Property blog: There’s no such thing as a free lunch
Spring may have come both in season and recession but watching the pennies remains a top priority for many households. Lynne McCaffrey though wants to make sure savers stay savvy and don’t cut corners as well as costs:
“They say if something seems too good to be true then it usually is! Now I’m not a pessimist by nature but they are definitely preaching to the converted here! I am, what you may say, a peruser of small print. This job certainly lends itself to it!
“No-limit, high speed internet a penny a month… plus £25 line rental on top. Free beauty gift… but only when you spend £20 and the item’s only worth 99p. You know the kind. Or how about this one ‘Free Legals’… oh yes there’s plenty of caveats with that one!
“We are starting to see a worrying trend develop with a number of people remortgaging who, in an attempt to minimise the cost, are opting to take ‘free legals’ with their mortgage deal instead of using their own solicitor. However, as with all these ‘something for nothing deals’, they can turn round and bite.
“In many cases free legals are the antithesis of Ronseal; they don’t do what they say on the tin and can often come with a cost. If the remortgage deviates slightly from the norm, for example if it involves additional legal work, transfers or leasehold property, then it’s highly likely you will be charged for this and hundreds of pounds at that.
“We also have concerns surrounding who the solicitor is acting in the interest of. I’ll give you a clue… they are appointed by the lender, they will undoubtedly act for the lender on countless other legal matters, they are paid by the lender. So if things get a little rough, who’s interest will they protect?
“In case there’s any confusion, let’s be crystal clear – if anything goes wrong you are left unprotected and with no right to redress.
“So what can go wrong? Let me give you an example of a real case which landed the client with a £7000 bill.
“Keen to get ahead of the game, a homeowner found a new mortgage deal a few months ahead of the end of his fixed term. He requested that the remortgage did not go through until August in order to avoid paying the early repayment charge (ERC). However this request was not met and the mortgage completed in July. As a consequence he was landed with an ERC of £7000.
“Despite making his claim to the solicitors and even as far as the Legal Ombudsman, he was unable to claim redress for this and was left to foot the bill himself.
“Now I’m not claiming this wouldn’t have happened if he had appointed his own solicitor; human error happens after all even when the greatest care is taken. But he wouldn’t have had to pay the ERC, his solicitors would have. He would have had a contract with them and therefore they would have had a duty of care to him. Calls and/or letters detailing the request to delay completion would have been on record and therefore the firm would have been liable for the cost.
“The reason the ‘free legals’ solicitor wasn’t accountable is because the contract was not with the client but with the lender. The lender was happy so there was no wrong doing.
“Don’t get me wrong, I am a big fan of a bargain but there’s a time and a place for cost cutting. In my opinion that time isn’t when it involves something as big as your home.”
Lynne McCaffrey is a licensed conveyancer with over 18 years experience. As Head of Property at Goldsmith Williams Lynne is responsible for the day to day running of the property department, which specialises in conveyancing, remortgage, buy to let and bridging.
Content correct at time of publication