Why you must check your conveyancing solicitor's lender panel membership
Before choosing a conveyancing solicitor for your home purchase, you must check whether the solicitor is an approved member of your mortgage lender's panel. Failure to do so could seriously delay your move.
Why does my 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 property offers safe security (legally) for the money they are lending.
When you take out a mortgage, the mortgage loan is 'secured' on the property you are purchasing.
If you do not keep up the mortgage payments, the lender can 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’ in case 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 also need to confirm that the value of the property will be enough to cover the outstanding mortgage plus the lender’s costs and interest.
To ensure that the property meets the lending criteria, the lender will need to instruct a solicitor. It is common practice for the lender to instruct the same solicitor that you use for your purchase. Using a different solicitor would be inefficient, and often leads to delays.
Before you instruct, check that your solicitor can act for your lender.If your solicitor is not on your mortgage lender's panel, it could cost you more money in additional fees and could delay your move.
But, most solicitors aren't on all lender panels...
There are over 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 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. Licensed conveyancers, who specialise in conveyancing, cannot be part of the CQS as it is a solicitor accreditation.
There are a few ‘niche’ lenders which only have a very restricted panel, or may even only employ one firm to complete their mortgages.
What happens if my solicitor is not on my lender’s panel?
If the conveyancing process is underway and the solicitor subsequently discovers that they cannot act for your lender, the lender will need a different solicitor to represent them.
Your solicitor will then have to arrange for another law firm to carry out the legal enquiries on behalf of the lender. This literally means creating a separate file on your behalf which must 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 inevitably causes delays in the conveyancing process.
As a buyer, you are required to pay the lender's legal costs. If a second solicitor is instructed to represent your lender, you might have to pay additional legal fees.
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.
What if my estate agent recommends a solicitor?
Estate agents will often recommend a solicitor to buyers and sellers. The agent might recommend a solicitor because they are fast and efficient, because of an institutional relationship or because the solicitor pays the biggest referral fee. However, the risk of the solicitor not being on your lender's panel still exists.
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 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 buyers avoid 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 shop around and compare quotes.
Most firms work on a 'no sale, no fee' basis, so it is a good idea to instruct a solicitor before you find a property.
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.
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 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.
The second solicitor won't, by default, feel any pressure to work quickly, so be prepared to chase regularly to ensure that your file is prioritised.
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