Professional practice updates 2015

Professional Practice Updates November 2015

Letters of Obligation and Advance Notices

Our Guidance on Letters of Obligation and Advance Notices states inter alia:-

“c) How will the Master Policy cover for letters of obligation be affected after the designated day?

For the rest of the insurance year Nov 2014 to Oct 2015, there will be no change to the Master Policy regarding the grant of letters of obligation. Once practice develops under the 2012 Act, the position may be reviewed at renewal of the Master Policy in 2015.”

Marsh have confirmed that the position stated above regarding the Master Policy will continue after October 2015 for the time being, in respect of letters of obligation in the classic form.

Professional Practice updates October 2015

Solicitors acting as Executors and Agents - Duties in Relation to Legal Rights

Bank of England confirms extension to CHAPS opening hours

Solicitors acting as Executors and Agents - Duties in Relation to Legal Rights

The Society’s Trust and Succession Sub-Committee and Professional Practice Committee both independently identified that important issues of interest and concern to the profession arose out of the  Scottish Solicitors’ Discipline Tribunal’s findings in The Law Society of Scotland v David Haddow Campbell  (11 March 2013).

An important finding by the Tribunal was that there was no clear authority on the obligation of executors to inform a potential legal rights claimant of his entitlement. Guidance produced by the Trust and Succession Sub-Committee and finalised in consultation with the Professional Practice Committee is now published on the Society’s website. This Guidance is intended to clarify the situation for the future.

 

Bank of England confirms extension to CHAPS opening hours

From 20 June 2016, the opening hours for making payments via CHAPS and CREST will be extended by one hour and forty minutes. 

According to the Bank of England, potential benefits of this change include allowing for high-value transactions to be made later in the business day, for example conveyancers completing house purchases using CHAPS. 

To facilitate transactions, Scottish solicitors who use these systems are encouraged to ask their banks to extend their cut-off times accordingly.

Further details of the change can be found on the Bank of England’s website.

Professional Practice updates September 2015

 

ADR Regulations: Action required before 1 October 2015
Virgin Money panel management charge
The Scottish New Build Standard Clauses (2015 Edition)

 

ADR Regulations: Action required before 1 October 2015

Alternative Dispute Resolution (ADR) Regulations come into effect on 1 October 2015. 

The Regulations have been laid before Parliament to implement the ADR/EDR Directive 2013/11/EU. The objective of the Directive is to promote ADR as a means of redress for consumers in relation to unsatisfactory goods or services, particularly in relation to online sales in the EU. 

The Regulations require the appointment of a “competent authority” that will be responsible for monitoring and evaluating “ADR entities” which are organisations who will undertake dispute resolution work. 

There are currently no “ADR Entities” appointed in Scotland for Scottish Legal Services. 

Responsibility for identifying an ADR entity rests with the Department for Business, Innovation and Skills (BIS). The Regulations are a consumer issue which means they are reserved to the UK Government and the Scottish Government has no power to force an organisation to become an entity. 

What do solicitors need to do? 

Firms should either: 

-       Implement the Regulations and inform clients about any ADR entities and processes which the firm are prepared to use. (These should be referred to in letters of engagement and on the firm’s website.) 

or 

-       If firms choose not to adopt an ADR process, they still require to account for and share information about the terms of the Regulations with their clients. 

Here is some sample text which could be used in the letter of engagement and on the firm’s website: 

“We recognise that Alternative Dispute Resolution Regulations have implemented ADR/EDR Directive 2013/11/EU to promote alternative dispute resolution as a means of redress for consumers in relation to unsatisfactory services.  We have however chosen not to adopt an ADR process and if you have any concerns about the services you receive from this firm you should contact the firm’s Client Relations Manager.” 

Firms should update their letters of engagement in time for the regulations coming into effect on 1 October 2015. 

Solicitors may also wish to share information about the Regulations with their own clients who may themselves become subject to the Regulations where goods or services are being provided to a consumer. 

View further information on alternative dispute resolution. 

If you have any queries in relation to this, please do not hesitate to get in touch with the Professional Practice team.

