Conveyancing Protocol

 
Background
 
In recent years, the level of complexity in completing a conveyancing transaction has increased markedly. As a result, there has been an increase in the cost of claims against practitioners arising from errors and omissions in completing a conveyancing transaction. In fact, claims arising from property transactions represent approximately 32% of total cost to the professional indemnity insurance Scheme.
 
The impact of this is felt by all practitioners through the increased cost of insurance. However it is also felt by the client who has suffered a loss due to an error or omission by a legal practitioner. Insurance can assist with any monetary loss — unfortunately the feelings of ill-will and mistrust may never be repaired. This also has an impact on the profession as a whole.
 
The significance of property transaction related claims has been such that it has come to the attention of the Scheme’s reinsurers, which have made it clear the profession must take active risk management/educative measures to minimize painful reinsurance cost increases.
 
To assist in addressing this issue, a conveyancing protocol has been prepared by Prof. Bill Duncan and Prof. Sharon Christensen of Queensland University of Technology. The objectives of the protocol include:
 
     
  • To guide and assist solicitors as to the standard of care and skill expected of a reasonably competent and diligent solicitor in a conveyancing transaction; and
    •  
  • To encourage and foster good conveyancing practices and standards in Queensland.
 
The Protocol has effect and application from 1 July 2006. The latest update is current from 10 September 2008. An outline of changes to the protocol is provided below.
 
Protocol
 
The Protocol consists of a general guide together with seven (7) sub-protocols each dealing with a particular type of conveyancing transaction. Therefore there are 8 documents making up the Protocol
 
     
  1. Queensland Conveyancing Protocol – This document contains a general guide on using the protocol and, importantly, a section entitled Standards of Conduct and General Responsibilities of Lawyers in all Conveyances
    2.  
  2. House and Land- Acting for the Seller
    3.  
  3. House and Land - Acting for the Buyer
    4.  
  4. Community Title - Acting for the Seller
    5.  
  5. Community Title - Acting for the Buyer
    6.  
  6. Commercial Contract - Acting for the Seller
    7.  
  7. Commercial Contract - Acting for the Buyer
    8.  
  8. Call Option or Put and Call Option
 
Supplementary Documents
 
There are a number of documents which supplement the protocol. However it is important to remember that the terms of the actual protocol must be considered in all circumstances. It will not be sufficient to simply use the supplementary documents.
 
     
  1. Questions for Buyer of Residential Property
    2.  
  2. Questions for Seller of Residential Property
    3.  
  3. Questions for Seller of Proposed Lot
    4.  
  4. Checklist 1 - House and Land - Seller (preparation of contract) 
    5.  
  5. Checklist 2 - House and Land - Seller (engaged after contract) 
    6.  
  6. Checklist 3 - Community Title - Seller (preparation of contract) 
    7.  
  7. Checklist 4 - Community Title - Seller (engaged after contract) 
    8.  
  8. Checklist 5 - House and Land - Buyer (engaged prior to contract) 
    9.  
  9. Checklist 6 - House and Land - Buyer (engaged after contract) 
    10.  
  10. Checklist 7 - Community Title - Buyer (engaged prior to contract) 
    11.  
  11. Checklist 8 - Community Title - Buyer (engaged after contract) 
    12.  
  12. Checklist 9 - Commercial Land - Buyer (engaged prior to contract) 
    13.  
  13. Checklist 10 - Commercial Land - Buyer (engaged after contract) 
    14.  
  14. Checklist 11 - Commercial Land - Seller (engaged prior to contract) 
    15.  
  15. Checklist 12 - Commercial Land - Seller (engaged after contract) 
    16.  
  16. Purchaser Enquiries
 
Compliance with the Protocol
 
It is important to note that the Indemnity Rule 2005 and the 2008/2009 insurance terms provide for a deterrent excess for any claim arising in respect of an issue addressed by the protocol and in circumstances where the practitioner is not able to demonstrate bona fide endeavours to comply with the protocol.
 
Many practitioners have expressed concern at the requirement to comply with the protocol given the imposition of a deterrent excess. In examining whether there has been a “failure to make a bona fide endeavour to comply with the conveyancing protocol”, regard will be had, amongst other things, to:
 
     
  • The period for which the particular materials have been available to the profession at large, and the actual content of those materials then available; and
    •  
  • The checklists that were, in fact, published at the material time.
 
Future Availability & Updates
 
At an appropriate juncture, it is proposed to make available a loose-leaf, bound, volume of the Conveyancing Protocol and Checklists to each Law Practice in Queensland.
 
The authors of the protocol, Professors Duncan and Christensen of QUT, have committed to providing up-dates to the protocol, as and when required for the next year at least; hence the adoption of a loose-leaf format.
 
Lexon has released version 3 of the Conveyancing Protocol. This release picks up a range of issues including:
 
     
  •  
    GST and non refundable deposits arising from recent cases including Phillips v Scotdale Pty Ltd [2008] QCA 127 and FCT v Reliance Carpet Company [2008] HCA 22. 
    •  
  •  
    Buyer Proposed Allotment and Land Sales Act issues arising from Three Pty Ltd v Body Corporate for Savoir Faire Community Title Scheme 3841 [2008] QCA 167.
 
The amended documents have been saved in PDF format with the amendments shown in track.
 
27 November 2008
 
Following reports of some search failures in non residential conveyances further amendments have been made to some protocol documents. 
 
They are:
 
     
  • Inquiries checklist
    •  
  • Commercial Protocol - Buyer
    •  
  • Commercial Protocol - Seller
 
Changes have been made to the protocols to emphasis the fact that a practitioner acting in a non-residential transaction may need to consider inquiries outside of those listed. A reference to environmental obligations at state and federal level has been added to the list of other searches in the protocol (eg 11.7/10.7)
 
The Purchaser Inquiries document is amended by adding telecommunications searches and a general warning that the list is not exhaustive.
 
28 November 2008
 
Lexon has produced two checklist packs relating to sales and purchases of residential property. These checklists packs replace the existing buyer and seller checklists 6 and 2 respectively. The checklists are detailed step by step guides as to critical components of the conveyance. They are also designed to allow practitioners and their staff to create file note evidence directly on the checklist as well as highlighting issues that should be escalated to a practitioner. The checklists in no way can substitute for proper training and legal experience. They are however a very useful prompt as to issues that should be addressed in the midst of a conveyance.
 
Feedback
 
It is important that the protocol remain current and reflect contemporary standards. Therefore feedback on the contents of the protocol is always welcomed.
 
Feedback may be sent to enquiries@lexoninsurance.com.au.




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