Professional practice updates 2016

December 2016

Proper Instruction: mental capacity

In light of recent reported cases, we would like to remind members that we have guidance on the terms of Rule B1.5, Proper Instructions, namely that a member must be satisfied when taking instructions from a client that the client does in fact have capacity to give instructions in relation to that matter. If there is any doubt as to a client's capacity to instruct in a particular case, advice should always be sought from the medical profession.

In all areas of practice, members are reminded of the importance of identifying any circumstances in which it is appropriate to obtain medical advice (or any other professional advice) in relation to any condition or disability that the client may have that could have any impact on any matter in which you are acting. Please read our guidance on dealing with vulnerable clients.

September 2016

Potential impact of interest rate cut on client accounts

On 4 August 2016, the Bank of England cut interest rates to 0.25% which is a historic low. The result of this is that some firms have been advised by their Banks that they will no longer receive interest on balances held in Clients’ accounts. This may impact upon the client’s expectation regarding the interest they may receive on funds held by their solicitor on their behalf.

Solicitors may wish to review their terms of business and consider whether any wording relating to interest requires to be amended. Where terms of business have already been issued, solicitors may wish to notify clients of changes in the interest they will receive.

Rule B4 (Client Communication)  and the Guidance on it, does not require solicitors to make any reference to interest in their terms of business. However solicitors who do make such reference or solicitors who expect to hold large balances for their clients may feel it appropriate to raise awareness of the interest rate cut to their clients.  The Guidance on Rule B4 states:- “It is recommended that the content of terms of business letters is kept under regular review”.

Our Professional Practice team can answer any further enquiries on these issues. Email: ProfPrac@lawscot.org.uk, Telephone: 0131 226 8896.

May 2016

New guidance on client communication

We have updated the guidance on client communication (Rule B4) and the new guidance will come into effect on 1 June 2016.

We have made substantial changes as this is the first full review of the guidance since 2005, when it became mandatory for solicitors to issue terms of business letters to clients in all transactions (subject to certain limited exceptions).

We would encourage you to familiarise yourself with the terms of the new guidance before 1 June.

If you have any questions, contact the professional practice team on 0131 226 8896 or email profprac@lawscot.org.uk.

Scottish Standard Clauses

The Standard Clauses Working Party has produced a new version of the Scottish Standard Clauses (Edition 2) which will come into effect on 3 May 2016. Edition 2 updates and amends Version 1.

Explanatory Note on Scottish Standard Clauses – Edition 2

Scottish Standard Clauses (Edition 2)

Client Guide for Scottish Standard Clauses (Edition 2)

Practitioners Guide for Scottish Standard Clauses (Edition 2)

 

Land and Buildings Transaction Tax Additional Dwelling Supplement -  links to further information

We have received a number of calls from solicitors seeking more information on LBTT and ADS.

Members who are looking for information on the Additional Dwelling Supplement (ADS) of LBTT may find the following links to Revenue Scotland webpages useful:

There is a page of FAQs which includes sections on ADS.

There is a page of ADS Background  and also one of worked ADS examples.

Guidance specific to ADS is also available, as well as a page on “How the ADS works”.

The issue of what might constitute an “only or main residence” is addressed on this page.

Finally, there is the Legislative Guidance running to 64 pages.

February 2016

Style dispositions launched specifically tailored to residential transactions

The Property Standardisation Group and the Law Society of Scotland Residential Project have launched a suite of style dispositions tailored to residential transactions.

They are designed to take account of the most common styles of disposition used. 

Style discharges, deeds of restriction, affidavits, a power of attorney and some standard notification letters (factors, LBTT advice etc) will follow in due course.

View the residential style dispositions

January 2016

Change to CML Handbook as a result of Mortgage Credit Directive

We would like to draw members’ attention to an amendment to the Council of Mortgage Lenders’ (CML) Handbook, which is due to be published in the online version of the Handbook on 1 February 2016.

The reason for the change is to incorporate the concepts of binding offers and reflection period, introduced by the Mortgage Credit Directive (Mortgage Credit Directive Order 2015), which comes into force on 21 March 2016. The Directive follows upon DIRECTIVE 2014/17/EU of the EUROPEAN PARLIAMENT.

The change to the Handbook has been explained by the CML as follows:

‘Summary of proposed change
Additional wording in clause 10.2 to reflect the mortgage credit directive and concepts of binding offer and reflection period. The wording allows for the conduct of the borrowers agent (in this case, the conveyancer) to act as the acceptance of the mortgage offer on the borrowers behalf, by submitting a Certificate of Title (COT) to the lender.  This will allow the lender, in the case where the lender does not require the borrower to formally accept the mortgage offer, to have evidence of the acceptance by virtue of the COT being submitted; it also indicates that the borrower has bought the reflection period to an end.

This change is in conjunction with clear explanations in customer literature about accepting the offer and the reflection period; and a proposed change in the Approved Certificate of Title for E&W which reflects the wording in the Handbook.

Jurisdiction
England & Wales; Scotland

Location in Handbook
Clause 10

Revised wording (change in bold)
10.2 We shall treat the submission by you of the certificate of title as confirmation that the borrower has chosen to proceed with our mortgage offer and as a request for us to release the mortgage advance to you. Check part 2 to see if the mortgage advance will be paid electronically or by cheque and the minimum number of days notice we require.

Previous wording
10.2 We shall treat the submission by you of the certificate of title as a request for us to release the mortgage advance to you. Check part 2 to see if the mortgage advance will be paid electronically or by cheque and the minimum number of days notice we require.’ 

 

Additional change to CML Handbook Clause 5.3

There will also be a change on 1 February 2016 to Clause 5.3 of the CML Handbook relating to searches and enquiries. The final wording of the amendment has yet to be agreed. Further details on this will follow as soon as they are available.