The Dreamvar Appeal and the game of ‘ping pong’ it has created

The decision of the Court of Appeal in  Dreamvar (UK) Ltd v Mishcon de Reya and the linked claim in P & P Property Ltd v Owen White and Catlin LLP has created more uncertainty and will without doubt lead to conveyancers playing ‘ping pong’ with each other as I hope this article looking at the practical implications will demonstrate.

So a buyer solicitor will be asking the seller for a warranty that the conveyancer’s client is the legal owner of the property. In return the seller conveyancer will or should say that all money laundering checks required by statute have been undertaken but that no warranty should be implied into the response as to the true identity of the seller.

The ball now firmly back in the buyer’s conveyancer’s court, the competent buyer’s conveyancer should challenge this, and say this is not good enough, and to specifically enquire as to whether the seller’s conveyancer has seen evidence to link the client to the ownership of the property. For example, evidence of building insurance or recent payment of council tax. This I submit is a reasonable request and one which the seller’s conveyancer should be required to answer.  If the seller’s conveyancer refuses then the buyer should be made aware that there is a refusal to provide the evidence, and be advised that he or she should not proceed without it. Make sure the seller’s conveyancer is made aware of the consequence of failing to answer this question.

If confirmation is given I am not sure the buyer’s conveyancer can do more. I consider it would in the absence of any other red flags be sufficient to take the reply as read.  If there are however red flags present then the buyer’s conveyancer may decide to ask for the sight of the evidence. The risk here is by asking for this and then receiving it, the buyer’s conveyancer is then taking on responsibility for checking the authenticity of the documents supplied.

This line of enquiry should be undertaken in each and every transaction.

If the buyer’s conveyancer following this enquiry has on going doubts then as I say this should be made aware to the buyer, and it may be that the advice is not to proceed, and if the buyer wishes to do so then a disclaimer should be signed.

The buyer in these circumstances should check the adequacy of the seller’s conveyancers PPI cover to make sure that off an issue arises the buyer is not exposed if a claim needs to be made.

The buyer’s conveyancer should also insist that the Law Society’s Code of Completion should be adhered too, which is of particular importance if the seller conveyancer is a licensed conveyancer or a conveyancer which operates outside the Law Society Protocol ( if the Protocol applies the Code is implied).  If the Code does not apply then the buyer’s conveyancer should insist on the seller’s conveyancer undertaking that they have the legal owner’s authority to receive the purchase monies. This should be sought before exchange.

If this is not forthcoming my view is that the buyer should be advised not to proceed without it and if the buyer says he or she still wishes to proceed make sure a disclaimer is sought.

There is no outright winner in this game – its all about compromise and making the client aware of the risks where these exist.

David Pett – Property Law Solicitor 

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