Practical Exercise: Drafting a Conveyancing Referral Disclosure

Scenario

MyEstate recommends Smith & Green Conveyancing Ltd to sellers and buyers.

The arrangement provides that:

• MyEstate receives £175 when a referred customer instructs the conveyancer;
• The payment is made by Smith & Green Conveyancing Ltd;
• MyEstate employees may receive credit towards an internal performance target;
• Customers may choose any conveyancer;
• Refusing the referral will not affect an offer or MyEstate’s service; and
• Customer contact details will only be supplied after the customer agrees.

Learner task

Draft a disclosure that explains:

1. The identity of the provider;
2. The commercial relationship;
3. The amount MyEstate will receive;
4. The staff incentive;
5. The customer’s freedom to choose;
6. That their transaction will not be disadvantaged; and
7. That details will only be shared after agreement.

Model answer

Conveyancing referral disclosure

MyEstate has a commercial referral arrangement with Smith & Green Conveyancing Ltd. If you instruct Smith & Green following our introduction, it will pay MyEstate a referral fee of £175. The employee making the introduction may also receive credit towards an internal performance target.

You are under no obligation to use Smith & Green and may appoint any conveyancer of your choice. Your decision will not affect whether your offer is submitted, how your application is considered or the service you receive from MyEstate.

We will only pass your contact details to Smith & Green after you have agreed to the introduction. The conveyancer will provide separate information about its services, charges and terms.

Why the model is appropriate

The disclosure:

• Identifies the provider;
• Explains that the relationship is commercial;
• States the actual referral fee;
• Reveals the staff incentive;
• Confirms freedom of choice;
• Addresses possible conditional selling;
• Explains when information will be shared; and
• Separates MyEstate’s disclosure from the provider’s own terms.

Additional Practical Scenarios

Scenario 1: The undisclosed broker payment

A negotiator tells a buyer that MyEstate’s broker is “the best person to speak to” but does not explain that MyEstate receives £200 for every completed mortgage.

Appropriate response: The commercial arrangement and fee should be disclosed before the buyer agrees to the introduction.

Scenario 2: Proof of funds

A buyer has provided a valid agreement in principle from an independent lender. An employee insists that the buyer must still speak to MyEstate’s broker before the offer will be submitted.

Appropriate response: The employee should follow MyEstate’s lawful buyer-qualification procedure without making submission of the offer conditional on using an associated service.

Scenario 3: Connected contractor

A property manager recommends a plumbing company owned by a director’s relative without disclosing the relationship.

Appropriate response: The connection creates at least a potential or perceived conflict and should be reported and appropriately disclosed.

Scenario 4: Utility referral

A tenant’s details are automatically supplied to a utility-switching company unless the tenant unticks a box.

Appropriate response: The referral and data-sharing arrangements should be reviewed. The tenant should receive clear information and any necessary genuine choice or consent before their details are transferred.

Scenario 5: Repeated complaints

Several customers complain that a recommended conveyancer does not respond to communications, but employees continue referring customers because the provider pays the highest fee.

Appropriate response: Management should review the provider immediately. Referral income should not override customer interests or appropriate provider monitoring.