Lenders' requests for files

The Law Society has updated its practice note for solicitors in cases where a lender is requesting that a solicitor discloses information or documents contained in a joint conveyancing file (i.e. a file maintained on an acquisition for the buyer and its lender). The update is motivated in part by renewed requests by lenders for information – perhaps investigating possible mortgage frauds – and in part by the decision of the High Court in the case of Mortgage Express v Sawali [2010] EWHC 3054 (Ch). In this case, the claimant lender sought an order for the delivery up of a number of conveyancing files from a firm of solicitors. The defendant firm's insurer argued that the court had no jurisdiction to order the delivery up of the entire file since some of the documents in the file would belong to the borrowers and/or would be covered by legal professional privilege. Some of the information in the file was confidential to the borrower, and disclosure would breach the SRA Code of Conduct. However, Mortgage Express relied upon an express declaration signed by the borrowers as part of their mortgage application which stated as follows: “I/We declare and agree that... I/We irrevocably authorise my/our conveyancer to send their entire file relating to the whole transaction (not just the loan) to you at your request.” Most other mortgagees rely upon similar waivers of privilege and confidentiality. The judge held that the waiver was valid. It was not unduly onerous or unfair and he therefore ordered the delivery up of the files. It made commercial common sense to uphold the waiver. Without it, a lender would be unable to police a transaction and to discover whether the solicitor has been in breach of duty.

Specifically on the issue of consent, the Law Society’s practice note says: “It is a matter of law whether any document signed by the borrower at the time of accepting the mortgage offer will constitute the required authority. That consent might have lapsed and you must be satisfied that there is a valid current consent. You should request a copy of the signed consent of the borrower relied on by the lender, rather than accepting an assurance from the lender that it holds a valid consent.”