As we all know company buy to lets are somewhat a flavour of the month at the moment and likely to gain further favour as the tax regime unfolds. There a number of legal aspects which distinguish this type of case from an individual with a buy to let.
The list is far too long, but to give you an idea, full identification is required from all directors and any shareholders who hold more than 25% of the issued capital in the company. This could mean reviewing ID for a number of individuals.
The Memorandum and Articles of Association must be examined to ensure that the company has the power to borrow money and hold property.
All directors and shareholders will be required to complete personal guarantees drawn up by solicitors, and they must take independent advice from a third party firm of solicitors.
I think these examples highlight how complex carrying out legal checks on limited companies are when compared to personal ownership buy to lets.
The sorry fact is, mistakes in conveyancing are by far the biggest drain on professional indemnity for lawyers; consistently 50% or more. Whilst it may be the case that these issues may not necessarily come to light to prevent a matter being completed they will come to light when the client comes to sell or remortgage. This is when the lawyer is likely to get a call from a concerned client.
A brief romp through the pitfalls of conveyancing in the specialist lending market shows how numerous complexities can trip the unwary conveyancer up.
Intermediaries’ experience in the market and knowledge of the process puts them in an ideal position to advise their clients on instructing the right conveyancer to look after their interests. They will thank you for it and your position with this client and their family will be quite rightly their trusted advisor for all their future cases
This market is not about saving a few quid here and there on a conveyancing quote from the internet – it’s about picking the right legal partner to help you and your clients through what is a complex non-standard instruction- just as your client picked you because of your specialist skills.