Early Payment fees not paid by solicitor

[RWV]

I recently purchased a new house on the sale of my previous house. 3 weeks ago, I received a letter from my mortgage lender advising that there was a balance owing of over £6,000. The letter stated that they had tried contacting my conveyancy solicitor regarding the issue but hadn’t received a response.

It has since transpired that the £6,000+ owing was down to an unpaid early repayment fee that was incurred when changing mortgages. Whilst we have the new mortgage with the same lender, as it hasn’t been ‘ported’ to the new house, a new mortgage was taken out and the early repayment fee was payable.

When we contacted our solicitor about this, we were advised not to worry as they had been given assurances, that the early payment fee wasn’t payable as they had been advised by the lender of this fact by phone. The lender can find no record of this conversation. The solictor has no name of who they spoke to either.

Our solicitor has now advised ‘bad news’ it is payable, they have no record of who gave this advice to them that it wasn’t payable, and we must therefore pay the sum owing.

As far as we were concerned the house purchase was completed as we had received the balance from the sale of the house, which we have since spent on renovations. We are totally shocked to be asked for £7k 3 months after the purchase.

We have spoken to the solicitor who have apologised for their mistake and are offering us £200 compensation.

Without mentioning the immense stress and time this has taken over the last few weeks, we feel that this offer is insulting and the fact that we are expected to pay this sum, after we contracted the solicitor to complete the transaction on our behalf seems very unjust.

What are our options? We have spoken to the legal ombudsman, who have said we have a case, but we must try to settle first and allow up to 8 weeks for a resolution. We really don’t know what to do as, we have no savings to cover this and is unexpected as we thought all our payments were settled after our move 3 months ago.

Any help and advice would be very welcome!

[Diana M]

Re: Early Payment fees not paid by solicitor

That must have come as a bit of a shock to you!

Did your solicitor show you the Redemption Statement which the lender sent (you should have been sent a copy too) which would have had a breakdown of how much was required to redeem the mortgage and why?

If your solicitor has admitted there was a mistake and offered compensation then you should ask them to compensate the full amount (£6k) in a complaint to the firm's senior partner.

I would also suggest to them that they may have been professionally negligent which will force them to report your accusation to their PI insurers who will deal direct with you.

You can complain to the Legal Ombudsman at the same time.

Check your paperwork to be certain that the ERC is actually payable. Some lenders don't charge the ERC if you are doing an 'internal remortgage' or taking out a new loan on another property (as you have done).

What was the difference in the loan size? Did you borrow more or less to buy the new property than the existing loan which you redeemed?

Why didn't you port the existing mortgage to the new property? Do you now have a better or worse interest rate?

Who's the lender?

Who 'advised' you on the new mortgage product?

Di

[RWV]

Re: Early Payment fees not paid by solicitor

That must have come as a bit of a shock to you!

Did your solicitor show you the Redemption Statement which the lender sent (you should have been sent a copy too) which would have had a breakdown of how much was required to redeem the mortgage and why?

If your solicitor has admitted there was a mistake and offered compensation then you should ask them to compensate the full amount (£6k) in a complaint to the firm's senior partner.

I would also suggest to them that they may have been professionally negligent which will force them to report your accusation to their PI insurers who will deal direct with you.

You can complain to the Legal Ombudsman at the same time.

Check your paperwork to be certain that the ERC is actually payable. Some lenders don't charge the ERC if you are doing an 'internal remortgage' or taking out a new loan on another property (as you have done).

What was the difference in the loan size? Did you borrow more or less to buy the new property than the existing loan which you redeemed?

Why didn't you port the existing mortgage to the new property? Do you now have a better or worse interest rate?

Who's the lender?

Who 'advised' you on the new mortgage product?

Di

Hi Di

Thank you for your helpful response. We have never seen the redemption statement. We know from talking to the lender (Nationwide) that they were sent the redemption for the higher amount, but they paid a lower amount not including the Early repayment fee.

The bank is adamant that the ERC is payable. The new mortgage increase is approx £150K extra. We switched mortgages as the rate was lower than our previous and our broker advised us that it would be cheaper to switch.

the solictor we are using is the one recommended by nationwide when we purchased our first home, four years ago.. so as they recommended the first time and all was well, we thought we'd be in safe hands!

The ERC is actually closer to £7K. the solicitor has mentioned that we have 3 options, we could ask nationwide to add sum to our mortgage (no way as the interest would be sky high!), or negotiate a repayment plan with nationwide or 'perhaps' they would pay it to close the file, and we would set a payment plan up with them.

