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Code for Completion by Post – new code

The Law Society has published the new Code for Completion by Post. It will come into effect on 1 May 2019. CQS-accredited firms must use the Code.

The Code has been updated following the CA decision in Dreamvar [2018]. The CA held (among other things) that the fraudster seller’s solicitor was in breach of the implied undertaking in the Code to the buyer’s solicitor, which required the seller’s solicitor to use the completion money for a genuine completion. As the purchase money was paid away to a fraudster, there was no ‘genuine’ completion and it is this that constituted the breach of undertaking.

The Law Society believes that the changes to the Code ‘make it even clearer that the seller’s solicitor is acting in a genuine sale’.

One of the key changes to the new Code is that it states that ‘all references to the “seller” are references to the person or persons who will be at the point of completion entitled to convey the legal and/or equitable title to the property’.

In addition, the notes to the Code state that ‘paragraph 8(i) of this code constitutes an undertaking that the seller’s solicitor has authority from the true owner of the title to the property named in the contract to receive the purchase money, and that such person is at the point of completion entitled to convey such title as the contract states will be conferred’.

While the new Code does not seem to take conveyancers beyond the decision in Dreamvar, many practitioners will be aghast at an undertaking that the seller’s conveyancer is acting for the true seller.

It is a reminder of the importance of firms carrying out proper due diligence and KYC checks when taking instructions on a sale. Firms might want to liaise with their indemnity insurers to find out their requirements. Some firms might even decide that some transactions are just too risky to take on in the first place. www.lawsociety.co.uk.

 

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