The legal services watchdog has experienced a significant surge in allegations of misconduct by solicitors relating to property transactions.
A new report reveals a large number of complaints have been made by banks about solicitors failing to discharge undertakings connected with property deals.
The issue was previously a major feature of Law Society investigations following the financial crash of 2007-08.
Solicitors routinely give undertakings to banks that they will be responsible for doing certain things connected with their client’s purchase of a property.
For example, this could include stamping and registering the transaction in order to give the necessary security for the mortgage.
But a report by the Legal Services Regulatory Authority (LSRA) reveals it got 123 complaints about non-compliance with undertakings between the end of March and the beginning of September – a fifth of all complaints received in that time. In comparison, there were just 56 complaints relating to undertakings in the previous six months, and 31 and 39 in each of the reporting periods prior to that.
A banking industry source said the surge could be linked to Ulster Bank and KBC “combing their books” ahead of their exit from the Irish market. However, neither bank would comment.
The LSRA said it had been told by one bank, who it did not identify, that the bank had identified 400 instances where it believed solicitors had not discharged undertakings.
Non-compliance with an undertaking is considered misconduct and can lead to problems for home purchasers particularly when the owner looks to sell on the property.
Bank of Ireland did not say how many complaints it had made. In a statement it said: “Delays in compliance with undertakings, which is a key component of the conveyancing process, impact the parties in any conveyancing transaction. Where we have a complaint we go through the normal procedure and the parties engage in a professional manner with the LSRA.”
Allied Irish Bank declined to comment.
Between April and September, two complaints for failure to comply with undertakings and two for failure to register purchases were referred on to the new Legal Practitioners Disciplinary Tribunal, which only deals with the most serious complaints.
It can impose a range of sanctions up to recommending to the High Court that a practitioner be struck off.
In the report, the LSRA warned solicitors of the importance of ensuring undertakings are complied with in a timely fashion and that correspondence from banks following up on outstanding undertakings is not ignored.
In a statement, the Law Society said it “expects all solicitors to comply with statutory and public obligations in all matters to ensure that our profession’s guiding ethical principles are maintained to the highest standard”.
Earlier this year, the society’s director of regulation, John Elliot, issued a notice saying the society was continuing to receive a considerable number of complaints relating to undertakings. He warned solicitors that not only was dealing with a complaint time consuming, it may also involve a substantial financial claim.