 

Virgin Money panel management charge

Following the introduction of LMS to manage its panel, the Law Society of Scotland has engaged with Virgin Money to discuss their decision to levy a £10 charge on each transaction at settlement which would be collected via the client’s solicitor for the purpose of financing its panel management requirements.  To assist our members, the Society queried whether this charge could be levied on the client at the time of collecting the arrangement fee.  Virgin Money advise that the fee is only chargeable where the transaction concludes successfully.  They explained that, because the majority of cases are introduced to them via intermediaries, they are therefore not in direct contact with borrowers until the mortgage completes .  As a result of not having that direct contact, they advise they would experience difficulties in returning the charge in the approximately 10% of cases where the matter does not complete, and so they have elected to charge this at settlement via the borrower’s solicitor.

  

The Scottish New Build Standard Clauses (2015 Edition)

Following extensive consultation, the Scottish New Build Standard Clauses (2015 Edition), negotiated between Alan Minty of Gillespie Macandrew and Ross MacKay, Convener of the Society’s Property Law Committee, have now been registered in the Books of Council and Session.  These can be used to assist both sellers and purchasers in negotiations where the seller is a builder selling a new-build property. 

To reflect commercial requirements, these are necessarily weighted in favour of the builder, but, notwithstanding this, they are intended to reflect an appropriately balanced position which will hopefully facilitate those selling on behalf of, or buying from, a builder.  A pdf of the Extract Registered Minute of Agreement, a word copy of the clauses, a client guide and practitioners’ guide can be found under advice and information in Section F, Division C of our Rules and Guidance on 1 October 2015.

 

 

Professional practice updates August 2015

Update on Civil Court reforms

Electronic delivery of paper documents

Updated guidance on electronic communications and scanning and archiving documents

Extension to period during which deeds without title number will be accepted by Keeper

New EU succession regulations affecting cross-border estates

 

Update on Civil Court reforms

The key features of the Court Reform (Scotland) Act 2014 will be implemented on 22nd September – the start of the new legal year.

 http://www.legislation.gov.uk/asp/2014/18/contents/enacted

The main effect of the reforms will be to shift substantial amounts of court business from the Court of Session to the Sheriff Courts.  This is achieved by:

  • A substantial increase in the threshold for cases to be heard in the Court of Session, from £5,000 to £100,000.
  • Establishing a specialist Sheriff Court with a national jurisdiction – this will be in Edinburgh
  • Creating a Sheriff Appeal Court to hear many of the appeals that currently go directly to the Court of Session.
  • Creation of a new judicial post – the summary sheriff - to resolve lower value civil cases such as debt cases more swiftly and efficiently, while also dealing with summary criminal cases.
  • Summary Cause procedure – which includes Small Claims – will be replaced by a new Simple Procedure.
  • New procedures for judicial review cases in the Court of Session including a three month time limit, and new procedures for appeals within the Court of Session and some appeals to the UK Supreme Court to improve efficiency.

It might be helpful to have to have links to the relevant Statutory Instruments/ Acts of Sederunt

The first two deal with the bulk of the civil courts reforms coming into force on 22 September:

 http://www.legislation.gov.uk/ssi/2015/228/pdfs/ssi_20150228_en.pdf

http://www.legislation.gov.uk/ssi/2015/176/pdfs/ssi_20150176_en.pdf

The next link is to the Order conferring a national jurisdiction on Edinburgh Sheriff Court in some personal injury cases.

http://www.legislation.gov.uk/ssi/2015/213/pdfs/ssi_20150213_en.pdf

The Order details that a sheriff of the sheriffdom of Lothian and Borders sitting at Edinburgh Sheriff Court has jurisdiction throughout Scotland in 3 situations-

The first is for actions of damages for, or arising from, personal injuries for claims exceeding £5000.

The second is for proceedings concerning an accident at work where the claim is for over £1000.

And the third situation is where the claim concerns an accident at work for under £1000 but the local sheriff has certified that the importance or difficulty of the proceedings make it appropriate to transfer the proceedings to the Personal Injury Court. Cases that fall into this category should therefore first be raised in the summary cause procedures in the local sheriff courts.

The rules for the new forms of action in the sheriff court can be found here:

 http://www.legislation.gov.uk/ssi/2015/227/pdfs/ssi_20150227_en.pdf

These include amendments made to the ordinary cause rules on jury trials, e-motions and active case management which closely follow equivalent provisions in the Court of Session.  There is also the introduction of an equivalent procedure to that in chapter 42a of the Court of Session rules which allows for active case management in complex cases which will apply in the new personal injury court and in local sheriff courts.where the amendments to the ordinary cause rules depart from current Court of Session procedure.

