Ground Rent Claims – Advice Reasonably Incidental To The Retainer

In the case of Solicitors Regulation Authority (SRA) v David Hayhurst [2020], the Solicitors Disciplinary Tribunal considered whether a Solicitor (Mr Hayhurst) had failed to provide adequate advice when acting for buyers in respect of four property development schemes and whether he was under an implied duty to carry out work that was reasonably incidental to the retainer.

SRA v David Hayhurst

Case summary

As mentioned above, the allegations against Mr Hayhurst related to his role when acting for the buyers of four property development schemes. The developers involved went bust and therefore none of the four developments were completed.

On 16^th June 2020, the Tribunal found that Mr Hayhurst had failed to advise his clients about the high risks inherent in the property development schemes that they were investing in. The SRA said that the schemes were not inherently dubious but were inherently risky and exactly the type of risks that a solicitor ought to advise their client on.

Negligence claims against property solicitors

At Nelsons, we deal with a number of claims against property solicitors for failing to provide adequate advice in respect of onerous and unreasonable ground rent provisions in the lease. In some instances, we have seen conveyancers fail to provide any advice in relation to the ground rent claims. In the above case, there was a clear breach of duty to advise on the leasehold provisions.

However, on a number of occasions, we have seen conveyancers fail to advise on the foreseeable risks and implications associated with an unreasonable ground rent clause. For example, many clients, who have a problematic ground rent clause, are experiencing difficulties marketing their property or attempting to re-mortgage. The above case demonstrates that a professional should consider and warn clients in respect of the risks that are material to their retainer.

In SRA v David Hayhurst, the client care letter advised the clients to take independent advice on such schemes. However, the SRA confirmed that an inexperienced client will need and is entitled to expect their solicitor to take a much broader scope of the retainer and their duties than with an experienced client. Many purchasers affected by ground rent are not experienced property investors and rely on their solicitors to take a broad approach and assist them in terms of the transaction.