The solicitor mentioned that they were in breach of contract with nationwide and want to get this wrapped up asap.

I'm nervous as ultimately, the bill is in my name and Nationwide say i am liable!

Very worried!

[Diana M]

Re: Early Payment fees not paid by solicitor

The ERC is actually closer to £7K. the solicitor has mentioned that we have 3 options, we could ask nationwide to add sum to our mortgage (no way as the interest would be sky high!), or negotiate a repayment plan with nationwide or 'perhaps' they would pay it to close the file, and we would set a payment plan up with them.

The solicitor mentioned that they were in breach of contract with nationwide and want to get this wrapped up asap.

I like the sound of Option 3 where the solicitors pays the Nationwide only without you paying back the solicitor if they have goofed.

You don't want a negative marker (default) on your CRA file from Nationwide so you want to get this wrapped up asap too.

Di

[RWV]

Re: Early Payment fees not paid by solicitor

Thanks. I feel like everything is on hold now until we get this sorted. We were so excited moving in, and now any plans we have are now on on a hiatus until we solve this. I will raise the complaint to the senior partner as suggested. It's nice knowing that we really do have cause for complaint. The solicitor has treated us like it is our fault and we should know. It's frustrating as we paid them to take the stress out of the transaction!.. feel like i could have done a better job myself! Thank you

[Diana M]

Re: Early Payment fees not paid by solicitor

The bank is adamant that the ERC is payable. The new mortgage increase is approx £150K extra. We switched mortgages as the rate was lower than our previous and our broker advised us that it would be cheaper to switch.

If you used a broker to arrange the new mortgage then I wonder if he has some responsibility in this.

He told you it would be cheaper to switch to a new product but did he also factor in the issue of paying the £7k ERC if you did?

He may have been paid a commission/fees by the Nationwide for introducing the business. Did you also pay him a fee for arranging the loan?

Was he a tied broker (an AR only able to 'sell' you Nationwide products) or was he a whole-of-market broker who may have been able to source an even better deal with another lender?

Ask yourself if the replacement mortgage may have been missold.

Di

[Peridot]

Re: Early Payment fees not paid by solicitor

Hi,

What a pain, takes the shine off your new home!

From your indication that the redemption figure showed the full amount (ie including the ERC) I am at a loss as to why the solicitors did not pay this. If they had the conversation with the lender then why was a new redemption statement not requested which indicated the correct figure.

I am concerned all the talk of types of mortgage, amounts and interest rates may detract from what appears to be the conveyancers error!?

You need to make the complaint to the conveyancers firm/Co and request copies of the file, including the redemption statement that the firm obtained prior to completing. This should at least shed some light on the situation. You should also contact the mortgage lender and ask for copies of the figures they sent to the conveyancers so you have something to compare.

At the moment there is a lot of speculation over exactly what redemption figure was requested and as I say, if a conversation was had then a new redemption figure should have been provided. If this wasn't done is the conveyancer not at fault?

Get the copy documents and then we can see where to go from there.

[Diana M]

Re: Early Payment fees not paid by solicitor

The fact the firm has already offered compensation for their error helps

My suggestion of exploring whether the replacement mortgage was missold by the broker was in addition to my suggestion to make a formal complaint to the firm's partner about the conveyancing error.

The OP may have suffered a double whammy. If so then both cock-ups can be persued at the same time.

Di

[RWV]

Re: Early Payment fees not paid by solicitor

Hi All

Just an update. We have now since received a copy of our file including the Mortgage Redemption Statement that the lender sent the Conveyance Solicitor. It did include the ERC amount, so as 'Peridot' has mentioned above, I am at a loss too, as to why they never settled the full amount.

Our solicitor has now given us their final response on the matter, which is an offer of a full refund of their fees for the purchase ( not the sale side). This equates to approx £600. I am not happy with this offer at all, and feel that the solicitor should pay the ERC as they were contracted to do in the first place. The solicitors has been quite robust against us, in stating that we 'cannot profit from their mistake'. There hasn't been an apology but just accusations and making us feel like we are in the wrong. I am not trying to make a profit, I am trying to go back to the point where I thought the sale of the house was completed some months ago. it has been really stressful. We've now referred the matter to the legal ombudsman and i'll let you know how it goes from there.

[des8]

Re: Early Payment fees not paid by solicitor

unjust enrichment v change of position