clc guidance notes 1-14

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GUIDANCE NOTE 1 PRACTISING ADDRESS AND COMMUNICATIONS

Issue 2

Issued by the Council for Licensed Conveyancers on 30 March 2009.

This Guidance Note came into force on 31 March 2009.

This Guidance Note supersedes Guidance Note 1 – Practising Address and Communications issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason

for not doing so in the particular circumstances;

3.2.2 ensure that the Recognised Body of which he is a Manager complies with the Guidance Notes unless it has good reason for not doing so in the particular circumstances.”

Rule 3.5 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “Control of a Recognised Body must be from a permanent fixed address in England or Wales.”

Rule 3.6 of the Licensed Conveyancers’ Conduct Rules 2009 states:-

“All Communications must include:-

3.6.1 the principal address of the Recognised Body;

3.6.2 the names of the Managers of a Recognised Body (identifying each Manager who is a Licensed Conveyancer); and

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3.6.3 the words “Regulated by the Council for Licensed Conveyancers”.”

This Guidance Note adopts the definitions set out in the Licensed Conveyancers’ Conduct Rules 2009.

1. If it can be demonstrated that Control is maintained from a permanent fixed address in England or Wales, the Operations of the Recognised Body may be carried out elsewhere, provided the Council has been given prior written notification of the Recognised Body’s intention to do so.

2. For these purposes

“Operations” includes administrative functions (such as data inputting) and work undertaken on specific client matters (such as generation of searches and response to telephone enquiries).

3. In whatever manner a Recognised Body is controlled the Council must at all times be satisfied that:

• there is compliance with all the Council’s Rules; • it is able to undertake effective monitoring. The Council must have

immediate and unrestricted access within England and/or Wales to all information held on a Durable Medium relating to the Recognised Body whether originating within England and/or Wales or elsewhere (to include its records, papers, files and financial accounts). The Council may make it a condition of the grant of the licence to Licensed Conveyancers who wish to carry out some aspect of their business outside England and Wales that they undertake to pay the Council’s costs of carrying out monitoring inspections so as to offset any increased costs to the Council of those inspections;

• on an intervention the Council must have immediate and unrestricted

access within England and/or Wales to all information held on a Durable Medium relating to a Recognised Body whether originating within England and/or Wales or elsewhere (to include its records, papers, files and financial accounts).

4. In addition to the provisions of Rule 3.6 all Communications must:-

• include the full address of the branch office if Communications are issued from a branch office;

• distinguish between Managers who are and who are not Licensed Conveyancers.

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GUIDANCE NOTE 2 UNDERTAKINGS

Issue 2



This Guidance Note supersedes Guidance Note 2 – Undertakings issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.4 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must when offering or providing Regulated Services through a Recognised Body: 4.4.1 ensure that all the Managers and employees of the Recognised

Body comply with the Council’s Rules where they apply;

4.4.7 comply fully with any undertaking given by him, the Recognised Body or any employee of that Recognised Body;”


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1. An undertaking is an unequivocal declaration of intention addressed to

someone who reasonably places reliance upon it. It need not be in writing nor contain the word “undertake” to be enforceable.

2. All Managers are equally responsible for the performance of undertakings

given in the name of the Recognised Body. They will remain responsible for the performance of undertakings even after they have left the Recognised Body or it has been dissolved.

3. Neither the Council nor the Discipline and Appeals Committee has power to

direct the specific performance of an undertaking or to direct the payment of compensation to a third party but the breach of an undertaking may lead to disciplinary proceedings.

4. The person entitled to the benefit of the undertaking or the Court (but not the

Council) may release a Recognised Body or a Licensed Conveyancer from an undertaking.

5. Neither a Licensed Conveyancer nor a Recognised Body can avoid liability on

an undertaking by asserting that to comply with it would be a breach of duty owed to the Client.

6. The Council will treat a promise to give an undertaking as an undertaking

provided the promise sufficiently identifies the terms of the undertaking and provided any prior conditions have been satisfied.

7. A Licensed Conveyancer or a Licensed Conveyancer incurring loss arising

directly from a claim based on an undertaking made in the course of practice might in certain circumstances be entitled to an indemnity under the Master Policy or other professional indemnity insurance.

8. An undertaking to redeem a mortgage or charge means that the mortgage or

charge must be redeemed immediately following completion of the transaction occasioning the redemption.

9. In an undertaking to pay money out of the proceeds of sale of a property it is

not implied that the undertaking is intended to take effect only if the proceeds of sale are received by the Recognised Body.

10. It is good practice: ~

(a) to ensure that an undertaking is given only by a Qualified Person or other member of staff with authority expressly given on a Durable Medium by the Recognised Body;

(b) to ensure that all staff are aware of the terms of undertakings

incorporated by the use of the Law Society’s formulae for exchanging contracts by telephone and its code for completion by post;

(c) to note on the file and confirm in writing to the other party any

agreed variation to undertakings in the Law Society’s formulae for

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exchanging contracts by telephone or its code for completion by post;

(d) to note separately the terms of undertakings on file; (e) to give an undertaking only if the Qualified Person or duly

authorised member of staff can be absolutely certain that it will be fulfilled;

(f) where making or accepting an undertaking “to pay costs” to

specify the amount of costs since if no sum is agreed the undertaking may be interpreted as meaning “to pay reasonable costs”;

(g) to ensure the wording of an undertaking is unambiguous, since

only in exceptional circumstances will extraneous evidence be admitted to clarify an ambiguity;

(h) where an undertaking is dependent on the happening of a future

event the recipient should be notified immediately if it becomes clear that the event will not occur;

(i) to specify both the identity of the lender and the date of each

charge it is intended to discharge in reply to any requisitions on title or otherwise;

(j) to give an oral undertaking only as a last resort and ensure that it

is confirmed in writing as soon as is practicable; (k) to avoid either giving or accepting an undertaking using terms

such as “best endeavours” or “reasonable endeavours”: be specific.

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GUIDANCE NOTE 3 SUPERVISION

Issue 2



This Guidance Note supersedes Guidance Note 3 – Supervision issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.4 of the Licensed Conveyancers Conduct Rules 2009 states: “A Licensed Conveyancer must when offering or providing Regulated Services through a Recognised Body: 4.4.1 ensure that all the Managers and employees of the

Recognised Body comply with the Council’s Rules where they apply;”

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Rule 4.6 of the Licensed Conveyancers’ Conduct Rules 2009 states:

“A Recognised Body must:- 4.6.2 ensure all Regulated Services are either carried out by or

effectively supervised and directed by a Qualified Person;”


1. A Manager who is a Qualified Person is responsible for supervising the

Conveyancing Services provided by his employees. 2. Factors in determining whether the work is being effectively supervised

include:- (a) the number of Qualified Persons available to supervise each office; (b) the volume and nature of the work undertaken; (c) the number, competence, training and duties of unqualified staff;

(d) arrangements for a Qualified Person to monitor incoming and outgoing Communications.

3. Alternative arrangements for supervision must be capable of being

implemented promptly when effective supervision is prevented by illness, accident or other unforeseen cause.

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GUIDANCE NOTE 4 MANAGEMENT ARRANGEMENTS

Issue 2



This Guidance Note supersedes Guidance Note 4 – Management Arrangements issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.6 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Recognised Body must:- 4.6.5 have in place appropriate management arrangements and

systems to ensure compliance with the Council’s Rules.”


1. The term “arrangements” is used at Rule 4.6.5 to include all systems,

procedures, processes and methods of organisation to ensure compliance with the Conduct Rules and Guidance Notes. The way in which they are implemented is a matter for the Recognised Body. However, each

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Recognised Body must be able to show that arrangements are in place and operating in order to satisfy the Council it is compliant.

2. Matters to be taken into account in determining whether the management

arrangements and systems adopted by the Recognised Body are appropriate will include its size and management structure; the number, experience and qualifications of staff; and the nature of work undertaken; and the mechanism for periodic review of their effectiveness.

