Advisory Note: Breaches of Undertaking

April 2024 

The CLC’s 2023 Risk Agenda highlighted the large number of complaints  received about breaches of undertakings given by CLC practices.  In 2023, the CLC received almost three times the number of reports regarding breaches of undertakings than in 2020.   

The Risk Agenda provided a stark warning that the property transfer system will break if conveyancers to do not adhere to undertakings.  Notwithstanding this warning and the serious implications of breaches of undertaking for the property transfer industry, the reputation of the profession and the impact for consumers, there has been little improvement in conduct and the CLC continues to receive a concerning number of complaints.     

Whilst in some cases breaches of undertakings may arise because of the action or inaction of third parties and will therefore be beyond the control of the conveyancer involved, the number of breaches is unacceptably high.   

Ensuring that their properties are registered promptly following completion, something which relies on undertakings being adhered to, is an integral, if not the most important, aspect of your role as a conveyancer.  However, unacceptably, it has come to the CLC’s attention that following receipt of their legal fee, some conveyancers do not prioritise the work required following completion, which results in breaches of undertakings and properties not being registered. We consider that such conduct lacks integrity. The CLC expects you to prioritise post completion work by ensuring that teams responsible for this work are adequately resourced and trained, so that 1) all undertakings provided are capable of, and are, complied with, 2) clients receive the full service they have paid for, and 3) their interests are protected.  It is imperative that you comply with undertakings and ensure post-completion work is undertaken promptly, with the requisite care, skill and diligence expected by the CLC.   

It is also important that there is clarity about who can give undertakings, what kind of undertakings they can give and in what circumstances.  Where relevant, you should ensure that staff are trained and understand their obligations in this regard.     

You are reminded of your obligations under the CLC’s Undertakings Code and Code of Conduct and we encourage all practices to review  the number and circumstances of any breaches, and take proactive steps to avoid the risk of such breaches occurring. For further guidance on good practice and proactive steps you may wish to consider taking to ensure you are meeting your obligations in this regard, you are strongly advised to read the CLC’s Undertakings Guidance.  Although this is not a CLC requirement, to assist in keeping track of undertakings given by your practice, you may wish to consider introducing an undertakings log or tracking system to help you and colleagues keep track of undertakings and whether the necessary actions have been taken to discharge responsibilities.  

Given the risk that breaches of undertakings pose to the property transfer system, the detrimental impact on your clients and public perceptions of legal services, the CLC is escalating its monitoring in this regard. The CLC will be tracking data, and where repeated or systemic breaches are identified, or where there is evidence of an increasing number of breaches by a practice, we will act.   

Every breach has the potential to impact the parties involved in the transaction.  In cases where the impact of a breach is particularly serious or detrimental or where there is evidence of professional misconduct, we will investigate and, consistent with our risk-based approach to compliance, you can expect the CLC to take proportionate action which will include disciplinary referral, where necessary.   

Undertakings are the cornerstone of the conveyancing process and your compliance with the undertakings you give is what your clients and other parties involved in these transactions rely on.  The CLC therefore expects to see significant improvement in this area.   

If you need further input or would like to discuss what steps your practice can take to drive improvement, please contact your Regulatory Supervision Manager or Officer.