Separate Representation and ‘reluctant lenders’ – know how to get the result you need!

27 October 2017

Rarely do I write a blog with such personal input or knowledge.  However, I am currently going through the exciting (and stressful) process of buying my first flat.  I had never before considered that the right to choose my own legal representation would cause an issue for our lender.  However, if you are about to embark on this journey I implore you to read on, so you know how to deal with lenders and get the result you need to ensure that this right is not swept from under your feet.

Firstly, when you purchase a home, you will need legal representation.  There are currently well in excess of 10,000 law firms registered for practice within the UK, ranging from small one-man bands to massive corporate internationals.  As a result there is plenty of variety and choice for your legal representation.  My first top tip is go to a solicitor you can trust and will give you the service you require (don’t just base your choice on fees, of course this is important, but I – being a solicitor myself – would prefer a solicitor whom I can reach when I call them).  This is important, as buying a house is a big deal, and one of the major financial decisions of your life, a few hundred pounds spent now may save you a lifetime of woe!

Secondly, once you know who your lender is check with your solicitor if they are on the lender’s panel.  If they are your chosen firm will act on both your behalf and the lender’s behalf.  If not, your chosen solicitor will act on your behalf and the lender will need to appoint a solicitor to act on their behalf.  If you fall into the latter category read on for some helpful tips to ensure the process is as smooth as possible.

If you have reached this paragraph, this will be because you have instructed a solicitor who is not on your lender’s panel.  As a result, you are in a ‘Separate Representation’ situation, i.e. the firm you have instructed will act on your behalf, and the lender will need to instruct a separate firm to act on their behalf.  There are therefore two solicitors involved.  This is where lenders can have a real ‘lack of understanding’ issue, because across the industry lenders struggle to deal with situations ‘outside the norm’ (here meaning ‘separate representation’, which to the contrary is quite normal and entirely acceptable).  It is important therefore to remember two things:

  1. It is your right to choose your own legal representation (trust is a big thing, and you should not have to sacrifice the trust you have in your solicitor just because the lender wants the solicitor on their panel); and
  2. The client is the boss not the lender, you are taking the loan much to the advantage of the lender (who, no matter how small interest rates are right now, will be making a lot of money from your borrowing).

The way to deal with the lender at this point is to make it abundantly clear from the outset that it is a ‘separate representation’ matter, and the lender needs to instruct their own solicitor, whilst at the same time confirming to your lender who your appointed solicitors are.  If you have a broker instructed, make sure that these points have been made abundantly clear, on their application to the bank.  Ensure that your broker does not take no for an answer, and fights your corner, the broker should not bow down to the bank, nor advise you to change your legal representation.  The Bank should deal with the application appropriately, and your broker should make sure it happens (at the end of the day they are getting paid to get you a mortgage, they should therefore need to work for it). 

During my 2 week ordeal I spoke to numerous brokers and my lender on many occasions who both advised me ‘separate representation’ cannot be done.  I can happily tell you they are both wrong.  I know because I have made it happen simply because I stuck to my guns and didn’t take no for an answer.  There appears to be a practice across the industry of banks ‘railroading’ purchasers into submission to appoint a solicitor on their panel, by simply being awkward.  This is wrong, is an unfair practice and must not be tolerated.  However, things will not change until purchasers stand up to the banks and remind them who ultimately is in charge.

Whilst this can be cause for a headache I have proved that by applying a little pressure and standing firm, you can get you the result you need.

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