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GUIDANCE NOTE 5

CONFLICTS OF INTEREST Issue 2

Issued by the Council for Licensed Conveyancers on

30 March 2009.


This Guidance Note supersedes Guidance Note 5 – Conflicts of Interest issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason




“A Licensed Conveyancer must:-

5.1.2 keep confidential all information about the Client except as

authorised by the Client or as required by law or the Council’s Rules;

5.1.3 not accept instructions from a person nor continue to act

for any Client whose interests conflict directly or indirectly with his own or those of his Recognised Body, or with those of any other Client;”


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“A Licensed Conveyancer, in the provision of Regulated Services, must:-

5.2.1 except as permitted in guidance issued by the Council, act only for

one Client in a matter unless each Client is informed in writing in advance that the Recognised Body has been asked to act for another Client; each Client is at all times represented by different Qualified Persons and those Qualified Persons conduct themselves in the matter as though they were members of different Recognised Bodies.

5.2.2 on the granting or redemption of a mortgage not act for himself

nor for any Client prohibited by the instructions of any lender;” This Guidance Note adopts the definitions set out in the Licensed Conveyancers’ Conduct Rules 2009. The following definitions taken from the Licensed Conveyancers’ Conduct Rules 2009 are included for ease of reference. “Permitted Person” a solicitor regulated by the Law Society, a barrister

regulated by the General Council of the Bar, a notary public regulated by the Master of the Faculties, a fellow regulated by the Institute of Legal Executives, a patent attorney regulated by the Chartered Institute of Patent Attorneys, a trade mark attorney regulated by the Institute of Trade Mark Attorneys, a law costs draftsman regulated by the Association of Law Costs Draftsmen and such other individuals authorised by any other Legal Regulator to provide Reserved Legal Services;

“Qualified Person” a Licensed Conveyancer; or a Permitted Person;

1. There are statutory exceptions to the requirements for a Licensed Conveyancer, Manager or Recognised Body to keep information about a Client confidential: the anti-money laundering regulations provide one example.

2. Except when a conflict of interest arises, a Recognised Body may act for two

or more Clients in an arm’s length transaction for value where each Client is represented by a different Qualified Person. A Recognised Body must consider carefully whether a conflict of interest arises or is likely to arise when it receives instructions to act for different Clients in the same matter where the seller is:-

(i) a developer or builder; or (ii) a lessor granting a lease

The interest of each Client must be paramount (Rule 5.1.1 Conduct Rules).

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3. Before instructions are accepted to act for a second Client each Client must be informed in writing that the Recognised Body has been asked to act for another Client in the same matter and the Recognised Body must obtain the informed consent in writing from each Client that the Recognised Body may act for another Client.

4. If a conflict of interest arises at any time the Recognised Body shall cease to

act for each Client. If a conflict was or should have been foreseen, the Recognised Body shall not be entitled to charge either Client a fee for the work undertaken other than for disbursements properly incurred.

5. Except when a conflict of interest arises, a Recognised Body with only one

Qualified Person may act for more than one Client where:-

• the matter is not an arm’s length transaction • one of the Clients is a lender providing mortgages in the normal course of

its business activities.

5. A matter will not generally be regarded as an arm’s length transaction where the parties are related by blood, adoption or marriage or in a stable relationship (eg a cohabiting couple or the parties otherwise treat each other as family members). The determining factor is not the specific relationship but the existence of any inequality of influence or disproportionate bargaining power which may give rise to a conflict of interest between the Clients. It is the duty of the Licensed Conveyancer, Manager or Recognised Body to advise each Client what is in that Clients’ interests. A conflict is likely to have arisen if the advice given to one Client is different from that which the Licensed Conveyancer, Manager or Recognised Body would have given if acting solely for that one Client.

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GUIDANCE NOTE 6 DISCLOSURE OF PROFITS AND ADVANTAGES

Issue 2



This Guidance Note supersedes Guidance Note 6 – Disclosure of Profits and Advantages issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason




“A Licensed Conveyancer, in the provision of Regulated Services must: 5.2.7 ensure that all Communications are clear, fair and not

misleading; 5.2.8 disclose to a Client in writing, as soon as they are known to the

Licensed Conveyancer, the existence and amount of any sum payable by or to the Licensed Conveyancer arising, whether directly or indirectly, from the Client’s instructions.”


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“Recognised Body” includes, where the context permits, any Manager (including a Licensed Conveyancer who is a Manager) or employee acting for the Recognised Body.

1. When it accepts instructions, the Recognised Body must inform the Client in writing:-

1.1 of the existence of any arrangement for the introduction of the Client to the Recognised Body by another person; and

1.2 any sum paid in connection with the introduction, or, if it is not practicable to inform the Client of the exact sum, the maximum sum which may be paid.

2. When he introduces a Client to another person the Recognised Body must

inform the Client in writing:-

2.1 of the existence of any arrangement for the introduction of the Client by the Recognised Body to another person; and

2.2 any sum paid in connection with the introduction, or, if it is not practicable to inform the Client of the exact sum, the maximum sum which may be paid.

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GUIDANCE NOTE 7 CONVEYANCING FILES

Issue 2



This Guidance Note supersedes Guidance Note 7 – Conveyancing Files issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 5.2 of the Licensed Conveyancers’ Conduct Rules 2009 states:

A Licensed Conveyancer, in the provision of Regulated Services, must:- 5.2.9 keep safe Client information and records on a Durable Medium

until delivered to the Client or disposed of in accordance with guidance issued by the Council.”


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“Recognised Body” includes, where the context permits, any Manager (including a Licensed Conveyancer who is a Manager) or employee acting for the Recognised Body.

Ownership of the file contents. 1. The conveyancing file itself will generally contain a mixture of papers and

documents some of which belong to the Client and some to the Recognised Body. In addition there may be other papers and documents which belong to another Client, for example a lender.

2. Documents that belong to the Client

• Those prepared by the Recognised Body for the benefit of the Client

and which have been paid for by the Client either directly or indirectly. They include:- - most attendance notes; - drafts; - copies made for the Client’s benefit of letters received by the

Licensed Conveyancer; - copies of letters written by the Recognised Body to third parties

contained in the Client’s file and used for the Client’s business, for example letters to lenders.

This does not include copies of letters written to the Client which may be kept by the Recognised Body.

• Those prepared by a third party during the course of a matter and sent to the Recognised Body (other than at the Recognised Body’s expense). Examples are receipts and vouchers for disbursements made by or on behalf of the Client and letters received by the Recognised Body from third parties.

3. Documents that belong to the Recognised Body

• Those prepared by the Recognised Body for its own benefit or protection, the preparation and production of which is not charged to the Client. They include:

- copies of Communications written to the Client; - copies of Communications received by the Recognised Body; - office journals; - computerised records; - copies of Communications to third parties but only if they are

contained in a filing system of all Communications written in the office;

- tape recordings of conversations; - entries in diaries; - time sheets; - books of account; - inter office Communications;

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• Those sent to the Recognised Body by the Client, the property of which was intended at the date of despatch to pass from the Client to the Recognised Body, including letters, authorities, and instructions written or given to the Recognised Body by the Client.

4. Joint retainers – joint Clients

Those documents referred to in paragraph 2 belong to the Clients jointly. Originals must only be handed to one Client with the consent of the other(s). Each Client is entitled to a copy without charge. Copies should be released to third parties only with the consent of all Clients.

5. Joint retainers –Client and lender

Where a request for the file or part of it is made by or on behalf of a lender, the Recognised Body should determine the ownership of the various papers in accordance with the principles in paragraphs 1 and 2. There may be documents which:-

• Belong to the lender alone including the lender’s instructions to the Recognised Body, certificate of title and correspondence between the Recognised Body and the lender. The original may be released but a copy should be retained.

• Belong to the borrower Client, but which the lender is nevertheless entitled to see, as they relate to that part of the work where the lender and borrower can be said to have a common interest, such as deducing title. Examples are the contract, transfer and search certificates.

