IN NOVEMBER of 2010 the Law Society of Ireland established a task force to consider whether or not existing guidance and regulations relating to solicitors acting for both vendor and purchaser in property transactions were adequate to protect the public interest and to make any appropriate recommendations.
It was chaired by Catherine Treacy, former chief executive of the Property Registration Authority.
The task force reviewed the systems applicable in other jurisdictions and also consulted widely before producing its report in March 2012. It recommended that there should be a prohibition on a firm of solicitors acting for both sides in property transactions (ie where one party makes a gift to another), subject only to very limited exceptions.
Historically, solicitors often acted on behalf of both parties to a property transaction provided that they were satisfied that no conflict of interest arose. In voluntary transactions they often sent the person making the gift to another solicitor for independent advice. These practices developed over a period when the issues surrounding property transactions were far less complex than they are today. There have been a number of High Court decisions arising out of the fact that solicitors had acted on both sides, and in those cases the High Court was extremely critical of the practice. In one case, the then president of the High Court described the practice as “highly undesirable”.
As far as voluntary transactions are concerned, the task force was particularly influenced by a study undertaken by the HSE and UCD in 2010 which found that 94 per cent of financial abuse of the elderly is carried out by family members. It also noted that there is a 91 per cent level of household ownership amongst elderly Irish people, and that among the types of financial abuse were elderly people being forced or misled to “sign over” ownership of a home or property against their will.
The chair of the HSE/UCD group submitted to the Law Society “where voluntary transfers of property are being entered into, it should be made mandatory for solicitors to ensure that individual family members obtain separate legal advice to ensure that there is no conflict between the interests of the older person and the donee of the property”.
The council of the Law Society accepted the task force’s view that an outright prohibition upon solicitors acting for both sides in property transactions (subject only to very limited exceptions, eg the transfer of a family home into joint names) will improve the protection for clients and solicitors against the possibility of any conflict of interest arising. It will bring greater certainty and clarity for solicitors and clients in such transactions and overall it will underpin confidence in the conveyancing system in Ireland.
The Law Society has now made regulations to give effect to the recommendations of the task force, which come into effect in January, 2013.
DONALD BINCHY
