Practice Management

Risk Alert July 2013

Changes to the policy for the 2013/2014 year
For a few years now, we have been warning the conveyancing profession of the possibility of an increase in the deductibles for claims arising out of conveyancing matters. These deductibles have now been increased in line with those for prescribed RAF/MVA matters.

The increase in deductibles can be attributed to the rising numbers of claims arising from –

  • the unauthorised payment of trust money;
  • an ongoing failure by conveyancers to supervise paralegal staff;
  • and conveyancers’ failure to put in place checks and balances to ensure that documents are accurate and correct procedures are followed (eg FICA).

There are no other substantive changes to the policy for the coming year.


Some tips for the prevention of conveyancing claims:  

(These tips may seem trite, but failure to observe them has led to many of the claims on our books)

Beware of scams and warn your staff of these.  
Ensure that unqualified staff is properly supervised.  
Ensure you have Minimum Operating Standards (MOS)/ Standard Operating Procedures (SOP) in place for your conveyancing department.  
Ensure you have workable checks and balances in place to ensure that all procedures i.t.o your MOS/SOP are observed.  
Conduct regular file audits.  
Ensure that FICA is properly applied without exception.  
It is the conveyancer’s responsibility to check all documents thoroughly and ensure 100% accuracy {see Margalit v Standard bank of SA Ltd 883/2011 [2012] ZASCA 208}.  
Always do Deeds Office searches and take note of the relevant information when drafting documents.  
No payments should be made from trust without the express written permission of the depositor.  
The originals of all important documents should be checked and copies certified by the conveyancer.  
Avoid unnecessary delays.  
Do not pay out the deposit or purchase price before transfer, unless there is adequate security in place and you have written permission from the purchaser.  
Do not agree to pay unsecured creditors on behalf of your client.  
Do not accept instructions to change banking details unless you have satisfied yourself 100% that the instruction comes from the correct (and authorised) party.  
Know and take note of the applicable laws eg the Matrimonial Property Act.  
Avoid conflicts of interest.  
Ensure that your support staff understands the firm’s legal and ethical obligations.  
Parties and/or witnesses must sign documents in your presence.  
Read the article “Red Flag Areas in Conveyancing Practice”.

AIIF Risk Alert July 2013

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