Paying large deposit to the Solicitor/Conveyancer - Is this 100% safe?

anakin373

When buying a house, the money (both your deposit and the money from the mortgage-provider) follows this route:

Buyer > Buyer's solicitor > Seller's solicitor > Seller

So at any one time either one of the solicitors has funds to the value of the price of the house in their account. What protetcts your money/interests in the case of one of them going bankrupt or in the case of fraud?

The reason I ask is because I'm putting up a deposit of about £160k - it's really worryong the hell out of me :eek:

Joe_Bloggs

The handing over the money is the scary bit. Often you can pay an insurance premium that guarantees a refund in the event that your solicitor defrauds you or their accountants screw up and the money goes astray.
I chose a local conveyancing solicitor who concentrated on conveyancing. I looked him in the eye and told him of my concerns in this matter. I was assured by the safeguards in place. I also noted the regestration of his car. Everything went well as they handle these matters a dozen times everyday.
J_B.

Ember999

I wouldn't worry hon, this happened to a friend of mine, the Solicitor who got his deposit (£20,000) did a runner abroad, the mortage company didn't have a problem with it, the money got sorted (legal things can't discuss here) but he did get his money back, or I should say, his new solicitor got the money from the other partners in the firm, deposit was paid, house sale went through. Yes, this does happen as what happened to my friend shows, but you do get your money back and sadly, there is no other way to buy a house than entrust your solicitor with your deposit.

Debt_Free_Chick

So at any one time either one of the solicitors has funds to the value of the price of the house in their account. What protetcts your money/interests in the case of one of them going bankrupt or in the case of fraud?

There are extensive Law Society rules about solicitors handling client's money. Firstly, all clients' money is quite separate to the practice/partners business money - the solicitor must use a separate client account to hold client's money. Not an individual account for each client but one account for all clients' money. They have to draw up separate accounts for client money and have a separate accountant's declaration for the audit of the client accounts. There is also a return to be made to the Law Society.

If the client account is defrauded, then the fraud is on the solicitor, not the client. The solicitor must maintain adequate insurance for this. No solicitor in practice wants to have their business defrauded and they will have internal procedures & audits to minimise the risk of fraud, so you can be confident that your money will be handled carefully.

If a solicitor went bankrupt, then the client accounts are not treated as the solicitors own money. In this case, all money in the client accounts is safe.

HTH

anakin373

Thanks for all the help guys n gals :T

So let me see if I've understood this properly...

So in the case of bankruptcy, the client account is still safe - no problem with that.

In the case of Fraud, I'm a bit confused by this: If I'm covered by insurance/compensation? ...who awards me compensation? The Law Society? And is it my responsibility to check the solicitor has adequete insurance or is it an industry standard type of thing? is this the indemnity insurance that some conveyancers highlight?

Debt_Free_Chick

anakin373 wrote:

Thanks for all the help guys n gals :T

So let me see if I've understood this properly...

So in the case of bankruptcy, the client account is still safe - no problem with that.

In the case of Fraud, I'm a bit confused by this: If I'm covered by insurance/compensation? ...who awards me compensation? The Law Society? And is it my responsibility to check the solicitor has adequete insurance or is it an industry standard type of thing? is this the indemnity insurance that some conveyancers highlight?

You don't have to check - it's automatic as it's part of the Law Society rules that solicitors operate under.

But no harm in asking a general question e.g. "What would happen if ..."