There has been significant support from estate agents for the new Material Information rules due to be announced by Trading Standards this month, with 83% of agents supporting the concept of more upfront information being made available to purchasers pre-offer, according to a new survey from HOP (the Home Owner’s Passport).
However, there is uncertainty about where this information will come from.
Some 44% of agents surveyed said they were likely to obtain the information directly from the vendor. Whilst this has been a credible option for the limited requirements of Part A, it is likely that Parts B and C will include data such as restrictive covenants and easements, which often vendors don’t know about. This question of where to get accurate information will become a live issue for agents very quickly after the new rules are introduced.
The next two preferred sources of the data for the agents that responded to the survey were from a conveyancer or direct from an existing CRM provider; and these may well become more reliable option for agents. Many lawyers are already starting to provide pre-offer instructions and title fix services, and tech onboarding solutions such as HOP can provide API integrations of the required data directly into CRMs.
Sally Holdway, director at the HOP, and who was herself a practising conveyancing solicitor commented, said: “As we move towards the inclusion of what has traditionally been seen as ‘conveyancing’ data in the new rules, our advice to agents is to obtain this information either directly from lawyers, or from the same sources the lawyers use.
“The potential sanctions for getting this wrong are significant for agents, so it is important to get it right first time. As we have built our Material Information Reports in HOP we have been careful to do it to existing conveyancing standards, so agents can trust the results.”
Despite the concerns about sources for reliable Material Information, the survey revealed that there is also broad support from agents for upfront information to go beyond the Material Information prescribed by the NTSELAT rules, and include all of the contract paperwork and searches the conveyancing solicitor will required.
Some 72% of estate agents supported contracts packs being available pre-offer, and these being attached to a badge such as ‘Contract Ready’ so consumers can readily identify properties where the paperwork was in place and ready to go.
One final ask from agents was for more support with the new rules. Only 50% of estate agents surveyed were aware of Parts B and C of the Material Information requirements, and 94% wanted more training. NTSLEAT have already confirmed that the new rules will be accompanied by comprehensive industry guidance, so hopefully this will be a short-lived problem.
In the meantime, the team at HOP has created a free training session for agents and lawyers on the expected changes and how to prepare, which is available here.
The importance of paying close attention to parts A, B and C of the material information guidance
I recently asked Howden Insurance how it thought MI might affect a solicitors/conveyancer Professional Indemnity Insurance position. The response (which raises some interesting questions about the source and validity of some of the information) is set out below:
“Although we don’t believe that the changes are particularly on the PII insurer’s radar at the moment, we are all in agreement that the increased responsibility placed on estate agents would be a positive move.
However, our understanding is that these checks would usually be expected to fall under the remit of a solicitor’s conveyancing transaction anyway, so there could be some risk involved for firms relying on the estate agent’s declarations. Any issues raised by estate agents at an early stage will no doubt stem the flow of fall through transactions, but once the conveyancing process is underway it is likely that any errors or emissions in relation to these checks could fall under the conveyancer’s professional indemnity policy.
As a result, we would anticipate PII underwriters having concerns when a legal firm relies on checks carried out by the estate agent, with an expectation that further checks are made and verified by the conveyancer and evidenced in writing to the client and on file before proceeding.”
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Sorry Rob I misunderstood your point in my reply below. I agree with you on this liability issue.
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Just a quick comment on the piece and Rob’s comment. Firstly it is very poor journalistically to say 83% of agents support the requirement and give absolutely no source for that. It is hard to believe. Secondly on Rob’s point, never in the history of human civilisation has a PII insurer reduced premiums for risk management initiatives, despite frequent expressions of preparedness to do so.
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David Jabbari CEO Muve
I see a source has now been added to the article but not really an independent survey if it is by a body (albeit a good one) that has a vested interested in the new regime coming into force.
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Np way do 83% support this
Why should they do the sols job for them?
Maybe sols need to stop working from home and buck up or charge less if the agent is doing all the work anyway
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If sellers instructed the conveyancer on, or before listing, the agent won’t (in your words Jan) “have to do the job for them.” Getting all of the MI together should be done jointly by agent and conveyancer.
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David Jabbari CEO Muve
Big issue that is being neglected is that if an agent provides information on covenants etc without any input from a solicitor then are they undertaking a duty of care with regard to that information and to any replies to a buyer that a negotiator may make when asked. Could a solicitor exclude its own liability at a later stage in relation to a matter relating to a query raised about covenants with the estate agent? This is why there is a strong chance that NTSLEAT does not really know what it is doing. The legal principle of “caveat emptor” – let the buyer beware – works because it ensures that the buyer is then incentivised to undertake their own full enquiry into what they are buying with the help of their advisers and the liability of the advisers is clear. It avoids placing an obligation on an estate agent to provide information which is beyond the legal duty of the agent. This extended material information requirement risks blurring these key principles.
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Its a good idea but its not a good working idea in practice, welcome to the real world.
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