 

Electronic delivery of paper documents

On 1 July 2015 the remaining provisions of the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (“the Act”) came into force and appropriate amendments to the Society’s Rules and Guidance will be carried out in due course to reflect the new provisions. The link to the Act is http://www.legislation.gov.uk/asp/2015/4/contents

Two recent articles in the Journal (which provide substantial useful information on the Act) can be accessed from http://www.journalonline.co.uk/Magazine/60-3/1019015.aspx  and http://www.journalonline.co.uk/Magazine/60-7/1020522.aspx     

Meantime, one development which will be of considerable significance to all practitioners, is the ability to “deliver” paper documents (including missives and other documents having a contractual effect) by electronic means. Section 4 of the Act provides that “traditional documents”, which are “documents written on paper, parchment or some similar tangible surface” (see Section 1A of the Requirements of Writing (Scotland) Act 1995, as substituted by Schedule 3 of the  Land Registration (Scotland) Act 2012, the link to which is:-http://www.legislation.gov.uk/asp/2012/5/schedule/3/enacted) can be delivered by “attachment to an email” or “by fax”. Other methods of delivery are also referred to but these will be the ones most frequently used.

In terms of Section 4(4) delivery must be by a means which the intended recipient has agreed to accept, but in terms of Section 4(5) if no accepted method has been agreed or the accepted method is impracticable then delivery may be “by such means (and in such form) as is reasonable in all the circumstances”. No definition is given of what amounts to “reasonable”, but the Explanatory Notes to the Act refer to what is reasonable “viewed objectively in all the circumstances”. See http://www.legislation.gov.uk/asp/2015/4/notes/division/3/2/1

It is also important to note the terms of Section 4(6) and 4(7) of the Act. Section 4(6) provides that although delivery by electronic means constitutes effective delivery of a traditional document, what is received by the electronic delivery is not treated as being the traditional document itself. Section 4(7) provides that the traditional document after electronic delivery to the recipient is to be held by the sender in accordance with whatever arrangements have been made by the sender and the recipient.

Therefore in a delivery of missives situation, it would normally be agreed by the parties that the traditional document (ie hard copy) of the missive letter will be forwarded on to the recipient by the sender after the electronic delivery has taken place. In other situations such as a lengthy commercial contract it may be that the parties will not wish the traditional document/hard copy to be sent backwards and forwards.

If the document sent by electronic delivery is to be registered, then the executed traditional document itself will be required for registration purposes since normally a faxed or emailed copy will not be accepted for registration.

The normal procedure for the delivery of missives would therefore seem to be:-

(1)  Agree in advance between parties solicitors whether delivery of missives may be by fax, or email attachment, or one of the other methods referred to in Section 4(9) of the Act;

(2)  Agree in advance that on delivery of the document by electronic means, the original document (hard copy) will be forwarded on to the recipient thereafter;

(3)  Proceed to carry out the electronic delivery;

(4)  Check thereafter by fax receipt or email read receipt or by physically contacting the recipient solicitors, that the document has been received by them.

(5)  Forward on the traditional document to the recipient solicitors as soon as possible after the electronic delivery has been carried out.

(6)  If no agreement can be reached on the method of delivery then consider utilising the provisions of Section 4(5) although this may require some careful consideration.

Finally, the Explanatory Notes to the Act refer to an email attachment being by PDF file, presumably because a PDF document scanned from the original will include the signature and cannot be subject to any alteration. A “Word” document would probably not be appropriate.

 

Updated guidance on electronic communications and scanning and archiving documents

The Society's Technology Sub Committee has recently updated the Society’s guidance in relation to Electronic Communications and Scanning and Archiving Documents. The updated guidance is available in our Rules and Guidance section on the folowing pages.

Division B: Electronic Communications
Division B: Scanning and Archiving Documents

 

Extension to period during which deeds without title number will be accepted by Keeper

The Society's Property Law Committee has successfully persuaded the Keeper to extend the period in which she will accept a deed which does not bear a title number from 14 days to 28 days after the date of registration.  This will assist solicitors particularly when obtaining discharges in respect of first registrations.

