Solicitors in the news wrt property issues

The news in the past few days has had two seperate accounts of solicitors being a little less than legal in their property dealings. I want to ask a question about one particular aspect of these reports - it would appear that the gentlemen in question raised loans against the property deeds of some of their unsuspecting clients and used the proceeds to finance thier own schemes.

My question is - how can a homeowner check if someone has taken out a mortgage against their property against their will? Reason being is that my house does not have an outstanding mortgage and the deeds are kept at my solicitors office. Needless to say, i have no reason to suspect any wrong-doing on the part of my solicitor but these recent cases have got me wondering - if others can get caught by this, what is preventing it happening to me?

Maybe the Land Registry/Registry of Deeds would the place to start?

Markjbloggs said:

it would appear that the gentlemen in question raised loans against the property deeds of some of their unsuspecting clients and used the proceeds to finance thier own schemes.

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Is that what is alleged? I was under the impression that the loans raised were against properties in the solicitors' own names.

(This is not a challenge but a genuine request as I don't know the full ins and outs of the story)

I think efm is correct; It may also be alleged that multiple mortgages were taken out in cahoots with clients. I don't think it is being suggested that multiple mortgages were taken out unknown to clients (though I haven't followed it that closely). Time will tell.

I too thought mostly they had taken out multiple mortgage on their own properties. Banks seem to have been rather careless in this regard. In one case I read a property with a value of 500,000 had mortgages of 5 Million. Of course if the solicitors fund is liable for the mortgages the banks won't give a damn. It's not clear to me if this is the case. The other case was where people were purchasing property abroad. Did they give the money to the solicitor as property developer - then not protected by the law society or did they give it to the solicitor as a solicitor and money to be put in client account - then their money is covered by the solicitors fund. Also seems some of them (there are now 5 different firms of solicitors involved) were using money in the client's accounts for their own private purchases. There will be no problem though if the properties when sold = the mortgages. Back to ye old house prices again.

The Solicitors fund will not cover all the estimated losses suffered by the banks, hence their keenness to get into court and get their charges registered (as the Judge said to one barrister for a lending institution on Tuesday "You may as well join the queue").

The use of client funds to fund personal transactions is a different thing though, any solicitors practice will have a constant flow of client money in and out but an average level of say €1m, therefore the solicitor knows that if he used 50k he can use the next deposit to fill the hole and he just keeps on doing this. However an audit will show up the deficit and unless he gets a return on that 50k and repays it the trouble starts. I might add that it was illegal to use the 50k in the first place!

Bit of an Irish story here but heard off a lady that her daughter had agreed a sale of a house with one of these companies and paid the deposit to the solicitor the other side has claimed they did not recieve the money and the daughter is not able to contact the person in question. Im sure it will all come out when the forensic accountants step in. Worrying situation for all clients involved.

Anyone know what is the total in the fund? Is there a limit on how much could be paid out to each client such as a ceiling like the banks have for deposits? I'm not a bit sorry for the banks but at the end of the day they will not be at a loss you can be sure as they will be charging the rest of us to make up for it.

I think you are missing the point here, Banks like individuals rely on the professionalism of solicitors and rely heavily on solicitors undertakings, if this were not the case any transaction regarding property would take a hell of a long time and as a result there would be many more threads here with people airing their grievances about the banks.

"Be very wary of developers who offer their own lawyer’s legal services – you will certainly not get independent advice."

This I copied from the website of overseas property law. I thought the rest of you might be interested.

Quest - just because it would take a long time oughn't to mean that there aren't checks and balances.

From yesterday's Irish Times it would seem that one of the solicitor's (the one gone AWOL) has dealt dodgily with a client's property as an individual has submitted an affidavit to the court stating that they used said solicitor for the purchase of the house but not for any sale and had not signed the property over to the solicitor that property was one of those used for the mortgage.

Size of solicitor's fund:

According to 2Pack on thepropertypin:
I make it the compo fund for victims of dodgy solicitors is €35m + €10.3m reserves total funds €46m at most . Thats the Law Society Cleaned out then . Figures E35m on page 20 of [broken link removed] and E10.3m Society Reserves on page 18 of same , quote from page 20 ."

Mr. Lynn apparently owes €52m to 6 banks. And some more money to 4 other banks (the amounts are too small to mention, or too big to count).

Mr Byrne owes €9m to IIB and I read somewhere may owe even more than Mr. Lynn on fewer properties, but I can't find the link at the moment.

So, what do the solicitors on AAM think about all this?
- Is it widespread that solicitors are making use of client's money to gamble on property? (there have been suggestions from less reliable sources that this is the case - the "I'm a solicitor and it goes on all the time" rants. It would be comforting for people who have to use a solicitor (particularly for anything that involves deeds if this rumour could be put to bed).
- Should the law society have done more to 'discourage' Mr. Byrne from dipping into his client accounts last year?
- Does the law society have sufficient funds to cover the claims that might come against it? (I am presuming that if the money borrowed from the banks passed through the client account of the solicitor, it would constitute fraudulent behaviour covered by the law society's funds - this may not be the case!).
- Is there a conflict of interest for solicitors in representing victims against the law society?

They may well owe around €60m to the banks, but they have substantial properties to sell to pay off a good part of these loans.

But the other issue is whether the banks can claim from the compensation fund. It is not clear that they can. It's meant to protect clients of solicitors. Are the banks clients?

I see in today's Irish Times that Anglo Irish Bank has said that it has been their practice not to lend money against letters of undertaking. So although they have lent to the solicitors involved, their security has been "perfected".

Brendan

Brendan said:

They may well owe around €60m to the banks, but they have substantial properties to sell to pay off a good part of these loans.

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One of the issues was they raised multiple mortgages against these properties. What did they do with this money? Buy forther property that they further re-mortgaged?

It doesn't completely add up. Either these guys have large black holes in their accounts, or have large numbers of properties that don't have multiple mortgages?

They have large black holes, but the black holes do not equal the total size of the borrowing. There will be some assets to dispose of.

Brendan

I don't disagree with you. Has there been any reporting on the value of their investments? All I've heard is rough numbers on numbers of properties across different countries but no breakdown on type or value.