SI 375 of 2012, the regulation that prohibits a solicitor or firm from acting for both sides in a conveyancing transaction, whether a transaction for value or a voluntary transaction, has been in force since 1 January 2013. Since then, each party to a conveyancing transaction requires separate full legal representation, subject to a few limited exceptions set out in the regulation. 

The Law Society has received queries about how voluntary transfers are to be conducted in practice by the solicitors representing each side, and the following recommendation applies to voluntary transfer situations.

Where a solicitor is approached by a client about a proposed voluntary transfer of property to another party, that solicitor must explain that s/he cannot also act for the other client, even if one or both parties want her/him to do so. The former practice of acting for both sides in a transaction and referring one party to another solicitor or firm for ‘independent legal advice’, but continuing to act thereafter for both parties in the execution and completion of the necessary documentation, is not acceptable practice and would be in breach of the above regulation.

Where a solicitor has previously acted in other transactions for the two parties to the current transaction (whether for the two in one transaction, or for one or the other in different transactions – and whether the parties have a family relationship to each other or not), the solicitor, before taking detailed instructions from one of the parties, will have to make a decision about which party s/he will represent in the current transaction. If there is any possibility of a conflict between the interests of the two former clients, the solicitor may not be able to act for either party – for example, if the solicitor is aware of information that was gained in previous transactions acting for one or both of the clients that would impact on the interests of one of the parties to the current transaction, the solicitor might have a duty of confidentiality to one of the parties while also having a conflicting duty of disclosure to the other party.

For example, in cases where:

• A solicitor is asked to act in a transfer of property from the sole name of a parent to the joint names of the parent and a child, the solicitor should be aware that s/he can act for the parent as transferor or for the parent and child as joint transferees, but not for the parent in both capacities,
• Similarly, where asked to act in the transfer of a solely owned property that is not a family home/shared home from the sole name of one spouse/civil partner into the joint names of both spouses/civil partners, the solicitor can act for the sole-owning spouse/civil partner as transferor or for the two spouses/civil partners as joint transferees, but not for the sole-owning spouse/civil partner in both capacities.

While the transferor must be represented separately to the two transferees in the above two examples, it is confirmed that the two joint transferees in both situations (provided there is no conflict of interest between them) may be represented by one solicitor.

Contracts for sale

Do you need a formal contract for sale between the two sides in a voluntary transfer?

It would be unusual to have a formal contract for sale. However, if there is to be a contract, it should comply with the formalities required by the Land and Conveyancing Law Reform Act 2009. It is suggested that the words ‘natural love and affection’ be used in place of the purchase price when relevant.

Otherwise, whether or not there is a contract will depend on various matters.

Firstly, under common law, the vendor under an open contract must give good title to the purchaser. Secondly, the Law Society's standard contract for sale – which is a closed contract – gives certain specific warranties as to title, planning, and other matters that are not given under an open contract. It is therefore a matter for the two parties to agree in advance if they want to make the voluntary transfer subject to all (or some) of the rights and obligations that the standard contract contains.

The transferor may have agreed to the transfer on the basis that the transferee takes the property ‘warts and all’. The transferee should be advised as to the limitations this would place on him/her in the event of a future sale or mortgage of the property. The transferee should consider whether, in the event of such a future sale or mortgage, s/he would have sufficient knowledge of the title so as to be able to reply to a standard set of requisitions on title. This may influence the transferee’s decision on whether to take the property ‘warts and all’.

Solicitors for transferees should be aware that, if the transferee is intending to raise finance on the security of the property and the residential certificate of title system is being used by the lending institution, the standard solicitor’s undertaking and certificate of title both state that ‘good marketable title’ means that the standard Law Society contract for sale was used (and this implies it was used without significant amendment) and that standard requisitions on title were raised and satisfactory replies were received. Otherwise, a transferee’s solicitor cannot give the standard undertaking to a lender prior to drawdown without first agreeing with the lender the qualification to it, and to the subsequent certificate of title.

If the property is not residential and some other format of certificate of title is contemplated, the solicitor should check to see what, if any, requirements there are for the use of a contract for sale or requisitions on title.

If some level of contractual protection is desired by the transferee, it should be considered whether this needs to be in the format of the Law Society’s full standard contract for sale, backed up by full requisitions on title with replies, etc, or whether something less (the extent of which to be agreed between the parties) will suffice.

Requisitions on title

Do you need to raise formal requisitions on title?

The question of whether to raise requisitions on title is one that a transferee will have to consider and, if required, the parties will have to negotiate and come to an agreement on whether a full set of requisitions on title will be raised and replied to, or whether a selected range of requisitions will suffice.

Much will depend on the nature of the relationship between the parties and the use to which the transferee wishes to put the property following its acquisition, and whether the transferee is or will be raising finance on the security of the property.

The parties will need to agree on where responsibility will lie for any burdens or charges on the property. Any existing mortgages will need to be redeemed. In addition, they will need to agree on who is to discharge any unpaid outgoings or charges on the property, including commercial rates, domestic waste charges, water charges, NPPR, household charge and LPT, etc. Under some of this legislation, the statutory obligation is on the transferor to pay these charges/tax – and consideration will need to be given to how this obligation is to be dealt with.

If the agreement between the parties is that a transferor is divesting her/himself of her/his property ‘warts and all’, it may be that no contract or requisitions will arise in practice and all that will be furnished is the minimal transfer documentation.

As can be seen above, much will depend on the level of familiarity with the title that the transferee has/does not have and on the basis of the agreement between the parties as to what is envisaged. If the parties have not already discussed these matters, they may need to do so before they give final instructions to their respective solicitors. This may result in a certain level of negotiations with the solicitor acting for the other side, for example in a situation where the voluntary transfer is subject to conditions of maintenance, or if rights are to be reserved. As with a contract for sale, there should be a mutual understanding as to the terms and conditions on which a property is to be transferred voluntarily from one party to another.

Transfer at undervalue

It is recommended that, in these transactions, there should be a contract and requisitions on title, even though such a transaction might be seen to be part-voluntary.

If acting in a transaction and the client does not want to pay for an investigation of title, whether the transaction is a voluntary transfer or a transfer for undervalue, it is very important that the solicitor writes to the client with advices, in order to have a record of the advices given.

Refusal of representation

If one of the sides refuses to obtain legal representation and you act for the other side, you should advise your client:

• Of the fact that you cannot act for, advise, or assist the other side in the matter, whether by way of advising them on what to do at various stages of the transaction or by the provision of legal documentation,
• That the quality of legal documentation provided by a non-solicitor acting on their own behalf may not meet the standard required by a prudent conveyancing solicitor and of the likelihood that this may result in delays and difficulties in completing the transaction, and
• Of the danger that, if the non-solicitor acting on their own behalf should seek in the future to challenge the validity of the transfer, a court may take into account the fact that s/he did not have legal representation in the matter and that s/he may have believed that the solicitor on the other side was also acting for her/him or was looking out for her/his interests, given that all parties may initially have consulted the same solicitor together.

There is no obligation on a solicitor to act in a transaction where the other party is not represented by a solicitor, and you should proceed with caution if you decide to act