3 way closing solicitor needed???

ceilishark

Hi All,

I am currently in the process of buying an investment property, offer accepted, deposit paid, my solicitor looking after the legalities on my side and sent off my mortgage application.

Today I got a call from Bank of Ireland asking me to pick a solicitor from their list who I had to pay to look after the Banks legal fees - my solicitor was not allowed to do this!

Needless to say I'm fuming over this! Has anybody else encountered this latest piece of extortion? What sort of additional costs does this bring? This was not an issue the last time I purchased!!!

At the moment I'm considering walking into the bank first thing in the morning and cancelling every current/deposit/investment account I have and moving my business else where!

Any info/costs/good news would be greatly appreciated.

Regards,

Jonathan

Kosseegan

That is the way it was for all mortgages up to 1987.The banks got stung in the bubble and now don't want to repeat the same mistakes.

ceilishark

Kosseegan wrote: »

That is the way it was for all mortgages up to 1987.The banks got stung in the bubble and now don't want to repeat the same mistakes.

Thanks for the reply Kosseegan, though I am still at a loss as to how me paying a second solicitor for the Bank prevents a bubble?

Delancey

Interesting only today it was reported by RTE that the IFA are up in arms over the decision of the Law Society that land transfers from farmer to child or other relative now require 2 Solicitors - one for each party.

This is expected to significantly the increase the costs associated with such transfers , Law Society say this is nescessary to protect everyone while there are the predictable accusations that it's just to generate additional legal fees.


http://www.rte.ie/news/2012/0628/ifa-law-society.html

Farcear

It's not a decision, it's still just a proposal at this point.

Delancey

Farcear wrote: »

It's not a decision, it's still just a proposal at this point.

Fair point , I stand corrected.

Kosseegan

ceilishark wrote: »

Thanks for the reply Kosseegan, though I am still at a loss as to how me paying a second solicitor for the Bank prevents a bubble?

No one ever said it would prevent a bubble. What happened during the bubble is that banks relied on the purchasers solicitor to secure their own position. In many cases the banks found that their security was not as good as they thought. This resulted in the banks not being able to enforce their security thus making the downturn more severe. The law society has also warned solicitors about giving undertakings in commercial transactions.
This will probably triple the cost of conveyancing for purchasers in many cases.

ceilishark

Info Update.

The Bank passed me on a list of ~15 solicitors that it had approved to do this work so I decided to give them a call to see if I could negotiate a price.

One by one they all stated that they had agreed a fixed fee with the Bank for providing this service, and even more surprising they all quoted the same (rather high) figure!!!

Now I'm no legal expert but this would seem like price fixing to me?

Any thoughts?

usernamegoes

ceilishark wrote: »

Info Update.

The Bank passed me on a list of ~15 solicitors that it had approved to do this work so I decided to give them a call to see if I could negotiate a price.

One by one they all stated that they had agreed a fixed fee with the Bank for providing this service, and even more surprising they all quoted the same (rather high) figure!!!

Now I'm no legal expert but this would seem like price fixing to me?

Any thoughts?

It sounds very much like a breach of s4 of the Competition Act http://www.irishstatutebook.ie/1991/en/act/pub/0024/sec0004.html#sec4

However, antitrust law is very complex so speak to the Competition Authority, see if they have an opinion on it.

Kosseegan

In the good old days the fee was fixed at £100 plus 1% of the purchase price for both solicitors.
The bank may have offered the solicitors the work provided they accepted a fixed fee as set by the bank. In that case there would be no question of the solicitors joining together to force the bank to agree a higher figure. You are being asked top discharge the banks costs as agreed between the bank and the solicitors. It would be surprising if the bank had agreed as different price with each solicitor.

Kosseegan

ceilishark wrote: »

Hi All,

This was not an issue the last time I purchased!!!



Jonathan

You are moving fast. It is not long since your first purchase!

http://www.boards.ie/vbulletin/showthread.php?p=77508963

ceilishark

Kosseegan wrote: »

You are moving fast. It is not long since your first purchase!

http://www.boards.ie/vbulletin/showthread.php?p=77508963

That was why I was so surprised!! I never heard of this three way closing before :eek:

Victor

ceilishark wrote: »

Needless to say I'm fuming over this! Has anybody else encountered this latest piece of extortion? What sort of additional costs does this bring? This was not an issue the last time I purchased!!!

What were the terms of the mortgage you were offered?

The banks have been stung by a lot of solicitors not doing their job.

krd

Victor wrote: »

The banks have been stung by a lot of solicitors not doing their job.

So their solution is to get even more solicitors involved.

dats_right

Regulations were introduced a couple of years ago prohibiting solicitors from giving undertakings in commercial property transactions. This change means that it is necessary for the bank to instruct their own solicitor to investigate title and put in place their security. This is the way all commercial property transactions should have progressed, even in the boom times. However the banks took short cuts and were often happy for the purchaser/borrower's solicitor to do the work on their behalf and accept solicitor's undertakings and certs of title. This was not the correct way of doing things and lead to a situation were there was enormous potential for conflicts of interest.

Three way closings are best practice and the correct approach. Whilst this does mean additional costs for the borrower this in my view is a small price to pay to have a system that functions properly.

Victor

dats_right wrote: »

Whilst this does mean additional costs for the borrower

Not quite. It merely means the cost is shown up front as opposed to being absorbed in the mortgage rate.

Milk & Honey

Victor wrote: »

Not quite. It merely means the cost is shown up front as opposed to being absorbed in the mortgage rate.

No quite. This is work that wasn't being done before so there was no charge to put on the mortgage.

Right 2B a liar

Why should the customer pay for the bank's due diligence? I agree the bank should have its own independent legal advisor, but I can't see why the bill should be passed onto the borrower purely because of the imbalance of power between the parties.

Kosseegan

Why should the other customers of the bank or the shareholders pay for the work in processing one individuals loan? The due diligence is the necessity to examine the quality of the security offered by the borrower. Not unreasonably, the borrowers pays.

Victor

Milk & Honey wrote: »

No quite. This is work that wasn't being done before so there was no charge to put on the mortgage.

While there was no direct cost up front, there has been a cost to the banks, government and society through not carrying out those checks.

Predalien

Do banks not have legal departments with in-house solicitors that could do the necessary work? Seems a backwards step to levy more costs on buyers at a time when the housing market is heavily depressed.

Right 2B a liar

The bank is a service provider out of which it makes a profit out of which it should pay for its own DD. Just because the bank pays for the DD it does not mean it will be passed onto their customers, if the shareholders are unhappy with their performance they have multiple actions they can take. Banks too benefit from loans and if people didn't borrow banks would not survive, it is enough for the borrower to pay their own solicitor.

Farcear

External solicitors have better insurance cover.

Milk & Honey

Victor wrote: »

While there was no direct cost up front, there has been a cost to the banks, government and society through not carrying out those checks.

The banks lost money through not having proper security but the cost falls on various parties, notably the taxpayer, possibly depositors and shareholders as well as borrowers. It was not paid by the individual who got the loan in his mortgage in any real sense. There are people on trackers who did not have to get a second solicitor involved and whose loan is not going to change no matter what losses the bank suffers.