How do you know if solicitor won't steal funds?

fkheng

Hi all,
I'm in the midst of trying to purchase a property. At some stage, I will have to transfer my deposit for the house to the solicitor, for initial transfer on date of contract exchange, and final transfer upon completion.

My questions are:
1) What legal provisions or assurance do house buyers have that lawyers will not run away with your money?
2) Is it compulsory under law to transfer funds to solicitors for a property purchase? Is this normal? Surely there should be some form of guidance on this, because I'm quite surprised that there is very little guidance when I try to search the Internet. I'm sure some Consumer Rights group must have dealt with this before, but I might have missed it.
3) If the worse happens, and lawyers run away, what kind of legal recourse is available, and is it possible to get all your money back?

Thank you. Will appreciate your advice.

fkheng

Troubled_Joe

The Solicitors Indemnity Fund (into which we all pay) will generally cover any losses incurred through dishonesty or the collapse of a practice.

princessamy86

It's very very unlikely that your solicitor will run away with your money, don't worry too much.

Gwhiz

Hi - people have been buying homes for years and transferring money to solicitors to do so for just as long.

There is protection from the Law Society but TBH you are worrying over nothing unless your solicitor is down some dark alley and called Stealit, Leggit and Run!

G_M

It is normal practice to transfer the funds to your solicitor. He is responsible for ensuring the funds are a) available/ready (and not drugs money) and b) transferred promptly on Exchange and Completion.

Solicitors have strict regulation. see here. Part of this is that clients money has to be kept separate from their own money (ie in a client account) so even if he goes bankrupt your cash is protected.

Of course in every walk of life there are crooks, and you might be unlucky, but you would have to be VERY unlucky to a) pick a crooked solicitor AND b) do so at precisely the time he chooses to clear his clients account and swan off to South America.
He would not do so just for the paltry sum you are giving him, only if he took all 200 / 500 clients he's dealing with, so don't imagine he's sitting there rubbing his hands with glee at the prospect of YOUR money.

And once he's done it, he'll never work as a solicitor again a) because he'll be disbarred and b) because if he comes back from S america he'll be in prison.

Chill out!

ps

Is it compulsory under law to transfer funds to solicitors for a property purchase?

Not compulsory under law but no solicitor will act for you unless they have the funds to carry out their duties.
The only alternative is to do the conveyancing yourself, and transfer the funds yourself direct to the vendor or vendor's solicitor. This is quite legal, and quite possible if you are clued up. However your post indicates to me that your knowledge of conveyancing is limited so I don't advise it!

Fire_Fox

Think of it this way, how much money would you need to retire to the Costa del Crime? They wouldn't ever be able to practice again, probably be sent to prison if they returned to the country, wouldn't be able to access any benefits/ NHS/ pension. Is your hundred grand or whatever going to be enough?

Edit: ha ha cross posted with GM! :cool:

LandyAndy

fkheng wrote: »

Hi all,
I'm in the midst of trying to purchase a property. At some stage, I will have to transfer my deposit for the house to the solicitor, for initial transfer on date of contract exchange, and final transfer upon completion.

My questions are:
1) What legal provisions or assurance do house buyers have that lawyers will not run away with your money?
2) Is it compulsory under law to transfer funds to solicitors for a property purchase? Is this normal? Surely there should be some form of guidance on this, because I'm quite surprised that there is very little guidance when I try to search the Internet. I'm sure some Consumer Rights group must have dealt with this before, but I might have missed it.
3) If the worse happens, and lawyers run away, what kind of legal recourse is available, and is it possible to get all your money back?

Thank you. Will appreciate your advice.

fkheng

If this is your biggest worry while trying to buy a house then you are very lucky indeed.

You are far more likely to win the lottery.

WestonDave

Relax.

Your money will be paid into a clients account which is legally seperated from the solicitors own business, so if the business gets into trouble creditors cannot get at your money. These client accounts are subject to specific auditing to ensure a whole list of safeguards are followed. If you are really really really bored then google Solicitors Accounts Rules!

In the very rare event of outright fraud (which is the only other possible problem) there is a compensation fund which will cover you, and practices are required to maintain professional indemnity insurance to cover you against negligent acts.

It would be very hard to perform exchange without your solicitor having cleared funds because as part of the process the solicitor has to given a legally binding undertaking to pass on the funds. No-one is going to make that commitment unless he/she has your money in their possession because if you fail to hand it over, they would be left high and dry. It is also a lot more efficient as solicitors mostly now have electronic access to bank systems which enable them to send guaranteed high value transactions instantly via the CHAPS system - there is no way that you could personally ensure that you got funds through to the other party by the completion deadline, as most banks will only promise normal customers to send the money by close of business on a given day. That isn't good enough for completion as it should be there by 1pm (or whatever time is in the contract)

There are plenty of parts of conveyancing that might be improved but the money transfer side of it is about as slick as it possibly can be and very few problems arise!

Sweetcaz_2

I was glad to see this post as we have just finally exhanged on our new house and I have to transfer alot of money across to my solicitor today.

I know it is all 99.9% safe but when you have never had that much money in your account before it feels quite scarey shipping off to an account number somewhere

Deep breath and off to the bank I go! :cool:

G_M

WestonDave wrote: »

Relax.

Your money will be paid into a clients account which is legally seperated from the solicitors own business, so if the business gets into trouble creditors cannot get at your money. These client accounts are subject to specific auditing to ensure a whole list of safeguards are followed. If you are really really really bored then google Solicitors Accounts Rules!

In the very rare event of outright fraud (which is the only other possible problem) there is a compensation fund which will cover you, and practices are required to maintain professional indemnity insurance to cover you against negligent acts.

It would be very hard to perform exchange without your solicitor having cleared funds because as part of the process the solicitor has to given a legally binding undertaking to pass on the funds. No-one is going to make that commitment unless he/she has your money in their possession because if you fail to hand it over, they would be left high and dry. It is also a lot more efficient as solicitors mostly now have electronic access to bank systems which enable them to send guaranteed high value transactions instantly via the CHAPS system - there is no way that you could personally ensure that you got funds through to the other party by the completion deadline, as most banks will only promise normal customers to send the money by close of business on a given day. That isn't good enough for completion as it should be there by 1pm (or whatever time is in the contract)

There are plenty of parts of conveyancing that might be improved but the money transfer side of it is about as slick as it possibly can be and very few problems arise!

I agree with all that except the last part. I've several times done my own conveyancing (both purchases and sales) and never had difficulty transferring/receiving funds in a timely fashion using standard CHAPS.