Legalinx urges conveyancers to protect themselves from bankruptcy risks

Legalinx urges conveyancers to protect themselves from bankruptcy risks

With bankruptcy searches becoming quicker and easier to carry out, LegalinX-7Side, a market leading provider of business, property and consumer information, is urging conveyancers to do more to protect themselves and clients from risk.

During a commercial conveyancing transaction, the conveyancer who acts as the representative for the buyer or lender should be aware of the current standing of the selling company.  If a company is not in a position to sell a property and the transaction proceeds, conveyancers could be in the firing line for negligence.

Without knowing if the selling company is currently undergoing winding up procedures, there is great risk involved in pursuing the transaction. In transactions where the official receiver has taken charge of the company and its assets, the entire transaction will be completely void.

The conveyancing handbook makes no reference to suggest that a solicitor should carry out a bankruptcy search on a vendor before completion. However, with the continued rise of fraud in the property industry, conveyancing professionals are being asked to request bankruptcy searches to protect their clients from fraud, and themselves from being found negligent.

Though the question of negligence for not conducting a bankruptcy search is a grey area, the availability of service providers who can conduct quick and accurate bankruptcy searches means that the risk doesn’t need to be taken.

The consequences of such a failure can be seen in the case of Edward Wong Finance Co Ltd v Johnson Stokes and Master [1984] 2 WLR 1 where funds were lost after the monies were transferred without a suitable check being made on the seller.  The buyer’s solicitors were ultimately found liable for negligence due to the obvious risk to their client. It was also noted that as bankruptcy searches were so easy and inexpensive to obtain, there was no need to take this risk.

Charlotte Blair, General Manager of Business Intelligence at Legalinx-7side, said: “Although the risk of vendor bankruptcy may not have been as likely and easy to predict as fraud in the past, with today’s searches being relatively low cost and easy to obtain, it does raise questions as to why it is not standard practice to take out such a search against bankruptcy when there is a possible risk.

“A winding up search provides you with information on the current standing of the selling company, allowing you to be completely assured when pursuing the transaction.

“The seriousness of possible consequences highlights the importance of guarding against such risks during commercial conveyancing transactions.  By taking these risks into account and obtaining an inexpensive, quick and easy bankruptcy search, conveyancers will be able to protect themselves and their client from falling foul of fraudulent scams and negligence.

“The general consensus is that if a solicitor suspects something, or even if they’re just not sure, then they should take all necessary steps to mitigate the risks.”

For further information on commercial and residential property searches, as well as bankruptcy searches, contact Legalinx-7side at

This article was submitted to be published by Legalinx-7Side as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.






GlobalX provide a multitude of document packages to suit your needs and International company information, covering over 270 jurisdictions around the world.

Our property and land search services cover Commercial and Residential conveyancing transactions, and our unique Commercial search ordering system is the simplest, yet most accurate, available in the market.

In addition we offer company formation and secretarial services, including specialist or complicated incorporations, and again our team have decades of experience to help you form companies with confidence.

LegalinX-7Side have also been a CPD accredited training company for over a decade and offer local, quality, CPD seminars across London, Bristol, Cardiff and Swansea.
All of our services are purely pay-as-you-go, meaning we don’t tie you into any minimum contracts or subscriptions, and our unique referencing tools allow seamless cost recovery.

Key contact: Nicola Watkins
Tel: 0800 197 1757
Email: [email protected]

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