Does my solicitor have to disclose this?

TheCyclingProgrammer

Our lender (Coventry BS) did a basic mortgage valuation which came back fine and matched our offer price. No problems, we got the mortgage offer.

We have since had our own, private homebuyers report. This raised a range of issues, some minor, some that need rectifying, notably reported damp around the perimeter. We have a specialist damp survey being undertaken (see other thread about this).

The survey also valued the property at £6k under what we had offered.

Our surveyor was very good in talking through the survey with us. He stated that he had adjusted the value to account for the cost of remedial works, but also to give us some wiggle room when negotiating on price. In other words, the full cost of the works should be less than £6k but we have some leeway.

Our solicitor has now informed us that they are obliged to inform the lender of our private survey results and valuation and about the damp issue before we exchange. They don't seem to think it will impact the offer.

I'm concerned it will affect it so I dropped my mortgage broker an email. He has come back to me and said that he has never heard of a solicitor claiming they are bound to notify the lender of a private survey valuation figure and that the lender has already done their own valuation for their purposes. He's asked me to double-check with the solicitor which I have done and I have asked them for a reference in the CML handbook that says they must do this.

He's also pretty certain that they do not have to disclose the results of the damp report (if it was something like subsidence it would be different). He also said that if we had got a homebuyer report through the lender, they would still have only received the valuation report and that the rest of the survey is for our purposes alone.

So who is right here, our broker or the solicitor? I'd prefer not to disclose this if we don't have to - we intend to negotiate a reduction in price once we have the damp survey results but I'm still satisfied that the property is worth what we originally offered if it wasn't for the work that needs doing.

G_M

Are you using the same solicitor for conveyancing as the mortgage lender is using for the mortgage? The answer is probably yes (but not always).

If your solicitor is acting for the mortgage lender, he has a duy to that client to disclose any material facts that come his way. So yes, he should tell them if he feels it is relevant to them.

The solution of course, is not to send the private survey to your solicitor. What was the purpose of this? Other than to highlight the reduced value wich has to be passed on to the lender.......

TheCyclingProgrammer

Response from solicitor is as follows:

Regarding your latter message and the homebuyers survey, please note that we owe an obligation both to you and your lender under the CML. We are required to report any matters affecting the valuation of the property to your lender, who hold an interest in the property. This derives not only from the CML, but from case law also. As my colleague's message below states, we will require your consent to contact the lender in this regard.

Seems strange to me- on one hand they are "required" but they also need my consent?

I've asked what happens if I do not give consent.

EDIT: Predictably, the solicitor has stated they would no longer be able to act for us due to a conflict of interest. My broker is going to ask the lender the hypothetical question without referencing our file as he thinks its farcical that the lender would refer to a valuation not instructed by themselves over one they have instructed as it would never happen the other way around.

TheCyclingProgrammer

G_M wrote: »

The solution of course, is not to send the private survey to your solicitor. What was the purpose of this? Other than to highlight the reduced value wich has to be passed on to the lender.......

I guess, naively, I was trying to keep my solicitor informed.

G_M

TheCyclingProgrammer wrote: »

Response from solicitor is as follows:



Seems strange to me- on one hand they are "required" but they also need my consent?

I've asked what happens if I do not give consent.

The report is confidential. You sent it to the solicitor,thus implicitly giving the solicior consent to read it.

For the mortgage lender to have it, your consent is required.

So the solicior's duty of care to the lender requires him to send it, but his duty to respect the confidentaility of the report requires your consent.

Ain't the law luvverrrly!?

I guess if you deny consent, the solicitor will have a quandry. He'll either
* decide to be pragmatic, and ignore the report (hmm, unlikely)
* send it without your consent (again, unlikely)
* put pressure on you for consent (yup!)
* write some sort of report to the lender about information that has come into his possession but which he is unable to pass to them (and you know what their reaction to that will be....?)

TheCyclingProgrammer

G_M wrote: »

I guess if you deny consent, the solicitor will have a quandry. He'll either
* decide to be pragmatic, and ignore the report (hmm, unlikely)
* send it without your consent (again, unlikely)
* put pressure on you for consent (yup!)
* write some sort of report to the lender about information that has come into his possession but which he is unable to pass to them (and you know what their reaction to that will be....?)

Or final option, stop acting for us!

Anyway, my excellent broker has spoken to Coventry Building Society who were apparently, "completely bemused by the situation" and advised they hadn't come across it either.

They have confirmed to my broker the difference in valuation should make no difference but they may have to refer any information regarding the damp back to their own surveyor which will require 72 hours and there may be some delays if they need more information.

He has said the worst case scenario is a retention, so seems like things should be OK (we do have some emergency funds that should cover any retentions until the work is done if necessary). Our solicitors have agreed not to disclose anything until we have the damp report and quotes.

bris

The solicitor will withdraw due to conflict of interest without consent, the lender will pull the plug to investigate, nothing good will come from this.


a retention is only possible if the seller agrees, they might just pull the plug.

TheCyclingProgrammer

bris wrote: »

The solicitor will withdraw due to conflict of interest without consent, the lender will pull the plug to investigate, nothing good will come from this.


a retention is only possible if the seller agrees, they might just pull the plug.

Our mortgage broker seemed to think there wouldn't be a problem and he has spoken to the lender, so I'm not going to worry too much just yet.

I will give the solicitor consent when we are ready as it does seem like we have effectively no choice.

I know now not to ever share private surveys in the future!

Hoploz

On the other hand, you said you are likely to renegotiate the price once your damp survey comes back ... So it would all come out in the end anyway.

Thrugelmir

TheCyclingProgrammer wrote: »

Our mortgage broker seemed to think there wouldn't be a problem and he has spoken to the lender, so I'm not going to worry too much just yet.

I will give the solicitor consent when we are ready as it does seem like we have effectively no choice.

I know now not to ever share private surveys in the future!

Seems a lot of hot air over nothing. I would be more concerned personally with paying less for the property. Which in the natural course of events would reduce the mortgage offer anyway.

I doubt your mortgage broker is qualified in law nor knows the CML handbook inside out either.

Kynthia

I'm surprised your separate survey included a valuation. When I paid for a survey the surveyor deliberately didn't value the property because the lender's surveyor was already doing this. Now I can see what, as a second lower valuation could have caused issues.