A recent report by the IOD and BLM law states that negligence claims against property solicitors are continuing to rise, as the issue of leasehold ground rents comes into public view. These claims have arisen from purchasers of leasehold properties who have sought to recover compensation for ground rent charges, which they claim that they were never informed of.
This follows the recent publicity about new-build homes sold with ground rent that doubles after a set amount of time. Various banks are refusing to lend on such leases, making some properties unsaleable. Estimates suggest that over 100,000 homes have been sold in the UK under this type of ownership.
The issue for law firms is whether clear enough advice was given to the purchasers so they could understand the risk and impact of the increasing ground rents. The UK government has said it will step in to resolve the issue, but it is going to some take time to address and will most likely only resolve future ground rent charges. Therefore, lawyers who have advised on purchases in the last few years are at risk of a claim.
The conveyancing sector is also waiting on the outcome of appeals on vendor fraud, where imposters have conned solicitors into acting for them in the sale of a property. Once the true owner arrives on the scene and successfully has ownership returned to them, the innocent purchaser is out of pocket and pursues a claim on their solicitors. A judgment in January against City firm Mishcon de Reya, which Healys acted on, found the firm to be liable for breach of trust and ordered it to pay £1m. The ruling is set to be challenged in the Court of Appeal next year.
Robert Johnson, Head of Professional Negligence, comments “We are seeing a rise in enquiries about ground rents and are already building up a portfolio of cases and know how. We are also intimately involved in the Court of Appeal case acting (as we do) for the Claimant in that case.”