When accepting instructions to act in the purchase of a property, a solicitor, above all else, contracts to obtain a “good and marketable” title for their client. If the solicitor fails in doing so, it will be relatively straightforward for the client to demonstrate a breach of professional duty.
Whilst the title to most properties will be “good”, the key to a “marketable” title is access. Simply put, whilst a property with access issues will usually retain some value, that value is likely to be far less than a similar property on the market that enjoys the necessary right of access.
Lead Master Policy Insurers, RSA, have encountered all sorts of access related claims over the years. Our experience tells us that the prospects of resolving claims of this nature often depend rather more on the attitude of neighbouring third parties than on the ability of insurers to mount a robust legal defence of the solicitor’s actions.
The claims of this type that we encounter do not tend to involve any particularly complicated mistakes or misunderstandings by the solicitor. Rather, it is most often the basics that have been missed: a lack of attention to detail when considering the access rights, a failure to understand what is or is not included in the title or a failure to check with the client that what is included in the title is what they have been shown when viewing the property.
Remember that clients will almost invariably have visited the property whereas a solicitor rarely would, so it is crucial to consult with the client and make sure that the title matches their expectations, particularly in relation to access.
A long walk home
The clients had found just what they were looking for: a farm building that had been converted into a rustic, residential property in a semi-rural location that ticked all the boxes for the next stage of their lives. They instructed a solicitor to make an offer on the property, which was accepted. The purchase progressed and completed without issue. Or, so it seemed.
Shortly after their entry to the property, the clients were visited by a neighbour who claimed ownership of the driveway and parking area that had been marketed with the property. The dreaded term “ransom strip” was even mentioned. On making enquiries, it, unfortunately, transpired that the neighbour was correct in his assertions.
To make matters worse, the property was situated on a single track road and the nearest on-street parking was more than a mile away. Hardly ideal for the weekly shop, and think of the poor pizza delivery driver!
With the neighbour holding all the cards, options for the clients were limited. Either negotiate with the neighbour (from a position of extreme weakness) or explore remodelling the property to resolve the access issues.
A claim for diminution in value followed and insurers had no option but to settle this high value claim on best possible terms.
The best case scenario
In circumstances extremely similar to the above case, another altogether simpler resolution was found. However, this was not down to any skilful claims handling on the part of RSA. Rather, it arose purely as a result of the good will of a neighbour.
The solicitor was instructed to purchase a property on behalf of their client where, after completion, it transpired that there were access issues. It was identified that the clients’ new neighbour could help, and happily, she just happened to be a relative of the couple who had sold the property to the clients.
This reasonable neighbour, with no ulterior motive, agreed to a transfer of the relevant strip of land. All she asked for in return was that her nominal legal fees for facilitating the transfer were covered.
A happy ending on that occasion, but unfortunately far from the norm.
Neighbours at war
A couple of elderly sisters had always talked of retiring to the countryside together as neighbours. They found the perfect spot in the picturesque grounds of an old guest house and purchased two plots of land for development.
After the clients purchased their plots but before planning approval was obtained, ownership of the guest house changed hands. As a result of that change of ownership, it was discovered that the necessary servitude rights of access and for the supply of services had not been obtained for the two plots. Contrary to the positive outcome achieved above, the new owner of the guest house has been far from accommodating with regard to the sisters’ plight.
Many years have now passed and the bitter fight for access goes on. The owner of the guest house shows no sign of backing down, and what was the sisters’ retirement dream has turned into a nightmare.
Never, ever, assume
It is not just in the world of residential conveyancing that a lack of the relevant access rights can cause major issues.
The clients had identified the extension of a large, out of town, leisure and retail park as an ideal opportunity to grow their business. They ran a successful family restaurant in the area and saw one of the units that had become available as the perfect location for them to expand their loyal customer base. Now, in circumstances like this, it is natural to expect that a right of access to the unit, across the main car park, would exist. Wrong. As nonsensical as it seems, the clients were left with a property within the development that they and their customers had no way of accessing.
As business owners, the unit was practically worthless to them without the necessary access rights.
The Master Policy therefore had to pick up the bill for negotiating access rights with a number of difficult owners and tenants within the development, many of whom were restaurant owners themselves, with a clear vested interest in avoiding the potential for competition opening on their doorstep.
It has been a common sight in recent years for sports clubs to sell their dilapidated old stadiums, usually to residential or commercial developers.
Commonly, the proceeds of said sale are then used to finance the building of new, purpose-built stadia with designs of taking the club on to “the next level”.
In just such a scenario, issues arose as a result of the way in which the proposed sale was to be structured. This was to be in two stages. It was proposed that the car park servicing the rugby stadium would be sold in the first instance and that the sale of the stadium itself would shortly follow.
However, while the sale of the car park completed as planned, the sale of the stadium did not. The solicitors acting for the clients did not foresee these difficulties and failed to retain access rights across the site of the old car park to the stadium.
A substantial claim was pursued against the solicitor for the costs of acquiring an alternative right of access. It was also claimed that the clients required to borrow funds due to the financial difficulties directly arising from the solicitor’s alleged negligence and the lack of access to the stadium.
What can we learn?
A (non-exhaustive) list of tips arising from the above examples would include:
Always check with clients that the area being sold in terms of the titles and plans matches the property they have visited and are expecting to buy, including the location of any access routes, and document in the file that you have done so.
Report to the client on any restrictions or maintenance obligations that apply to the access rights you identify, and make sure that they are both current and validly created.
Insist on the seller obtaining a roads report from the local authority to find out the location and extent of adopted roads, rather than relying on a reference in the property enquiry certificate.
Check any plans report carefully to see just how the deed plan will be delineated on the cadastral map, and check for any gaps from the public road. Raise any concerns with your client or the seller as appropriate.
Use ScotLIS to identify and check the extent of neighbouring registered titles.
Pay particular attention when titles are being split that all necessary access rights are retained or created as necessary.
Where there is any doubt about access rights, consider requesting a warranty from the seller in the missives or defective title indemnity insurance.
It pays to take the time to make sure that clear and documented access rights exist which will satisfy the client’s needs.
Checking and reporting on them is an essential part of the conveyancing process, and any failure to obtain them will be a difficult claim to defend. The outcome of such a dispute is likely to depend on the attitude of others and can seldom be influenced by the disadvantaged clients, their solicitors, or insurers.
There is no substitute for a good solicitor’s attention to detail.
Kenneth Law is risk manager in the Master Policy team at Lockton