Mortgage company charging extra if you use small solicitors

pinkshoes

We wanted to use our local solicitor for our house purchase.

They informed us that some mortgage lenders won't deal with them (as they are small), and they'd have to incur (and charge us) an additional £150 approximately to go through a solicitor that could deal with the mortgage lender for certain bits of the process.

When going through the last bit of the mortgage application on the phone, the lender then informed me that I'd be charged £250 for using a solicitor not on their list!

Surely this in unfair competition?? e.g. I can only use my local solicitor if I cough up an extra £400.

The local solicitor are £200 cheaper than larger firms, but due to our chosen mortgage lender will now be £200 more expensive.

We have only just had an offer accepted a week ago, so I guess this means we will have to change solicitors. Is this easy to do?

Beckyy

Does your mortgage offer say anything about legal fees etc.?

Which lender is it?

kingstreet

A lender can insist on a panel solicitor acting for it. You would be expected to meet the cost of this.

Over the years, lenders have been willing to have the applicant's solicitor act for it as well as for the applicant, as long as the solicitor was capable of panel membership. In HSBC's case the solicitor has to be CQS accredited.

So, if your chosen firm isn't on the lender's panel, you end up with a solicitor representing the lender and another firm acting for the borrower, at the borrower's expense. This should be avoided as the hassle reported on here on such cases has never been pretty.

Senior_Paper_Monitor

Changing Solicitors (at the stage you are at) is easy.


It appears that no-one is giving you a straightforward answer/definition here (edited to say: I didn't mean 'here' as it the site , particularly Kingstreet's shorter and faster typed reply - but in the circumstances you find yourself) - so I will try.


Standard conveyancing transactions (fairly uniquely - because it is uncontested and both client parties sit on one side of the transaction i.e buying) permit the solicitor to jointly represent the purchaser and the lender.


In order to protect themselves all lender's operate an approval system for who is going to represent them (known as their panel) - qualification requirements vary (some as high as four partners which trips over many applications).


At the end of the day the market is moving against 'small firms' (primarily because it is understandably perceived that they cannot maintain the appropriate internal checks/controls that the lenders deem necessary).


To put this in perspective - we have just had a deal require new solicitors at the last moment because the (client appointed) 1 solicitor firm has just closed (2 weeks after we reported that their phone number was unobtainable and website disappeared to the SRA/Law Society) following the sole partner's bankruptcy a few months ago and the company's unannounced office closure (and subsequent SRA intervention).


Speaking regularly with our long term (approaching 10 years) recommended conveyancing solicitor, he is of the view that continuing amalgamation of firms to meet compliance and PI conditions is unavoidable - hopefully avoiding cloning into the 'conveyancing factories' that we mutually abhor.


Even the larger firms occasionally have a gap in their panels approvals - but most (and the proactive smaller ones) have 'established relationships' with other firms who will enable them to provide joint representation when this occurs without huge (if any) cost penalties arising.


There are some exceptions (primarily in the adverse market) but most lenders accept a surprisingly large panel of solicitors to represent them.


If your chosen solicitor hasn't set up joint representation arrangements to protect their panel shortfalls then it will cost you fairly heavily (and potentially delay the process as a result of introducing a further party into the equation) to have dual representation with the lender appointing their own legal representation (inevitably one of the 'conveyancing factories' with the associated service levels).

amnblog

Many lenders have considerably reduced the size of their panels (list of lenders they will work with) in recent years.

Small solicitors are often not acceptable to lenders, particularly if they are not QCS registered or have less than 4 partners.

The ever increasing cost of regulation means the solicitor would rather to do hundreds of cases with a dozen solicitors than a dozen cases with hundreds of solicitors - many of which do not do regular business.

Borrowers should always check at outset that your intended solicitor is on your proposed lenders panel.

pinkshoes

Thank you for the answers! That makes a lot more sense now. We shall find. Solicitor that is on their list to make life easier!

The lender is the Post Office.

christologymum

We had this recently. The solicitor we appointed and had started working for us wasn't on aldermores panel, so cost us an extra £360 for them to appoint their own solicitor. All that happened was our solicitor had to send all the work they had done to their solicitor just to check, which was pretty straight forward I believe. Our solicitor didn't charge us any extra for the hassle. On day of completion the money didn't go to our solicitor but the banks. They weren't on aldermores panel due to the amount of partners they have.

It still worked out cheaper in the long run as our solicitor was way cheaper plus we got £200 back from estate agent for using their approved solicitor. Plus they were local so I used to pop in to get (annoy them) an update regularly.

amnblog

So the estate agents referred you to a solicitor that was not on the lenders panel.

One to watch.

stator

pinkshoes wrote: »

Thank you for the answers! That makes a lot more sense now. We shall find. Solicitor that is on their list to make life easier!

The lender is the Post Office.

I don't think Post Office / Bank of Ireland have particularly troublesome requirements. All my local solicitors were on their panel (or at least they said they were)

pinkshoes

stator wrote: »

I don't think Post Office / Bank of Ireland have particularly troublesome requirements. All my local solicitors were on their panel (or at least they said they were)

Having spoken to the post office again (who can't give me a list of local solicitors who are on their panel, as that would be recommending solicitors...), they have now said that our local solicitor can probably be added to their panel, so hopefully this will be fine...

amnblog wrote: »

So the estate agents referred you to a solicitor that was not on the lenders panel.

One to watch.

The EA didn't recommend any solicitors as we already had one that we used for selling both our properties, of which the sales have already completed.

We like this local solicitor as we can just drop documents off, and they know where we live and post things through our letter box! It prevents documents getting lost in the post and the whole process is just a lot less hassle.

christologymum

Tbf the estate agent recommended a couple of solicitors but we were limited due to our buyers/sellers using the others and the estate agent didn't know who we were going to get our mortgage with so they couldn't possibly know that they weren't on their panel, in fact at the time of appointing the solicitor we didn't even know for sure who our mortgage provider would be.