• Belong to the borrower Client that the lender is not entitled to see without the consent of the borrower Client (and for which a copying charge may be made).

Retention and Destruction of the file contents. 6. The Council recommends:

(a) the contents of files relating to the sale of property are retained for a minimum of six years;

(b) the contents of any other file are retained for a minimum of fifteen years;

(c) after the relevant minimum period, and provided it has the Client’s authority, a Recognised Body reviews the file to decide whether it may be safely destroyed;

(d) a Recognised Body to consider retaining separately and for a longer period the authority from the Client.

7. If the matter involved a mortgage, then any specific requirements of the

particular lender must be taken into account. 8. It is good practice for a Recognised Body:-

(a) to make a copy (without charge) for its own benefit of any documents released;

(b) where documents are requested with a view to any claim being

made against it:

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not to make any admission of liability;

to notify insurers of the circumstances (as required by

Rule 4.4.11 Conduct Rules 2009); and

to deal with the matter in accordance with instructions issued by or on behalf of the insurers.

(c) where a file or information from a Client file is requested by a

third party (such as the Police, HM Revenue and Customs or Trustee in Bankruptcy) to satisfy itself (by the production of legal authority, preferably a court order) that the party making the request is legally entitled to the documents and information requested;

(d) where it intends to charge for copying documents (other than

where any copying is made for his own benefit) to make a reasonable charge which the Council considers should be no more than 15 pence (plus VAT) per A4 sheet;

(e) to ensure that the relevant Terms of Engagement authorise it

to retain or destroy the contents of a Client’s file or transfer the data onto another Durable Medium, since it may be liable for any loss incurred if the contents of a file are destroyed without the Client’s consent.

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GUIDANCE NOTE 8 ESTIMATES AND TERMS OF ENGAGEMENT

Issue 2



This Guidance Note supersedes Guidance Note 8 – Estimates and Terms of Engagement issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason




“A Licensed Conveyancer, in the provision of Regulated Services, must:-

5.2.10 before or when accepting instructions, set out in writing to

the Client the terms on which instructions are accepted, an estimate of costs and the Recognised Body’s complaints procedure.”


“Terms of Engagement” a statement on a Durable Medium of all terms upon

which instructions are accepted

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“Recognised Body” includes, where the context permits, any Manager

(including a Licensed Conveyancer who is a Manager) or employee acting for the Recognised Body.

Estimates 1. Any estimate of costs must be capable of being stored on a Durable Medium

and state:-

1.1 the name of the Client, and the nature of the transaction;

1.2 the basis on which fees for abortive work will be payable;

1.3 the proposed fees and other expenses (such as bank transfer fees) payable to the Recognised Body (such fees and other expenses are deemed to be inclusive of VAT unless VAT is separately itemised);

1.4 any disbursement likely be incurred on the basis of the instructions received (such disbursements are deemed to be inclusive of VAT unless VAT is separately itemised);

1.5 where the total sum payable as estimated under paragraph 1.3 is likely to be exceeded that the Recognised Body will advise the Client of that fact and provide him with an explanation and a revised estimate;

1.6 in respect of paragraphs 1.3 and 1.4:

1.6.1 a separate fee must not be charged as a contribution towards the professional indemnity premium since this is considered an overhead which should be taken into account when calculating the amount of fees charged;

1.6.2 unless otherwise stated fees will be deemed to be inclusive of the costs of post, telephone calls, facsimile communications and e-mail;

1.6.3 unless separately specified, the estimate of proposed fees payable to the Recognised Body will be deemed to include fees for:-

representation of the lender;

service of notices on a landlord or management company;

1.6.4 a disbursement means any payment made or for which a liability to pay has been incurred by a Recognised Body to a third party on behalf of a Client: disbursements are deemed to include:

stamp duty land tax;

Land Registry fees;

Local Authority and any other applicable search fees.

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1.6.5 the Client must be advised where it is not possible to provide an estimate of fees and disbursements because the relevant information is not available.

2. It is advisable to set out the likely fees to be incurred in an estimate rather than in a quotation since a quotation will be treated as a fixed price contract which cannot be varied notwithstanding any provision in the Terms of Engagement to the contrary.

3. If it becomes apparent that the total sum payable as estimated under paragraph 1 is likely to be exceeded or that the relevant information has become available, the Recognised Body must as soon as practicable:-

3.1 advise the Client; and

3.2 provide the Client with an explanation.

4. Any notification given under paragraph 3 must be set out on a Durable Medium to the Client as soon as possible.

5. Any fees, expenses, disbursements and VAT to be charged in respect of an abortive transaction must be notified to the Client on a Durable Medium as soon as those matters can reasonably be calculated whether or not an invoice is rendered at this time.

Terms of Engagement

6. The Recognised Body must provide Clients with Terms of Engagement with

a request that the Client evidences agreement to the Terms of Engagement.

7. The Terms of Engagement must be drafted in sufficient detail and with sufficient clarity so as to be readily understandable to the Client.

8. The Terms of Engagement must include:-

8.1 the name, address, telephone and other contact details of the Recognised Body;

8.2 if not included in paragraph 8.1, the names of the Managers of the Recognised Body;

8.3 the name of the individual having day to day conduct of the matter and where applicable the name of the individual responsible for its overall supervision;

8.4 if the matter is to be conducted by a team, the identity of that team and the name of its leader(s);

8.5 the name of the individual to whom any complaint should be made;

8.6 an explanation of the procedure to be adopted where the Client is dissatisfied with the services or conduct of a Manger or employee of the Recognised Body which must include the name and address of the Council (see further Guidance Note 9 Complaints Procedures).

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8.7

the following wording:- ‘’If you make a valid claim against us for a loss arising out of work for which we are legally responsible, and we are unable to meet our liability in full, you may be entitled to claim from the Compensation Fund administered by the Council For Licensed Conveyancers (from whom details can be obtained”).

9. It is good practice for Terms of Engagement to include authority for the Recognised Body to retain or destroy the contents of a Client’s file or transfer the data onto another Durable Medium (see paragraph 8(e) of the Guidance Note 7 Conveyancing Files).

10. The AML Toolkit Issue 3 includes the suggested wording to be incorporated in the Practice’s Terms of Engagement:

Generally 11. A copy of, and any evidence that the Client has agreed, the estimate and

Terms of Engagement must be kept on a Durable Medium.

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GUIDANCE NOTE 9 COMPLAINTS PROCEDURES

Issue 2



This Guidance Note supersedes Guidance Note 9 – Complaints Procedures issued by the Council on 19 October 2005 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.6 of the Licensed Conveyancers’ Conduct Rules 2009 states “A Recognised Body must 4.6.4 have in place an appropriate written complaints procedure.” Rule 5.2 of the Licensed Conveyancers’ Conduct Rules 2009 states “A Licensed Conveyancer, in the provision of Regulated Services, must:-

5.2.10 before or when accepting instructions, set out in writing to the

Client the terms on which instructions are accepted, an estimate of costs and the Recognised Body’s complaints procedure;

5.2.11 where a complaint is received comply with the Recognised

Body’s complaints procedure.”

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These Guidance Notes adopt the definitions set out in the Licensed Conveyancers’ Conduct Rules 2009.

1. A complaints procedure must be:

appropriate to the needs of clients; clear, transparent and responsive;

impartially implemented; and

include the requirements set out at paragraphs 2 to 6 below.

2. The procedure must provide for investigation of the complaint by a senior

member of the Recognised Body. A Licensed conveyancer who is the only Manager in a Recognised Body must investigate the complaint himself, unless he has an arrangement with another firm to investigate complaints.

3. The Recognised Body should reply in writing to complaints within 7 days. Where a complaint is made orally, the Recognised Body should include with its reply or acknowledgment to the complainant its understanding in writing of the complaint.

4.

