In the recent case of Redstone Mortgages Limited v B Legal Limited  EWHC 3398 (Ch)the Court considered preliminary issues in a claim for negligence against B Legal arising from their handling of four residential conveyancing transactions. The Court found that in respect of two of the four properties, which were owned on a shared ownership basis, B Legal was negligent in providing unqualified Certificates of Title to Redstone’s predecessors in title, Beacon Homeloans Limited.
Two mortgage advances were provided by Beacon: one to a Mr Howard to be secured against a property in Northwich (the Howard Loan) and one to a Mr McOwen and Ms Parsons to be secured against a property in Wadebridge (the McOwen Loan).
The Howard Loan was a remortgage and the McOwen Loan related to a purchase. Both properties were to be owned on a shared ownership basis between the borrowers and a local housing association. The borrowers were restricted in their ability to charge the properties.
In respect of both loans, the Court found that B legal had provided written disclosure to Beacon (a written memorandum for the Howard Loan and emails for the McOwen Loan). However, in respect of both loans, B Legal subsequently submitted unqualified Certificates of Title. In doing so, B Legal certified that the properties were free from any restrictions or encumbrances which at the time of completion might reasonably be expected to materially affect the value of the property or its future marketability.
Despite having notified Beacon in writing of the existence of the shared ownership arrangement, albeit not expressly in relation to the Howard Loan, the solicitors were held to be liable in negligence for subsequently providing an unqualified Certificate of Title. The case reaffirms the importance of the Certificate of Title in conveyancing transactions.