Retention of Funds
The Professional Practice Department at the Society receives a substantial number of inquiries about solicitors' obligations in relation to funds retained at settlement of conveyancing transactions( retentions). Solicitors frequently find that they are unable to get instructions from clients who either decline to reply to letters or who have disappeared. Some general guidance may be of assistance in these situations.
Where a sum of money is to be retained at settlement of a conveyancing transaction, the conditions upon which it is retained should be set out in writing at settlement. The agreement should specify the time limit for implementation. Matters should not be left to recollection of telephone conversations which may become vague with the passage of time.
If funds were retained pending fulfilment of certain conditions by the seller, they should be released when those conditions have been fulfilled in terms of the written agreement. The purchaser's solicitor does not need to seek instructions from his or her client at that stage.
Solicitors are entitled to rely upon agreements reached with other solicitors at settlement which set out conditions on which funds will be released. If the client instructs the solicitor not to release funds there could be a conflict of interest between solicitor and client requiring the solicitor to withdraw from acting.
It may be that the conditions for release of the funds have not been fulfilled by the seller. In these circumstances if the purchaser's solicitor produces vouching for the actual or estimated expenditure required to fulfil the conditions, the seller's agent does not require the seller's instructions to agree to the release of the funds as so vouched. Again solicitors are entitled to rely on the reciprocity of such agreements.
