Fee for dealing with third party (mortgage lender's) solicitor

plassoy

Hi,

My wife and I currently just a few weeks away from completion on our first home. But I got a bit of a shock in the post this morning, when a letter from our solicitor asked for an additional £200+VAT because our mortgage lender used their own solicitors.

In our original quote of "potential fees" there is no mention of 3rd party fees. In fact, the quote there was a note at the bottom about being charged £150+VAT if our lender used our solicitor to act on their behalf.

As we knew the bank was using their own, we thought we didn't have to pay anything extra.

They've been useless from the start and I'm really struggling to see what "extra" work they've done to warrant any additional fees. For a start, when we signed up and paid the initial conveyancing fees, it took them over a week to send our "welcome pack" and formal quote.

There is a slight kicker though, in that when they did finally send through the initial documentation, they provided a list of "Additional Menu of Fees", which set out costs for over 90 different items such as transfering cash overseas, power of atterny, various types of deed costs, lease extensions etc. and I quote "Dealing with Third Party Lawyers (eg. matrimonial dispute) £200".

Can they still demand this fee, given that it's not mentioned in the quote and the whole "eg matrimonial dispute" makes it sound non-applicable to our circumstances?

Any advice appreciated!

davidmcn

Is the £200 the mortgage lenders' solicitors' fee, or your own solicitor charging an additional fee because the lender is separately represented? It's fairly normal for borrowers to have to pay the bank's legal costs (which would normally just be wrapped up in your own legal costs if you use the same solicitors).

G_M

plassoy wrote: »

Hi,



As we knew the bank was using their own, we thought we didn't have to pay anything extra.

Clearly you thought wrong.

Unless your mortgage deal specifically said that legal fees were paid by the lender, you will have to pay the fees.

Normally your solicitor would act for the lender as well as for you (hence their quote said £150 for this). Is there a reason why that did not happen? Is your solicior not on the lender's approved list? Did you ask or were you told?

But expecting it to be free was, I'm afraid, naive.

Kynthia

If this is the fee the lender is charging you then your solicitor is only collecting it on their behalf and it's not them you owe. Do you want to tell your lender that you aren't paying their legal fees?

kingstreet

It is the borrower's responsibility to check with their lender that the chosen solicitor is on the lender's panel.

If the solicitor is not on the panel, the borrower may;-

appoint a panel solicitor to act for him and the lender
or
use the non-panel firm to act for him, but the lender will instruct a panel solicitor to act for it, at the borrower's expense.

In this case, it would appear the borrower appointed a non-panel firm, the lender appointed a panel firm and the panel firm has sent its invoice to the borrower's solicitor for its costs to be included in the draft completion statement, as usual.

Responsibility for this falls squarely at the door of the borrower to establish which firm to use and what costs are payable and when.

plassoy

Thanks for all the responses everyone! I wasn't expecting to hear back so soon from so many.

To answer all your quesitons, no the fee is not the lender's fee. We have already paid that directly to the lender (HSBC). The reason was, as noted, that our solictor was not on their approved list.

So, in effect we're being charged twice. Once by the lender and again by our solicitor. Hence why I don't understand where this extra fee has come from.

Yorkie1

plassoy wrote: »

Thanks for all the responses everyone! I wasn't expecting to hear back so soon from so many.

To answer all your quesitons, no the fee is not the lender's fee. We have already paid that directly to the lender (HSBC). The reason was, as noted, that our solictor was not on their approved list.

So, in effect we're being charged twice. Once by the lender and again by our solicitor. Hence why I don't understand where this extra fee has come from.

What amount / fee do you think you're referring to in the bit I've emboldened?

I suspect that you've confused a different payment with what is going on here.

Have a look at this article - see the reference to option 3 at the bottom, which I suspect is the case for you.

http://www.lawsociety.org.uk/news/stories/hsbc-accepts-all-law-society-cqs-solicitors-to-conveyancing-panel/

kingstreet

Ah, it's a bit clearer now.

I have heard of firms charging more where HSBC is going to use its own panel solicitor, usually Countrywide.

This could be avoided by using a solicitor with the Law Society's CQS accreditation.

The end result of the two solicitor thing is the borrower pays the £192 for the privilege of Countrywide clomping all over the case, then they are effectively penalised by their own solicitor, who would probably prefer you to go elsewhere, hence the additional charge.

IMHO the solicitor should provide a quotation of fees and the minute any mention of HSBC is made, should have drawn the client's attention to the additional fee, to give them an opportunity to go elsewhere...

plassoy

Yorkie1 wrote: »

What amount / fee do you think you're referring to in the bit I've emboldened?

I suspect that you've confused a different payment with what is going on here.

Have a look at this article - see the reference to option 3 at the bottom, which I suspect is the case for you.

Option 3 is what happened to us, whereby we paid HSBC to work with out solicitor who is not on the list of managed panel firms or CQS members. Unfortunately, we had already paid the initial fees to our solicitor before we found out they were neither of those.

As I said, we paid that £160+VAT fee directly to HSBC.

What I don't understand is why our solicitor is charging us £200+VAT. Because HSBC are using their own solicitor and not ours? Then we would have had to pay £150+VAT as mentioned in my original post. So it's a catch 22. Additional fees that we were not told about when we first signed up with our solicitor, that we would have to pay regardless of how we set about purchasing the property.

I thought they had to be open about their fee structure? As those two fees were both applicable in one way or another, surely I should have been informed that I would have to pay one of those fees?

plassoy

kingstreet wrote: »

Ah, it's a bit clearer now.

I have heard of firms charging more where HSBC is going to use its own panel solicitor, usually Countrywide.

This could be avoided by using a solicitor with the Law Society's CQS accreditation.

The end result of the two solicitor thing is the borrower pays the £192 for the privilege of Countrywide clomping all over the case, then they are effectively penalised by their own solicitor, who would probably prefer you to go elsewhere, hence the additional charge.

IMHO the solicitor should provide a quotation of fees and the minute any mention of HSBC is made, should have drawn the client's attention to the additional fee, to give them an opportunity to go elsewhere...

You're spot on! Unfortunately, we had already signed up with our solicitor and paid the initial conveyancing fees before we had the final decision from the bank about lending to us. Otherwise we definitely would have gone with someone else.

I think what's made me so angry about the whole situation is that we were put into a catch 22 scenario. Pay a fee if our lender uses our solicitor or pay a fee if our lender doesn't user our solicitor. Which, if we had been informed about from the start, we could've made a decision based on knowing that. But I feel this fee has been sprung on us, despite our solicitor knowing the situation from the start and not informing us.

kingstreet

plassoy wrote: »

if we had been informed about from the start, we could've made a decision based on knowing that. But I feel this fee has been sprung on us, despite our solicitor knowing the situation from the start and not informing us.

And that is the basis for your complaint to the solicitor involved.