 

New EU succession regulations affecting cross-border estates

Regulation (EU) No 650/2012, known more generally as the Succession Regulation (or Brussels IV), will come into force on 17 August.  Although the UK didn’t opt into the regulations, they are still of considerable relevance to UK residents and nationals who own assets in EU countries that are signatories to the legislation.  The changes are being considered by the Society’s Trust and Succession sub-committee but solicitors with clients who are resident in EU countries should be aware of the changes and be ready to advise clients who may be affected.

 

Professional Practice Updates July 2015

Keeper extends period for signing of deeds following grant of title number from 14 days to 28 days

Following representations by the Property Law Committee, the Keeper has amended her policy in respect of deeds submitted for registration but which do not bear the Title Number of the registered plot to which they relate.

The Keeper will accept a deed that does not narrate the Title Number provided: (i) the deed contains an otherwise sufficient description of the subjects or the security being discharged; and (ii) the deed is executed before the Title Number is known; or (iii) the deed is executed up to 28 days after the provisional Title Number is known. 

This brings the Keeper’s policy in line with current conveyancing practices, both in terms of lenders retaining Discharges for execution until after the date of registration, and in terms of the standard practice of selling solicitors providing a letter of undertaking to the purchaser’s solicitor to provide a validly executed discharged within 28 days.

 

New ADR Directive  

On 9 July 2015 the UK will be required to comply with a new EU directive on alternative dispute resolution (ADR). Regulation 19 of the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities & Information) Regulations 2015 will come into effect on 1 October 2015.

In situations where a firm’s internal complaints process has been exhausted, the regulations require solicitors (as service providers) to give consumer clients (individuals not trading as commercial entities) details of a certified ADR provider, and indicate whether or not they intend to use them to try and settle the dispute.

 

Registers of Scotland introduces 25% discount in voluntary registration fees

From 30 June 2015, Registers of Scotland will be introducing a 25 per cent discount in voluntary registration fees.  This is to encourage completion of the Land Register.

A voluntary registration is where the proprietor of unregistered land applies to the Keeper on a voluntary basis for that land to be registered in the Land Register.  A voluntary registration is much the same as a first registration, except of course the title is not being transferred to a new proprietor and there is no new deed to be registered.  Where no title problems are discovered, the applicant in a voluntary registration will benefit from the Keeper's warranty.

The Keeper’s guidance on voluntary registration contains a checklist of the items required to effect voluntary registration. 

Professional Practice Updates June 2015

Update on Civil Court Reforms

Scotland's civil court reforms will start to be seen within months.

The much anticipated specialist sheriff court, with a Scotland-wide jurisdiction for personal injury cases, will open in Edinburgh Sheriff Court on 22nd September 2015.

It will be mirrored by an extension of the exclusive jurisdiction of all sheriff courts to actions with a value of up to £100,000.

At the same time the Sheriff Appeal Court will be established at first with jurisdiction for criminal cases and after January 2016 with jurisdiction also in civil cases.

The new simple procedure, to be managed by summary sheriffs, will be introduced in spring 2016.

Further updates will follow once more information becomes available.  

The Scottish New Build Standard Clauses (2015 Edition)  

Following extensive consultation, the Scottish New Build Standard Clauses (2015 Edition), negotiated between Alan Minty of Gillespie Macandrew and Ross MacKay, Convener of the Society’s Property Law Committee, have now been registered in the Books of Council and Session.  These can be downloaded here to assist in transactions where the seller is a builder selling a new-build property.  These can be used to assist both sellers and purchasers in negotiations. 

To reflect commercial requirements, these are necessarily weighted in favour of the builder, but, notwithstanding this, they are intended to reflect an appropriately balanced position which will hopefully facilitate those selling on behalf of, or buying from, a builder.  A client guide and practitioners’ guide will follow in due course.

Download theThe Scottish New Build Standard Clauses (2015 Edition) (PDF)
Download a 'word' version


Lloyds Banking Group (LBG) – plans to extend file requisition

The Society has been made aware that LBG intends as part of its due diligence to extend its programme of requisitioning files from solicitors.  Solicitors are reminded of the Society’s guidance when responding to lenders’ requests for files. 

