Sellers, Choose Your Transferring Attorney

It is usually the right of the seller to nominate the attorney who will handle the transfer of their property and all the associated legal matters – and for good reason.  Of course, that doesn’t make it illegal for the purchaser to nominate the attorney.  However, the seller does expose himself to significant risk should he allow anyone other than his nominated attorney to effect the transfer.

In some cases, a purchaser may insist that his attorney be appointed.  This is usually motivated based on the fact that their attorney had agreed a lower fee to handle the transfer.  In other instances, there may be a linked sale – where the purchaser has a property that is being sold – and it is suggested that it’s easier for one attorney to deal with both matters.

Should a seller consider allowing the purchaser’s attorney to handle the transfer? In our experience, a seller should avoid this if at all possible.

When the seller appoints the attorney, then the conveyancer acts for the seller to ensure the contract is adhered to.  Both seller and buyer have obligations in a contract of sale – and the attorney needs to ensure that all parties fulfil these obligations.

When the attorney is appointed by the purchaser, and there is a dispute or non-performance by the purchaser, it becomes very difficult for the attorney to act against their client.  We’ve often been told that, in such a situation, they have a conflict of interest.

In reality what this means for the seller is that he has to then consult his own attorney and incur costs in doing so.  To further complicate matters, if the deposit is held by the transferring attorney who acts for the purchaser, the seller will have difficulty claiming damages against the deposit.  In such a case the transferring attorney will hold the deposit pending the result of a court case or settlement.

The situation gets even worse for a seller when the purchaser takes occupation prior to transfer.  We’ve often seen purchasers move into a property and then claim the seller has concealed defects.  They insist they are rectified at the sellers’ cost – even when the seller is not at fault.

In such a situation the seller is left with the option of either complying with the purchaser’s demands or taking legal steps to ensure the purchaser performs.   This results in delays and additional costs for the seller.

There is a counter-argument that the buyer has little protection in the event that the sellers’ conveyancer is used.  However, the conveyancer has a legal obligation to ensure the seller also complies with the contract.  In the event that the seller fails to do so, and the purchaser can prove such, the conveyancer has to protect the purchasers’ legal rights.

In our experience, where the estate agent has ensured the seller discloses relevant defects, and the contract is clear on the obligations or all parties, the potential for disputes can be minimized.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

 

 

 

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