Successful Professional Negligence case results in couple avoiding penalty interest for delayed property purchase

Prior to engaging Jack Lindgren

The clients, a married couple, wished to sell their property and purchase another to live in. They engaged a Solicitor to act for them in relation to the sale of the first property, and also in relation to the purchase of the second property.

As the clients required funds from the sale of the first property to purchase the second, they instructed their Solicitor to make sure that the contracts were “interdependent”, so that they would not be required to purchase the second property if the sale of the first was delayed, or otherwise did not proceed.

The clients signed the contracts in the Solicitor’s office. At the time of signing, the clients asked the Solicitor to confirm the contracts were in fact interdependent, and the Solicitor reassured the clients that they were.

After both property transactions had completed, the amount received by the clients as the surplus from their purchase was less than they had expected it to be. They asked the Solicitor to provide a breakdown of the amount received by them. The Solicitor provided, for the first time, a settlement statement which showed that the clients had paid penalty interest and an amount of legal costs to the vendor of the second property, due to their failure to comply with a “notice to complete” issued by the vendor. The clients had never seen a copy of the notice to complete.

Our role

An comprehensive investigation was carried  which showed that: –

  1. The Solicitor had failed to ensure the contracts were in fact interdependent (and had therefore misled the clients when he advised them that they were);
  2. The Solicitor had failed to inform the clients that the vendor of the second property had issued a notice to complete until they received the settlement statement; and,
  3. The Solicitor had agreed on the clients’ behalf to pay penalty interest to the vendor of the second property, without seeking their instructions to do so.

Significantly, the Solicitor’s failure to advise the clients of the issue of a notice to complete denied the clients the opportunity to obtain any form of bridging finance, or to otherwise comply with the notice.

A comprehensive letter of demand was sent to the Solicitor detailing the issues identified from a review of the file.

Outcome

Within one month, the Solicitor paid to the clients the full amount of the penalty interest and legal cost they had paid, and refunded half the legal fees rendered to the clients.