If a full reply to the complaint can not be sent within 7 days, the Recognised Body Conveyancer must acknowledge receipt of the complaint in writing within the 7 day period stating by what date within 28 days of receipt of the complaint a substantive response is likely to be sent and explain the reason for the delay.

5. If there are two or more Qualified Persons within the Recognised Body the procedure should include provision for the complainant, if he is dissatisfied with any aspect of the handling of the complaint by the Recognised Body, to ask for a separate review of the complaint to be carried out. If there is only one Qualified Person in the Recognised Body it may be appropriate to arrange for another firm to review the complaint. Any review should be completed within 28 days of the request for the separate review.

6. The Recognised Body must when it makes a full response to the complaint notify the complainant in writing of his entitlement (if he is dissatisfied with the Recognised Body’s response) to ask the Council to consider the complaint, and include the name and address of the Council.

7. A record detailing complaints received and how they are resolved should be maintained. It is good practice to draw learning points from complaints and to use them for staff training and for possible changes to office procedures.

8. It is acceptable for a Recognised Body to include the following terms in any complaints procedure

“Unless it agrees there are good reasons not to do so, the Council will expect you to allow us to consider and respond to your complaint in accordance with the procedure set out above.”

9. An explanation of the Recognised Body’s complaints procedure should be

included in the Terms of Engagement (see paragraph 8.6 Guidance Note 8 Estimates and Terms of Engagement).

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GUIDANCE NOTE 10 ANTI MONEY LAUNDERING AND

COMBATING TERRORIST FINANCING Issue 3


30 March 2009

This Note comes into force on 31 March 2009

This Guidance Note supersedes Guidance Note 10 – Prevention of Money Laundering and Combating Terrorist Financing Issue 2 issued by the Council on 16 January 2008 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.4 of the Licensed Conveyancers’ Conduct Rules 2009 states: “A Licensed Conveyancer must when offering or providing Regulated Services through a Recognised Body:: 4.4.6 not conduct himself in a manner which he knows or has

reasonable grounds for suspecting will result in a breach by the Licensed Conveyancer of the law or of the Council’s Rules;”

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Additional Definition AML/CTF Anti Money Laundering Legislation and Combating the

Financing of Terrorism Legislation and, in particular, o Proceeds of Crime Act 2002 (as amended); o Terrorism Act 2000 (as amended); and o Money Laundering Regulations 2007 (the Regulations).

Beneficial Owner means an individual or other legal person who ultimately owns or controls the client on whose behalf a transaction or activity is being conducted (Regulation 6) CDD includes all of:

o “Customer Due Diligence measures” (as defined by Regulation 5)

o “Ongoing Monitoring” (as defined by Regulation 8(2)) o “Enhanced Customer Due Diligence measures” (as

described in Regulation 14) o ”Enhanced Ongoing Monitoring” (as referred to in

Regulation 14)

SOCA means Serious Organised Crime Agency 1. A Recognised Body must have in place appropriate management

arrangements and systems and controls to comply with AML/CTF.

2. A Recognised Body must ensure that the management arrangements, systems and controls enable it to identify, assess, monitor and manage AML/CTF risk and are appropriate to the nature, scale and complexity of the Recognised Body’s activities.

3. A Recognised Body must carry out regular reviews of the adequacy of its

management arrangements, systems and controls.

4. The Council, when considering whether there has been a breach of the Council’s Rules, will take into account

(a) the adequacy of the arrangements made by the Recognised Body;

and (b) whether it has followed these and the guidance contained in the

Council’s Guidance for the Prevention of Money Laundering and Combating Terrorist Financing issued in interim form in December 2007 (and any later amending Guidance issued by the Council).

5. A Recognised Body should ensure that, in order to meet its obligations under

the Regulations, its management arrangements, systems and controls include:-

(a) an appropriate AML/CTF policy for the Recognised Body;

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(b) appropriate and regular training for its employees (of which a record must be kept) in relation to AML/CTF to enable those employees to recognise and deal with transactions and other activities which may be related to AML/CTF;

(c) appropriate internal reporting procedures; (d) management and retention of records of CDD and information about,

suspicion reports which have been made by the Recognised Body; (e) appropriate measures to ensure that AML/CTF is taken into account

in the day to day operation of the Recognised Body including the application of appropriate CDD for:-

(i) dealing with existing clients; (ii) the taking on of new clients; (iii) dealing with Beneficial Owners; (iv) incorporating changes in the services it provides;

(f) appropriate CDD measures to ensure that procedures for identifying

and verifying new clients and Beneficial Owners do not unreasonably deny access to the Recognised Body’s services to potential clients who can not reasonably be expected to produce detailed evidence of identity.

6. A Recognised Body must:-

(a) appoint a Nominated Officer with responsibility to receive suspicion

reports and make reports to SOCA; (b) appoint a senior manager (who may or may not be the Nominated

Officer) with responsibility for ensuring the Recognised Body’s compliance with AML/CTF and this Guidance Note;

(c) ensure that the Nominated Officer or senior manager has an

appropriate level of authority and independence within the Recognised Body, and access to resources and information sufficient to enable him to carry out that responsibility.

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GUIDANCE NOTE 11

DEALING WITH UNQUALIFIED THIRD PARTIES Issue 2


30 March 2009

This Guidance Note came into force on 31 March 2009

This Guidance Note supersedes Guidance Note 11 – Dealing with Unqualified Third Parties issued by the Council on 19 July 2006 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason for not doing

so in the particular circumstances;


Rule 4.1 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must:- 4.1.2 act with reasonable care, skill and diligence;” Rule 5.1 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must:-

5.1.1 at all times keep paramount the interests of the client except as

required by law or by the Council’s Rules;”


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“Recognised Body” includes, where the context permits, any Manager (including

a Licensed Conveyancer who is a Manager) or employee acting for the Recognised Body.

The Effect of s.22 Solicitors Act 1974 1. Section 22 Solicitors Act 1974 makes it an offence for an unqualified person to draw or

prepare a contract for sale or a transfer, conveyance, lease or mortgage relating to land in expectation of fee, gain or reward. Qualified persons under this section are solicitors, barristers, notaries public, Licensed Conveyancers, some public officers and, for unregistered conveyancing, Scottish solicitors.

2. Unless the drawing or the preparation of the relevant documents is undertaken by a

qualified person, an unqualified person who undertakes a conveyancing transaction in the course of a conveyancing business will commit an offence under s.22. In such circumstances, the unqualified conveyancer’s client is likely to be guilty of aiding and abetting the offence. The Licensed Conveyancer acting for the other party may also be guilty of procuring the commission of an offence by inviting or urging the unqualified person to provide a draft contract or transfer or to progress the transaction.

3. A Recognised Body should therefore refuse to have any dealings with any unqualified

person carrying on a conveyancing business unless there is clear evidence that offences under s.22 will not be committed.

Recommended Procedure 4. A Recognised Body should first check with the Law Society or the Council for Licensed

Conveyancers whether a person is a solicitor or a licensed conveyancer, as required by paragraphs A3.2 and B3.2 of the CML Handbook, or is otherwise exempt from the provisions of s.22 Solicitors Act 1974.

5. If it is unable to obtain that confirmation the Recognised Body should write immediately:- (a) to the unqualified conveyancer:- (i) asking for an explanation why the prohibition under s.22 does not apply to

him; and (ii) stating that in the absence of such explanation the Recognised Body can not

enter into any dealings with him unless there is clear evidence that no offences will be committed. An example of clear evidence would be a letter from a qualified person confirming that he will prepare the relevant documents;

(b) to its own client explaining why it cannot deal with the unqualified conveyancer

unless clear evidence is forthcoming. 6. A Recognised Body asked to report to the Council (without submitting its file) where there

appears to be or to have been a breach of s.22 Solicitors Act. Dealing with Unqualified Third Persons Definition 7. Unqualified Third

Persons: persons who are not authorised by statute to provide conveyancing services for reward or persons acting on their

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own behalf. Generally 8. A Recognised Body should:- (a) be alert to the line of decisions starting with Hedley Byrne v Heller [1964] AC 465,

which extends the duty of care owed by a legal adviser (in this case, a Recognised Body) to persons who are not clients but who, to its knowledge, rely and act on the legal adviser’s advice;

(b) never accept any undertaking which an Unqualified Third Person may offer in the

course of a transaction as it is not enforceable in the same way as an undertaking given by a Recognised Body or solicitor;

(c) decide in each case which special provisions should be incorporated into the draft

contract to take account of the problems which arise because the other party has no qualified person acting (see below);

(d) ensure that any power of attorney is valid, properly granted and effective for all

relevant purposes; (e) advise the client in writing that the Recognised Body is dealing with an Unqualified

Third Person and explain all the steps which are being taken to protect the client’s position.

