When we undertake an educated, experienced professional to provide a service, we expect a certain level of care and for that service to be completed adequately.
Unfortunately, professionals such as Solicitors do not always meet our expectations and can sometimes fall below what is considered their expected duty of care.
When this occurs, it can be considered negligent and there may be a case to make a claim on the grounds of professional negligence. We use a recent case example to demonstrate how this can occur.
Specters successfully settled a claim on behalf of a Lending Company against their former Solicitor for failing to remove an existing Legal Charge as security against an existing loan.
Our Client carried on a business as a Lender of secured loans to businesses and individuals. Our Client made a substantial loan sum to a company. This loan was guaranteed by the Director of the Company.
Security for the loan was given by a debenture by the Borrower and a First Legal Charge over a freehold Property that was owned by the Borrower.
During the loan transaction, it became apparent that an existing Legal Charge had already been secured against the Property in the favour of another company. Part of the loan was to redeem the existing charge.
Our Client instructed a Solicitor to ensure the loan was secured by way of a First Legal Charge over the Property. During the course of the loan transaction, our Client’s Solicitor sent the Borrower’s Solicitor a standard form of undertaking which stated the Borrower Solicitor had to discharge of all registered charges affecting the property and to also ensure the removal of any restrictions registered against the property title.
The Borrower’s Solicitor in fact returned an amended undertaking removing the clause.
Our Client proceeded with the loan transaction unaware that the existing Charge remained on the Property.
The Borrower then defaulted on payment and our Client initiated possession proceedings.
To our Client’s disbelief the existing Charge remained which effectively meant that our Client was the Second Charge and would be unable to recover any of the loans.
Specters successfully brought a claim against our Client’s former Solicitor for negligence and recovered the total sale price of the Property.