No conveyancing service as promised

Press, 26 January 1988, Page 21

No conveyancing service as promised

PA Wellington The Government will not provide a Housing Corporation conveyancing service as promised before the 1984 election if lawyers’ conveyancing fees remain at their current low levels.

The corporation's client legal services director, Winston Hindmarsh, said if lawyers’ fees rose above what the corporation felt was reasonable, it would step in and offer its own conveyancing service.

Legislation passed last year enables the corporation to offer the service. The then Minister of Housing, Mr Goff, described it as ‘‘a sword of Damocles” hanging over the legal profession’s head.

Mr Hindmarsh said the corporation had enough staff to offer the service everywhere except New Plymouth and Invercargill. More staff could be employed if necessary. Lawyer’s conveyancing fees have been decreasing steadily since 1984 when a scale fee linked to house value was abolished and more competition allowed into the profession. The corporation was asking lawyers to supply quotes for their conveyancing services. These would then be made available to corporation clients to enable them to choose the most competitive, he said. Informal surveys by the corporation had shown the reduction in fees and corporation pilot conveyancing schemes planned for Manakau City and. Christchurch had now

been scrapped.

As most of the work involved in corporation client transactions was fairly straightforward, he did not forsee many problems with complications forcing lawyers to exceed their quotes. “If a fee is quoted the solicitor would be held to that,” he said. However, the Law Society’s executive director, Alan Ritchie, said the quotes given to the corporation could only be for hypothetical transactions as no two deals could be the same.

"A lawyer may be held to a particular quote for a particular transaction but not to a hypothetical quote,” he said. A lawyer who had made a quote would have to be able to say he could not do the work for that price if a transaction turned out to involve more than first appeared. Price was not the only factor to be considered in conveyancing work, he said. For quality and for work done promptly and efficiently it could be necessary to pay more. The corporation could not offer a service truly competitive with the profession, he said. Its original plans for such a ser-. vice charged a fee too low to maintain and it would have had to be subsidised. This would be unfair competition, he said. The society had moved to reduce fees before the Government stepped in. There had been no response from society members as yet. Mr Ritchie also said the Housing Corporation was

putting obstacles in house buyers' way by charging a loan application fee linked to the amount borrowed.

That was exactly the charge levelled at lawyers by the Government when they used to charge a scale conveyancing fee linked to house value, he said.

Late last year the corporation changed its loan application fee of $7O and its property inspection fee of $4O to a standard charge of 0.7 per cent of the amount approved for a loan.

Mr Ritchie said this amounted to about $420 for a $60,000 loan compared to the $llO charged under the old system. The Corporation’s lending director said the new percentage fee was introduced because the old fee had not been reviewed for many years. It was below the loan application rates charged by other lending institutions who charged between 1 and 5 per cent. It reflected the amount of work that went into arranging a loan.

The loan processing fee was not an obstacle to home buyers because it could be tacked on to the loan itself. This enabled clients to pay it at a later date when they were not so financially stretched. The $60,000 loan figure given as an example by Mr Ritchie was at the higher end of the amounts the corporation lent, he said. An average loan was about $40,000 which resulted in a fee of about $2BO to $250, he said.