are on that lenders panel. If you are still deciding between two or three lenders you should confirm that the solicitor is on all prospective lenders panels.
How can you check your prospective solicitor’s panel membership?
You need to ask the solicitor about panel membership before you instruct them.
With Quittance you can confirm this online.
What if my preferred solicitor is not on my lender’s panel?
If it is discovered that your solicitor is not on your lender’s panel, the lender will insist on using a different solicitor to conduct the legal work.
The solicitor will then have to arrange for another law firm to carry out legal enquiries on behalf of the lender. This literally means creating a separate file on your behalf which can then be forwarded to the second solicitor.
Alternatively, you could opt to go with a solicitor recommended by the lender themselves.
Either way, this process will waste valuable time. A long delay could cause serious delays or scupper your purchase entirely.
You could be expected to pay the legal costs of the firm the lender uses.
What if my conveyancing is already underway?
If you are in the early stages of the conveyancing process, you should contact your solicitor and make sure that they know which lender you are using. You should ask the solicitor to confirm that they can act for your lender.
Unless you have only just instructed a solicitor, it will probably not be worth trying to move the the conveyancing over to another firm.
You should therefore ask the solicitor to confirm what their process will be.
The solicitor should be ready to send the necessary information over to an alternative firm as soon as the mortgage offer is received. The solicitor should also give you their undertaking that there will be no delays as a consequence of using a second firm
Whether you go with the lender’s solicitors, or one recommended by the solicitor, the second solicitor won't, by default, feel any pressure to work quickly.
You should therefore be prepared to chase regularly to ensure that your file as prioritised by the second solicitor.