The Professional Practice team is on hand to discuss any requisitions and the applicability of the guidance and can be reached on 0131 226 8896.

Professional Practice Updates May 2015

CML Working Party Update

The Law Society of Scotland has welcomed amendments to the Council of Mortgage Lenders (CML) Scottish edition handbook. 

Alistair Morris, President of the Law Society of Scotland, said: “The updated handbook is good news for conveyancing solicitors in Scotland. 

Mr Morris, who has also convened the Society’s CML Working Party, said: “Updating the handbook has been a joint process between the Society and the Council of Mortgage Lenders. We have worked constructively with the CML to ensure that the changes to the handbook provide clarity for conveyancers on a range of areas and make it more suitable for Scottish practice and procedure. The handbook is a living document and will require further changes as time progresses and risk and practices change. 

“It’s important that solicitors are aware of the changes and follow the CML handbook to ensure that their work on behalf of their lender clients, as well as homebuyers and sellers, progresses smoothly.”

 The newly updated handbook reflects recent legislative changes in Scotland including the new Land and Buildings Transaction Tax which came into force on 1 April this year and the Land Registration etc (Scotland) Act 2012 which came into effect at the end of 2014. It also includes an amendment to the requirements on good and marketable title. 

The Law Society CML Working Party was formed following agreement on the need for amendments to the handbook to better reflect Scots conveyancing law and practice. It followed a vote against separate representation of borrowers and lenders in residential conveyancing transactions at a Law Society general meeting in September 2013. The group has now completed its work with the CML on amendments to the Scottish version of the CML Handbook.

The amendments to the CML Scottish Handbook are available to read on the CML website.

The CML news release is also available to read.

Professional practice updates February 2015

Registers of Scotland rejections update

Scottish standard Clauses

Significant changes to Property Law Guidance

Registers of Scotland rejections update

Following the introduction of the Registers of Scotland rejection fee on 9 February, the Society met with Registers of Scotland to gain a better understanding of the type and volume of issues being raised.

The rejection team have reported a steady decline in the number of applications that need to be returned since the land registration changes were introduced in December. The rejection rate dropped to 6% by the end of last week which highlights the efforts made to understand and implement the extensive changes.

A snapshot from one day of rejections last week shows that the reasons for rejection were not based on issues caused by the Land Registration etc (Scotland) Act 2012 and instead follow the more typical rejection issues that existed before the introduction of the 2012 Act.

Reasons for rejection:

  • Application form not signed/completed (31)
  • Error in deed or no deed provided (20)
  • Incorrect fee (where payment is by cheque) (5)
  • No SDLT certificate (4)
  • No or wrong plan (4)

The predominant issue with the plans at present appears to be the plotting of the subjects onto the cadastral map. Either the subjects conflict with a title that is already on the cadastral map or it has not been possible to plot the subjects on to the map based on the current deed plan and/or conveyancing description – the ‘floating shape’ scenario. Obtaining an appropriate plans report should help to establish whether the plan to be provided is acceptable.

The Society will continue to work with Registers of Scotland to reduce rejection rates and we will keep members informed of any trends in reasons for rejection.

For advice on the completion of applications, as well as general guidance on how to avoid rejections, Registers of Scotland can be contacted on 0800 028 9311.

If you have any queries about the registration process please contact the Society’s Professional Practice team for a confidential discussion on 0131 226 8896.

Scottish Standard Clauses

The Scottish Standard Clauses have been launched nationwide to assist property lawyers with residential conveyancing transactions.  The Standard Clauses practitioner’s guide and client guide is now available. 

Significant changes to Property Law Guidance

As practitioners will know, the implementation of the 2012 Act saw the Property Law Committee bring in new guidance to assist practitioners with the changes and to update the letters of obligation guidance.  Further information can be found here.

Following from that, the Property Law Committee has updated its Guidance which can be found at Section F Division C of the Society’s Rules and Guidance.  We would encourage all solicitors engaged in property law to review it as the updates are extensive.

In addition to reviewing the existing Guidance, Guidance where the lender wishes to remit funds directly to the seller's solicitor has been introduced.  An advice note to assist practitioners when a lender wishes a Repairs Grant to be discharged is available, and links to the new CML Compliance Checklist and Scottish Standard Clauses have been provided.