Acting for the Buyer 9. The Recognised Body should consider the following and, if appropriate, amend the

contract:- (a) replies to the Property Information Questionnaire and all other preliminary enquiries

and requisitions must be signed by the seller; (b) the deposit must be paid to the buyer’s Recognised Body as stakeholder. If the seller

will not agree to this, it may be possible to agree to place the deposit in a deposit account in the joint names of the buyer’s Recognised Body and the seller, or in a deposit account in the seller’s name, with the deposit receipt retained by the buyer’s Recognised Body;

(c) either the seller must attend personally at completion, or an authority must be

handed over on completion signed by the seller for the purchase money to be paid to his agent. The reason for this is that the protection provided by s. 69 Law of Property Act 1925 only applies when a document containing a receipt for purchase money is handed over by a Recognised Body or solicitor, or the seller himself;

(d) deeds and keys are given to the person entitled to receive them (the buyer). If an

authority on behalf of the buyer is offered to the seller’s Recognised Body, it is for the Recognised Body to decide whether or not to accept it, bearing in mind that no authority, however expressed, can be irrevocable.

(e) The purchase money, including any deposit, is paid either to the seller or to the

seller’s properly authorised agent. Acting for the Lender 10. Whilst the client’s interests remain paramount, the Recognised Body must ensure that it

does not give the unqualified agent additional assistance in a way which might establish a Recognised Body/client relationship either with the Unqualified Third Person or with the

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borrower, or leave the Recognised Body open to a negligence claim either from the Recognised Body’s lender client or from the borrower.

11. The lender’s Recognised Body is not obliged to undertake work which would normally be

carried out by the borrower’s legal adviser (such as drafting and preparation of the instrument of transfer). However, it is essential to the lender client that good title is transferred to the borrower.

12. In order that there is compliance with s. 69 Law of Property Act 1925, the Recognised Body

should insist that mortgage advances are paid only to those properly entitled to receive them by requiring either that the borrower attends personally on completion, or that a signed authority from the borrower in favour of his agent is received on completion .

13. On completion, any CHAPs payments should be sent to a named bank or building society

account held by the Recognised Body or solicitor or their clients, and not to some intermediate party. The title documents should normally be handed over to the borrower personally, unless he provides a valid authority for them to be handed to a third party.

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GUIDANCE NOTE 12

HOME INFORMATION PACKS Issue 2


30 March 2009

This Guidance Note comes into force on 6 April 2009

This Guidance Note supersedes Guidance Note 12 – Home Information Packs issued by the Council on 29 March 2007 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.1 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must

4.1.1 act with integrity and honesty ;

4.1.2 act with reasonable care, skill and diligence;

4.1.3 not take, and must not permit anyone on his behalf to

take, any action which may bring disrepute to the profession;

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“A Licensed Conveyancer must:-

5.1.1 at all times keep paramount the interests of the Client

except as required by law or by the Council’s Rules;

5.1.2 keep confidential all information about the Client except as authorised by the Client or as required by law or the Council’s Rules;

5.1.3 not accept instructions from a person nor continue to

act for any Client whose interests conflict directly or indirectly with his own or those of the Recognised Body, or with those of any other Client;”

Rule 5.2 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer, in the provision of Regulated Services, must:- 5.2.1

except as permitted in guidance issued by the Council, act only for one Client in a matter unless each Client is informed in writing in advance that the Recognised Body has been asked to act for another Client; each Client is at all times represented by different Qualified Persons and those Qualified Persons conduct themselves in the matter as though they were members of different entities;

5.2.6 only seek to exclude or limit liability with the informed written consent of the Client;

5.2.8 disclose to a Client in writing, as soon as they are known to the Licensed Conveyancer, the existence and amount of any sum payable by or to the Licensed Conveyancer arising, whether directly or indirectly, from the Client’s instructions;”


”HIP” Home Information Pack

"the provision of the legal component of a

the provision of that part of the HIP which could reasonably be regarded as the provision of

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HIP” conveyancing services or services ancillary to the provision of conveyancing services as defined by s.11(3) Administration of Justice Act 1985.

1. The Council is satisfied that the provision of the legal component of a HIP (as defined) by a Recognised Body is an activity regulated by the Council.

2. At the outset of instructions the Recognised Body must identify the client to

whom it is delivering conveyancing services to determine the extent to which the Council’s Rules apply. For example, where it provides a HIP direct to a seller, the seller will be the client of the Recognised Body and the Council’s Rules apply in full.

3. The Recognised Body must satisfy itself that no conflict of interest arises in

acting for both a seller client and a HIPs provider concurrently. It should consider carefully the terms of any agreement entered into with a HIPs provider and satisfy itself that they do not conflict with the interests of a seller client. In particular, it should also satisfy itself that there is no conflict of interest as between itself and the seller client.

4. The Recognised Body may act for a buyer where a HIP has been provided to

the seller provided it is satisfied that it does not hold confidential information about the seller and/or the property which is material to the particular transaction.

5. The Recognised Body must ensure that, where applicable, the existence of any

referral arrangement as between it and the HIPs provider and any sum payable in respect of such referral arrangement is disclosed to the Client in writing.

6. Provided no conflict arises and provided it complies with the Conduct Rules

2005 the Recognised Body may act for the buyer, seller and HIP provider in respect of a conveyancing transaction.

7. Further information issued by the Government is accessible at

http://www.direct.gov.uk/en/index.htm by searching for “Home Information Packs”.

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GUIDANCE NOTE 13 ACTING FOR LENDERS

Issue 2



This Guidance Note supersedes Guidance Note 13 – Acting for Lenders issued by the Council on 18 October 2007 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason



Rule 4.1 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must 4.1.1 act with integrity and honesty 4.1.2 act with reasonable care, skill and diligence;” Rule 4.4 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must when offering or providing Regulated Services through a Recognised Body:

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4.4.6 not conduct himself in a manner which he knows or has reasonable grounds for suspecting will result in a breach by the Licensed Conveyancer of the law or of the Council’s Rules;

4.4.7 comply fully with any undertaking given by him, the

Recognised Body or any employee of that Recognised Body;”

Rule 4.6 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Recognised Body must: 4.6.2 ensure all Regulated Services are either carried out by or

effectively supervised and directed by a Qualified Person.” This Guidance Note adopts the definitions set out in the Licensed Conveyancers’ Conduct Rules 2009. “Recognised Body” includes, where the context permits, any Manager


This Guidance Note should be read in conjunction with Guidance Note 14 - Mortgage Fraud

General Principles 1. When acting for a Lender, a Recognised Body must take all necessary steps to

ensure that the conveyancing services provided by it and by everyone working within the Recognised Body do not fall below the standard expected of a reasonably competent conveyancer.

2. Where these apply, a Recognised Body should take all relevant steps to

comply with the general and particular mortgage instructions contained in current edition of Parts 1 & 2 of the Lenders’ Handbook for England & Wales issued by the Council of Mortgage Lenders ("the CML Handbook").

3. If it suspects a client of not being completely honest or transparent about any

element of a proposed mortgage transaction, a Recognised Body must consider whether it should continue to act for the Lender and/or the client.

