It remains a fixed principle in law that the conveyancer represents the seller no matter who appointed him.
This is because the seller authorises the transferring attorney, by way of a power of attorney, to transfer the property to the purchaser.
The parties may agree to use the purchaser’s transferring attorney, however, should the seller refuse, the transferring attorney of the seller must be used. Sometimes the agent insists that their attorneys on the panel are used. Regardless of who requests the transferring attorney, THE SELLER has the final decision.
This has been confirmed in a number of High Court decisions.
It is the purchaser’s responsibility to pay the transfer fees and therefore they often feel that they have the right to appoint the attorney. However, the purchaser is responsible to raise the finance and paying the full purchase price and costs, often by way of a bond, and the seller is generally more protected by his attorney managing these important elements and ensuring that these funds are received in order to effect an efficient transfer into the name of the purchaser.
The transferring attorney has to ensure that the purchase price is secured and available and a purchaser’s attorney may be persuaded to rely on the assurances of his client, the purchaser, that the money is available. This could result in dire consequences for both the purchaser and the attorney should this prove to be incorrect. It is generally regarded that the seller, as the owner of the property, stands to lose more than the purchaser and therefore has a stronger claim to the appointment of the conveyancer.
Should the parties agree to use the purchaser’s attorney it would be advisable to include a clause to such effect in the offer to purchase as well as the reasons for the appointment of such attorney.
These days it is increasingly common for buyers to try to enforce their own choice of a conveyancer, especially those shopping around for discounts.
Some agencies have been guilty of aggravating the problem. Attorneys have personally experienced cases where the seller specifically intends to appoint them as their conveyancer, only for both of them to find that the agency has already engaged a conveyancer of its own choice to issue a quotation for the buyer’s fees with a 20% discount automatically included. The quotation is presented to the buyer before the seller is even aware that an OTP exists!
This is highly unprofessional conduct on the part of the agent and the buyer, and one can only guess at what the ‘relationship’ between the agency and the quick-fire attorney is. This is also a direct violation of the EAAB Code of Conduct, and should the agent/agency be found in contravention to the code of conduct a fine and/or other penalties will be levied against the offending party.
This sort of conduct is highly prejudicial to the interests of all parties to a sale.
A purchaser, while still compiling his OTP, recently contacted an attorney and demanded a 25% discount on his fees as a right. The reason? Other conveyancers had done this for him before. When it was pointed out that the seller had the exclusive right to appoint the transferring conveyancer, who likewise had the right to charge a reasonable fee, he retorted, “why can’t buyers put up the transfer to any three conveyancers of their choice and accept the lowest quote?”
Another purchaser of an East Rand property, who had known for some time that a certain attorney was the nominated conveyancer, promptly (on the bond grant) approached another firm in Nelspruit (!) for a reduced rate and, on obtaining a 25% discount, told the attorney he would no longer be using their services. The Nelspruit firm was originally unaware of the seller’s attorney being appointed and immediately withdrew its quote. Why would the seller want to use an unknown firm in Nelspruit?
These are only a few examples of buyers who think that, because they are paying the transfer fees, they should be entitled to shop around and engage whichever conveyancer offers the fattest discount.
Just one matter in which John Gilchrist Attorneys were involved should be sufficient to convince any seller that it is not in his interests to allow his purchaser to appoint a conveyancer of his choice. The seller here let his purchaser choose the conveyancer who soon advised the seller in writing that the full purchase price (R2.4 million) had been paid to him in cash. When some months later the seller enquired why the transfer was taking so long the conveyancer replied that he had been obliged to refund the deposit to the purchaser in full because he had instructed him to repay it! The conveyancer justified his action by saying he had been appointed as the purchaser’s conveyancer and had to act on the purchaser’s instructions. At the same time, the seller discovered that the purchaser had totally demolished the seller’s home as well!
Fortunately, but only after some time and much sweating on the seller’s part, the situation was eventually resolved, but be warned!
It is not in the seller’s interests to allow a purchaser’s conveyancer to do his transfer.
When things go wrong, the conveyancer will shield the purchaser.
So, we’ve moved from the days where conveyancers were only allowed to market their services professionally so that the highest standards would be maintained and competition was based on service delivery alone to a new era where the goose goes to the highest bidder (more correctly here, the lowest bidder!) For those who think the buyers have a point, it must be remembered that every buyer will one day become a seller and will then be the one needing the most protection.
The only way we, as estate agents and other role-players, can restrain property buyers from thinking everything must go their way is to maintain our own standards and to avoid yielding to demanding buyers.