Can a Solicitor Act for Both Parties in a House Sale?

Why would a solicitor act for both parties in a house sale?

There are benefits to using one solicitor:

• reduce unnecessary communication back and forth between two solicitors;
• key documents only need to be reviewed once, rather than by both solicitors; and
• the above may result in an overall saving on legal costs.

When can a solicitor act for the buyer and a seller?

There are some exceptional circumstances where the interests of the buyer and seller are aligned, and two solicitors from the same firm could act for both, under separate supervision. Both clients must be long-standing clients of the firm, and be fully aware of the risks, with the firm taking appropriate safeguarding measures.

There must be no conflict of interest between the parties; however, there are many conflicts which will arise after the process has begun, meaning that both solicitors will have to stop acting immediately and both parties will have to instruct a new solicitor, costing time and money.

Scenarios where one solicitor firm may act for both parties

• 1When parents sell to their child undervalue, the parents and the child likely have their interests aligned, with a common goal to convey the property to the child at a reduced cost as a gift. The parents may be required to seek legal advice from an independent solicitor.
• 2When an individual is selling a property they own privately to their own limited company , they are essentially both the buyer and the seller, and may need only one solicitor.
• 3When one spouse is transferring all or some of a property to their spouse , married couples and civil partners are generally assumed to have common interests, unless they are in the process of divorce, dissolution, or separation.

While some types of transactions are generally low-risk they must each be reviewed on a case-by-case basis. The solicitors will have to write up their risk assessment and justify their decision. If a conflict arises, both parties will have to find a different solicitor.

What is a conflict of interest in conveyancing?

Client conflict

Client conflict means that the buyer and the seller have opposing interests, meaning the solicitor cannot act fully in the interest of one party, without it being detrimental to the other. For example:

A survey reveals a defect with the property, such as a leak in the roof and subsequent rot in the timbers. It is in the buyer's interest to reduce the price to reflect the unforeseen cost of replacing the rotten timbers and repairing the roof; it is in the seller's interest to hold firm on the asking price, as they can't afford to borrow the difference in order to purchase their new home.

Own-interest conflict

This occurs when a solicitor's own interest conflicts with the client's best interest. For example:

• 1A client instructs their solicitor for the purchase of a house, but the house they want to buy belongs to the client's child'. In the event of negotiations the solicitor's interest in their child obtaining a higher price conflicts with their client's interest of securing a lower purchase price.
• 2A client instructs a solicitor for the sale of a house, but the client is the new partner of the solicitor's estranged ex-spouse. There may be a personal conflict of interest which compromises the solicitor's ability to act in their client's best interest.

Conflict between client and lender

Often the solicitor is acting for the buyer and their lender. This can pose a conflict of interest where there is a non-standard mortgage or if the solicitor is, for any reason, not using the approved certificate of title. If there is a conflict of interest, the solicitor must cease acting for the lender. For example:

The client loses their job. The solicitor's duty of confidentiality to the Client must come above their duty to disclose material information to the Lender. In this case, the solicitor would have to cease acting for the Lender.

What are the risks of using the same solicitor?

Where there is any room to negotiate on the price, both solicitors within the same firm may be forced to negotiate against one another, meaning they may be more likely to concede to the other party than if they were battling with a third-party solicitor. One party may ask their solicitor to withhold information about the transaction which would be advantageous to the other party, and certain sensitive information may be leaked within the office jeopardising the transaction. For example:

• 1The survey and legal work reveal a conversion listed as a bedroom does not meet legal regulations and therefore can't be sold as a habitable room. The solicitors could be tempted to drag out negotiations, making more money for their firm, rather than agree to a reasonable compromise quickly. Both clients suffer.
• 2The mortgage lender withdraws their offer and the buyer has to quickly source alternative funds. If the seller learned this through the buyer's solicitor and had competing offers, they may ditch the buyer and sell to another person, rather than risk a delay to completion. The buyer suffers.

What happens if a conflict of interest occurs?

The solicitors must report the conflict of interest and cease acting for both clients, immediately. Both parties will need to get new solicitors which will delay the transaction and add costs.

If a solicitor did not report a conflict of interest and cease work, the clients may be able to sue the solicitor, particularly if either were vulnerable, able to prove they did not fully understand the risk or were pressured into using the same solicitor. The solicitor may be 'struck off' by the SRA, meaning they are banned from practising law.