4. A Recognised Body’s duty of confidentiality prevents it from disclosing

confidential information to the Lender after it has ceased to act for a client. Identity of the Client 5. A Recognised Body must always establish and obtain proof of the identity of its

clients in line with the requirements of the CML Handbook and the Money Laundering Regulations ("the Regulations") and obtain proof of that identity and advise the Lender if a Borrower client is unable, reluctant or unwilling to provide this verification.

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6. Clause 3B3.3 of Part 1 of the CML Handbook prescribes requirements for

safeguards and identity checks.

Checking Identity by Documentary Means 7. The identity of a Borrower can be verified by checking his identity against

appropriate original documents produced to a Recognised Body which appear to be authentic, are current and, where applicable, have been signed in the relevant place. A document or a series of documents meeting the expectations contained in Clause 3A3.3 of Part 1 of the CML Handbook is likely to satisfy the Lender's requirements.

8. Care must always be taken to ensure that the extent of the evidence seen will

also meet the Recognised Body's obligations for client identity verification under the Regulations and the expectations contained in the Council's Guidance for the Prevention of Money Laundering and Combating Terrorist Financing ("the CLC Guidance").

Checking Identity by Electronic Means 9. The CLC Guidance has been updated to give guidance for making some

identification checks electronically. 10. A Recognised Body must obtain "satisfactory evidence of identity", which must

be reasonably capable of establishing (and does in fact establish to the satisfaction of the person who obtains it) that the potential client is the person he claims to be. The Council considers that verifying identity by appropriate electronic means is now acceptable. However, they should still be relied on with caution.

11. Any system or product used must be sufficiently robust to provide the

necessary degree of certainty by using data from a range of multiple sources, and across time, or must incorporate qualitative checks that assess the strength of the information supplied. The evidence base and level of verification must be composite and comprehensive. Data accessed from a single source (e.g. the Electoral Roll) will not normally be sufficient on its own. Some databases will offer a higher degree of confidence than others.

12. Before using a commercial agency for electronic verification, a Recognised

Body must be satisfied that:- 12.1 the information supplied by the data provider is considered to be

sufficiently extensive, reliable and accurate; and 12.2 the agency has processes which allow its users to capture and store the

information that they have used to verify an identity. 13. Electronic evidence obtained should provide a strong level of certainty that any

individual is the person he claims to be and that a person of that name lives at the address given using the client's full name, address and date of birth as its basis.

14. The process needs to be cumulative and the Recognised Body may consider it

appropriate to seek additional evidence (eg a copy of a document bearing a

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signature and a date of birth) in all cases or, at least, where any client poses a higher risk of identity fraud, money laundering or terrorist financing or where the result of any electronic verification check gives rise to concern or uncertainty over the client’s identity.

15 The Recognised Body may wish to consider whether the provider meets each

of the following criteria, namely that it:-

15.1 is recognised to store personal data through registration with the Information Commissioner’s Office;

15.2 uses a range of positive information sources that can be called upon to

link an applicant to both current and previous circumstances; 15.3 accesses negative information sources such as databases relating to

identity fraud and deceased persons; 15.4 accesses a wide range of alert data sources; and 15.5 has transparent processes that enable a Recognised Body to know

what checks were carried out, what the results of these checks were and what they mean in terms of how much certainty they give as to the identity of the subject of the identity enquiry.

Data from more robust sources where inclusion is based on proof of identity (such as government departments) ought to be included (under paragraph 15.2). Negative information checks (under paragraph 15.3) minimise the risk of impersonation fraud.

16. It is also important for:-

16.1 the process of electronic verification to meet a standard level of confirmation before it can be relied on. In circumstances which do not give rise to concern or uncertainty, the standard level would be expected to be

(i) one match on an individual’s full name and current address and (ii) a second match on an individual’s full name and either his current

address or his date of birth. If the result of a standard verification check gives rise to concern or

uncertainty over the client's identity, the number of matches required to provide reasonable satisfaction as to his identity should increase.

16.2 a Recognised Body should ensure that it understands the basis of the

system that it uses in order to be satisfied that the sources of the underlying data reflect the guidance and cumulatively meet the standard level of confirmation set out above as commercial agencies use various methods of displaying results (e.g. by the number of documents checked or through scoring mechanisms, etc).

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Identity of the Property

17. A Recognised Body should be certain that it has correctly identified the property which is to be mortgaged and that the documents of title with which it has been presented accurately relate to and reflect that property, particularly where its name or its boundaries or other significant features have been changed.

Transactional Considerations 18. In registered title property transactions, Official Copies of the title and a copy of

the Official Plan produced by the Land Registry must always be obtained.

18.1 Whether acting for a Seller or Buyer, those Official Copies and Official Plan should always be carefully checked to ensure that no additional charges have been registered.

18.2 When acting for a Seller, it is particularly important to check the Title

Entries on receipt from the Land Registry and before issue to the Buyer’s conveyancer or including them or allowing them to be included in a Home Information Pack to ensure that any additional charges are noted and addressed at the outset to avoid causing problems in discharging undertakings.

19. In unregistered title property transactions, it is good practice both when acting

for a Seller or a Buyer to make a Land Charges Search at the outset of the transaction to ascertain any entries details of which have not been supplied by the clients or are not revealed in the Abstract or Epitome of Title.

20. A Recognised Body must never complete a mortgage transaction without first

obtaining the results of Land Registry, Land Charges or Company Searches, as appropriate. 20.1 For a registered title, the date from which the Land Registry search

should be made is the date of issue of the Official Copies supplied or obtained at the outset of the transaction and the search should be made in the registered name of the Lender (and not its trading name) to avoid any conflict of priorities.

20.2 For unregistered land, searches must be made against all names and

any variations on those names on the title documentation and, where an address has changed, a search should be made against any former address and/or counties.

20.3 For unregistered land, an Index Map Search must always be undertaken

to ensure that the extent of the land to be conveyed is consistent with the title documentation and the Borrower’s understanding.

21. A Recognised Body must always carry out a Bankruptcy Search (which must

be current at completion) in the registered names of and any other names used by a Borrower or by which he is otherwise known.

21.1 Where an entry is revealed against the name of the Borrower (or the

mortgagor or guarantor) the Recognised Body must certify that the entry does not relate to the Borrower (or the mortgagor or guarantor) if it is

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able to do so from its own knowledge (paragraph 5.12.2.1 CML Handbook) or make a report to the Lender.

21.2 A search must be made against the names of all parties to any deed of

gift or transaction at an apparent undervalue (paragraph 5.12.3 CML Handbook).

22. A mortgage for a registered title must be completed and the application for

registration at the Land Registry lodged before the end of the priority period provided by his Land Registry Search. Any search application to create a fresh priority must be made in sufficient time before the expiry of the existing priority period to enable a substantive application to be lodged within the existing priority period if another "hostile" application is revealed.

23. When completing a mortgage over an unregistered title, a Recognised Body

must complete within the priority period provided by the Land Charges Searches. The application for registration at the Land Registry must be lodged within 2 months of the date of completion.

24. Where the Borrower is a Company the charge must be registered at

Companies House within 21 days, which period may only be extended by order of the Court.

Mortgage Redemption 25. To ensure compliance with the Council’s Guidance Note 2 - Undertakings and

with Clause 17 of Part 1 of the CML Handbook, a Recognised Body must:- 25.1 ask a client at the outset of any sale or remortgage transaction whether

there are any mortgages secured against the property and, if so, obtain details (including relevant mortgage account numbers);

25.2 specifically ask those clients whether, in addition to the principal

mortgage account, they have any other loans with different account numbers with the same Lender (which may be secured against the property) or any other mortgages with any other Lenders and, if so, obtain details (including relevant mortgage account numbers);

25.3 request an illustrative redemption statement from the Lender at the

outset of the transaction giving details of mortgage account numbers, and verify the outstanding amount(s) shown on those statements with his clients;

25.4 when obtaining either an illustrative or a final redemption figure from a

Lender, request a statement of the total amount required to redeem all loans and monies secured by the Lender's charge over the property. Failure to ask for details of all loans and monies secured by the Lender may mean that the redemption figure will only relate to those accounts where details have been provided;

25.5 ensure that any discharge undertaking given meets the requirements of

Paragraph 10(i) of Guidance Note 2 - Undertakings.

