Unlocking the potential of Upfront Information in conveyancing

Earlier this month, the newly-created Digital Property Market Steering Group (DPMSG) held its first conference and in a wide-ranging series of sessions there was plenty of positivity about what could be achieved by improved use of digital services within the conveyancing process, and a series of discussions about the potential barriers to change.

As you might expect, the increased use of Upfront Information (UFI) within the process figured heavily, particularly in terms of utilising digital methods to extract that data and present it to the consumer, which should hopefully cut down the time, resource and money currently spent on a very long-winded sale/purchase process, and decrease the risk of aborted transactions.

Within the conveyancing sector, and certainly within the Conveyancing Association, there is strong support for consumers instructing conveyancers far earlier in the process, support for the use of UFI, and to be able to deliver that data in a digitised format, however we’re also acutely aware that some have reservations about this.

For complete transparency, I chair the working group within the Home Buying & Selling Group which focuses on the potential barriers to using UFI and therefore it’s vitally important to me that we ascertain whether some of the potential barriers cited by some stakeholders are actually there, and if they are, how they can be safely overcome.

In a recent survey of conveyancers, a number of respondents focused on UFI – quite rightly – in terms of liability for that information, where it sits, and whether there might be an increase in liability for conveyancers, and whether as a result of that, there will be an increase in complaints and claims against firms.

As mentioned, it’s completely understandable that firms have highlighted this and are concerned about liability being shifted, claim risk being higher, and of course what this might do to firms’ PII cover, future premium levels, etc.

To that end, I’d like to highlight a recent paper by Professor Steward Brymer, a Director of Brymer Legal in Scotland, who has looked at UFI provision, in the context of claims and liability, with a specific focus on the Home Report in Scotland, which as I’m sure you know, is required by law to be obtained by the vendor(s) and provided to prospective buyers and any agents they might have.

The Home Report effectively provides UFI in the form of a single survey containing a valuation, an EPC, and a Property Questionnaire signed by the seller. It costs between £450-£800 and, despite some worries that its introduction would drastically reduce the number of properties being put up for sale in Scotland, there is no evidence to suggest this has been the case, since it was legally required from December 2008.

So, in a very true sense, this is the provision of UFI to prospective buyers by the seller, and therefore you might expect – if the worries expressed by some stakeholders in England & Wales are justified – that as a result of this provision, claims against firms will have increased.

According to Professor Brymer’s paper however there is no evidence of this from the Law Society of Scotland’s Master Policy Insurers who ‘do not recall seeing any claims in recent years which have arisen from the Home Report itself’.

Brymer suggests therefore that, when it comes to the impact of UFI on liability and claims ‘it is likely that liability will diminish rather than increase’ because:

  • ‘if the Seller’s Conveyancer prepares the UFI and creates the Material Information for the estate agent property advert, they have no duty of care to the buyer;
  • the buyer’s conveyancer is under a duty to undertake due diligence on behalf of her/his client; and
  • there are less likely to be claims because the buyer has the information up front and it can be evidenced what they knew at the point they made their offer.’

He also suggests that since the introduction of the Home Report, it is not the provision of UFI that has increased PII premiums but instead an increase in fraud and cyber attacks. He argues that, as valuations are more likely to be based on factual information rather than assumptions, this will ‘reduce claims by lenders against conveyancers for breaches arising under the contractual terms of the UK Finance Mortgage Lenders Handbook as they, and the conveyancer acting on their behalf, will have more information available to them earlier in the process’.

While suggesting that the Home Report is not perfect – and a review is planned – Brymer does believe it has worked well in Scotland, and argues that the risks posed to conveyancing firms will be ‘significantly reduced’ by the use of UFI.

From my perspective, and those of PII providers I have spoken to, there is an agreement with Brymer’s assessment – the belief being that claims against conveyancers will go down with greater use of UFI and that evidence of the consumer’s receipt of the information in the process actually goes up, if there are any claims.

I understand why firms are concerned by having access to the whole of the information set out in the Buying and Selling Property Information (BASPI) dataset, given that chunks of it are for other stakeholders to review.

Conveyancers do not have the expertise or qualifications to advise on, for example, structural or environmental factors, and nor should they. But, just as now, our disclaimers will protect us when we explain to our clients conveyancers are only qualified to advise on matters of conveyancing law and the client must take advice from a tax expert on, for example, CGT, or a surveyor on the structural integrity of the property.

Overall, however, there is no evidence of increased areas of liability in Scotland with the provision of UFI – and there is no reason to suggest it will be evident in England & Wales, or that we should stop the push for greater UFI because of it.

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