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Mortgage Instructions 26. A Recognised Body must always:-

26.1 check the Lender's mortgage offer and instructions carefully and ensure that that they match the details of the transaction exactly or otherwise report any discrepancies to the Lender, having first obtained instructions from his Borrower client so to do or, if the client refuses to consent, to cease acting for the Lender;

26.2 question and clarify any unusual or uncertain instructions before

proceeding;

26.3 cease to act for the Lender if his interests or the interests of anyone working within the Recognised Body or the interests of the Borrower come into conflict with those of the Lender; and

26.4 take note and act upon of Guidance Note 14 - Mortgage Fraud.

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GUIDANCE NOTE 14 MORTGAGE FRAUD

Issue 2

Issued by the Council for Licensed Conveyancers on 30 March 2009


This Guidance Note supersedes Guidance Note 14 – Mortgage Fraud issued by the Council on 18 October 2007 which ceased to have effect on 31 March 2009. Licensed Conveyancers, Managers and Recognised Bodies must at all times act in compliance with the Council’s Rules in so far as they are applicable. In particular, Rule 3.2 of the Licensed Conveyancers’ Conduct Rules 2009 provides:- “A Licensed Conveyancer must: 3.2.1 comply with the Guidance Notes unless he has good reason for

not doing so in the particular circumstances;


Rule 4.1 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must 4.1.1 act with integrity and honesty 4.1.2 act with reasonable care, skill and diligence; 4.1.3 not take, and must not permit anyone on his behalf to take, any

action which may bring disrepute to the profession;” Rule 4.4 of the Licensed Conveyancers’ Conduct Rules 2009 states:- “A Licensed Conveyancer must when offering or providing Regulated Services through a Recognised Body:

2

4.4.6 not conduct himself in a manner which he knows or has

reasonable grounds for suspecting will result in a breach by the Licensed Conveyancer of the law or of the Council’s Rules;

4.4.7 comply fully with any undertaking given by him, the

Recognised Body or any employee of that Recognised Body; 4.4.8 never give false or misleading information relating to the

provision of Regulated Services to any person;” This Guidance Note adopts the definitions set out in the Licensed Conveyancers’ Conduct Rules 2009.

This Guidance Note should be read in conjunction with Guidance Note 13 – Acting for Lenders

“Recognised Body” includes, where the context permits, any Manager


General Information 1. A Recognised Body must be alert to the possibility of mortgage fraud to protect its

clients, themselves and the legal profession. Mortgage fraud may be perpetrated by one or more participants in a mortgage loan transaction, including the Borrower, or by multiple parties (a mortgage fraud ring) working dishonestly together (and often in a professional capacity).

2. Mortgage fraud is a criminal offence which can often result in imprisonment on

conviction. Some conveyancers have been caught up unwittingly in a mortgage fraud, not because of any wilfully fraudulent acts on their part but because they have failed to act in accordance with good practice. They have neglected to check all details of the transaction and have failed where appropriate to report to the Lender for whom they are also acting. They have not appreciated that the circumstances of the transaction might lead to or give rise to fraud.

3. Proceeds of mortgage fraud are criminal property. A conveyancer who assists in

such a fraud will facilitate the acquisition, retention, use or control of criminal property contrary to s.328 of the Proceeds of Crime Act 2002. He may also aid and abet a fraud or be complicit in a conspiracy to defraud.

4. The Recognised Body must have appropriate Anti-Money Laundering and

Combating Terrorist Financing procedures in place as required by the current CLC Guidance. Mortgage fraud is likely to require a report to be made to the Serious Organised Crime Agency.

5. Any attempt to deceive a Lender may expose the Recognised Body or conveyancer to civil action (e.g. breach of contract, breach of trust or negligence) and/or to disciplinary proceedings.

6. A Recognised Body must cease to act for any client immediately in any

circumstances where it is aware or suspects that the client is attempting to perpetrate fraud. If it decides to terminate his retainer, it should observe the

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requirements of Rule 5.3 of the Licensed Conveyancers’ Conduct Rules 2009 unless to do so would constitute a "tipping off" offence under the Proceeds of Crime Act 2002 or the Terrorism Act 2000.

7. A Recognised Body’s duty of confidentiality to its client continues after it has

ceased to act for that client except where

a. a court orders such matters to be disclosed, b. a warrant permits a police officer or other authority to seize confidential

documents, or c. there is compelling evidence that the client was using its services to

further a criminal or fraudulent purpose, in which case disclosure should be made to the police.

Identity of the Client and Client's Circumstances

7. A Recognised Body should always:-

7.1 establish the identity of its client in line with the relevant guidance issued by the Council and the current Money Laundering Regulations and obtain proof of that identity to establish that a client is who he says he is and that he lives at the address given;

7.2 advise the Lender if, in any case, a client is unable, reluctant or unwilling to provide this verification;

7.3 identify all the other owners of the property and other persons who might have an interest in or rights over the property (if any) and ensure that the client's current co-owner/partner is, where applicable, the co-owner/partner referred to on the title of the property;

7.4 obtain confirmation of instructions direct from the client (and from all other interested parties) wherever possible, particularly where he or they communicate through an intermediary and

(i) obtain detailed instructions ; (ii) satisfy itself that the client is not subject to duress or undue

influence and (iii) satisfy itself that the client is entering into the transaction

knowingly;

7.5 be satisfied that the client's economic position, wealth and lifestyle correspond with the mortgage that he is proposing to enter into and there are no facts which suggest the potential for mortgage fraud (e.g. that he has not overstated his income in the mortgage application or that he does not have substantial arrears on an existing mortgage account); and

7.6 check all signatures to reduce any risk of forgery of the signatures of other interested parties (e.g. a husband who forges his wife's signature).

Linked Parties 8. A Recognised Body must always be careful if:-

8.1 there appear to be links between a Buyer and Seller; or

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8.2 the Recognised Body is acting for both parties; or 8.3 the Seller is a private company or the Seller has recently purchased from a

private company and the names and addresses of the officers and shareholders of the company appear to be connected with the transaction, the Seller or Buyer.

Linked Transactions 8. A Recognised Body must notify the Lender of any sub-sale or back-to-back

element in any transaction and ensure that the Lender's written consent is held before proceeding, having first obtained its client's instructions so to notify the Lender. If the client refuses to consent to that disclosure, the Recognised Body must cease acting for the client and the Lender.

Identity of the other lawyers 10. A Recognised Body must check the identity of the Licensed Conveyancers or

Solicitors acting for the other party to the transaction by reference to the Council or the Records Department of the Law Society of England & Wales respectively.

Proceeds of Sale 11. A Recognised Body must pay particular attention to instructions given for the

distribution of the net proceeds of a sale or remortgage.

11.1 If the property or the mortgage is held in joint names, the net proceeds of sale must normally be sent to an account in the joint names of all clients or a cheque must be written to all parties jointly.

11.2 The net proceeds must be sent to all the parties except as otherwise

instructed by all the parties in writing. Variations in Price, Incentives and other Material Considerations 12. When acting for a Buyer and a Lender, a Recognised Body must with its client's

consent, notify a Lender immediately where:-

12.1 there is an alteration to the purchase price or the details are different from the details set out in the mortgage offer (other than as permitted by the Lender).

12.2 it becomes aware of any other information which it would reasonably expect

the Lender to consider important in deciding whether, or on what terms, it would make the mortgage advance available to the Buyer.

13. In that context. a Recognised Body must check whether:-

13.1 the contract papers have incomplete or missing dates, incorrect

descriptions or any sections (particularly the price) which have been left blank;

13.2 the price shown in the Contract and Transfer documentation differs from the

amount actually being paid for the property;

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13.3 any fixtures and fittings included in the purchase price materially reduce the value of the property;

13.4 the Seller is offering the Buyer any incentive(s) to buy the property unless

these clearly fall within a Part 2 CML Handbook dispensation given by the Lender concerned;

13.5 any allowances are made or any other sum is being set-off against the

money payable by the Buyer to the Seller (e.g. for repairs to the property): 13.6 the Buyer proposes to pay or has apparently paid a deposit direct to the

Seller (except for a nominal reservation fee); or 13.7 there is anything else that affects the price of the property or the amount

actually being paid for the property, however small; .

. and must report any such matters fully to the Lender with the consent of the client. The Recognised Body must not complete the mortgage until the Lender has confirmed that it is happy to proceed and, if applicable, the terms upon which it is willing so to do.

14. It is inadvisable for the Recognised Body to determine whether any change is

material. It must make a report to the Lender with the client’s consent. It is good practice to advise clients at an early stage that

(i) it would be regarded as fraud to misrepresent the purchase price or the

existence of any incentives and inducements; and (ii) a Recognised Body is under a duty to inform a Lender of the true or

underlying price actually being paid for a property. 15. A Recognised Body must establish and maintain proper systems, procedures,

processes and internal controls for approval of Certificates of Title prior to submission to the Lender.

16. A Recognised Body must remain mindful of its duty to act in the best interests of

the Lender as its client, and:-. 16.1 if to do so will require it to pass on or report any such information to the

Lender but the Borrower client declines consent to its disclosure, a conflict of interest will arise between the duty of confidentiality to the Borrower client and the duty to act in the best interests of the Lender and it must therefore cease to act for the Lender and consider carefully whether it can continue to act for the Buyer, but the safest course of action for the Recognised Body to adopt may be to cease to act for both the Lender and the Borrower client.

16.3 where it ceases to act for the Lender in such circumstances, the

Recognised Body should return the mortgage instructions to the Lender merely stating that they are returned because of a conflict of interests without giving any further explanation.

Valuations 17. It is good practice for a Recognised Body to check any valuation supplied by the

Lender to check that this is not

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17.1 higher than the actual price being paid for the property or higher than might be expected for a property of that type in the location in which it is situated; or

17.2 considerably higher than the price paid for the property on any earlier sale

or disposal within the last 12 months, taking into account any subsequent inflation or deflation in property prices since the date of that sale or disposal.

18. A Recognised Body is not a valuation expert and cannot be expected to advise on

the accuracy of a valuation. Nevertheless, a valuation which is patently out of line with the apparent value of a property may be a ground for a suspicion of fraud, particularly where there is a possibility or risk of complicity between prospective Borrowers and Valuers.

General 19. It is good practice to include a term in the Terms of Engagement permitting the

disclosure to Lenders of material facts relating to the property and the Borrower client.

20. A conveyancer must not witness any signature unless the person signing does so

in his presence. The conveyancer must ensure that any signed document which has been witnessed other than by him has been properly signed in the presence of a witness and verify the signatures of his clients (and any other interested parties) on all documents connected with a transaction by examination and comparison with signatures on any other available documentation.

Warning Signs

21. A Recognised Body should question unusual instructions and be particularly

circumspect if any one or more of the circumstances set out in the Appendix to this Guidance Note (“Summary of Warning Signs”) apply to a transaction where it is acting or if they become apparent as the transaction progresses. The list of circumstances outlined is not exhaustive but is provided as a guideline.

Any failure to take account of Warning Signs or to observe this guidance and to take appropriate steps may be used in court as evidence against a Recognised Body, Licensed Conveyancer or other Manager in criminal or civil proceedings

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APPENDIX

Summary of Warning Signs

Remote Client Where a client is introduced to a Recognised Body by a third party (e.g. a mortgage broker or an estate agent) who is not well known to the Licensed Conveyancer or the Recognised Body. Where a potential client wishing to instruct the Recognised Body for the first time does not live locally to the Recognised Body and has not been introduced by someone known to the Recognised Body and there is no obvious reason why he should place his instructions with the Recognised Body. Where a client will be using the services of the Recognised Body for the first time and persuades the Recognised Body to accept instructions from the other party or the other party instructs the Recognised Body

Secretive Client Client declines to be met or come to the office and/or uses an intermediary to communicate with the Recognised Body and/or asks the Recognised Body to contact him at his business or another address rather than at his home address. Client shares an address with one or more other parties to the transaction. Licensed Conveyancer suspects that a client is not being completely honest or transparent about any element of a proposed mortgage transaction.

Nominee Buyers

Instructions to purchase in or transfer a property into the name or names of nominees.

Fictitious Solicitor or Conveyancer A Solicitor or Licensed Conveyancer acting for another party who is not known to you or who is not registered with the Council for Licensed Conveyancers or the Law Society of England & Wales

Unusual instructions Instructions from a Seller to remit the net proceeds of a transaction to someone other than the Seller Any instructions from a Buyer or Seller which do not correspond with the normal type of instructions that a Licensed Conveyancer would expect to receive during the course of a standard residential or commercial conveyancing transaction

Transactions which do not follow their normal course or a usual pattern of events

Any transaction which is unusual insofar as it does not follow the normal course or pattern of a standard residential or commercial property transaction

Misrepresentation of the purchase price

The actual and true cash price to be paid is not the stated consideration in the contract and transfer and/or the price shown in the mortgage instructions and in the Certificate of Title submitted to the Lender.

Change to the purchase price

Adjustments to the purchase price, particularly in high percentage mortgage cases, or allowances off the purchase price, for example, for alleged works to be carried out.

A deposit or any part of a purchase price paid direct

A deposit or the difference between the mortgage advance and the price is paid direct or said to have been be paid direct, to the Seller.

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Incomplete Contract documentation;

Contract documents are not fully completed by the Seller’s representative, i.e. dates missing or the identity of the parties are not fully described or financial details are not fully stated.

Linked Parties Sale at an inflated price Roll-Over Fraud & Sub-sales

Sale at an inflated price to an individual by a company or other entity controlled or owned by him which may be a device designed to raise additional finance for the company or other entity and be linked to larger-scale frauds involving tax, improvement grants, etc. Sale by a Borrower to an associate at an inflated price (known as roll-over fraud) to enable the associate to obtain a higher mortgage. No repayments are made under the mortgage and before the Lender is able to repossess the property, it is sold to another associate for a higher price, and so on. A Buyer at one price instructs his conveyancer that he will be selling on to a third party at a higher price where the Sub-Buyer is either one and the same person as the Buyer or an associated person where the Seller may or may not also be a party to the fraud. The Sub-Buyer third party obtains a mortgage based on the sub-sale price and secures an immediate profit. The balance between the original sale price and the higher sub-sale price is never paid or is said to be paid by the Buyer to the Sub-buyer or is allegedly set-off by the Buyer against money owed to him by the Sub-Buyer. These transactions often feature a simultaneous exchange of contracts followed by a quick completion, leaving the Lender left with a property worth the original sale-price as security for a much higher loan. A derivative of this fraud occurs where a Seller grants a lease to a Buyer at a ground rent and the Buyer then assigns the lease to a Sub-Buyer at a premium to provide the Sub-Buyer with a legal interest over which he can then obtain a mortgage.

Unusual transactions Client has a current mortgage on two or more properties Client is using an alias Client is buying several properties from the same person or two or more persons using same conveyancer. Client is reselling property at a substantial profit for which no adequate explanation has been provided. Client does not intend to occupy property (unless Buy-to-Let mortgage offer issued).

Fraudulent Mortgage Application Size of mortgage sought by a client does not correspond with his apparent economic position and lifestyle. Unemployed Client and/or gift letter produced. Substantial arrears on an existing mortgage account.

clc guidance notes 1-14

Documents

england andor wales

recognised bodies

councils rules

guidance notes

recognised bodys intention

practising address

principal address

permanent fixed address