The Conveyancing Committee would like to remind practitioners that as a result of new PII regulations contained in SI No. 384 of 2009, certain undertakings to financial institutions in commercial property/loan transactions will no longer be covered by the minimum terms and conditions of solicitors' professional indemnity insurance from 1 December 2009.

From or after that date, the following undertakings given by solicitors to financial institutions in commercial loan transactions, where the solicitor acts either for the borrower or for the borrower and the lending institution jointly are no longer be covered by the minimum terms and conditions of solicitors' professional indemnity insurance. The undertakings are as follows:-

(a) an undertaking given to a lender to provide the lender with a certificate of title relating to any commercial property. Therefore , anything other than a principal private residence or a not-for-letting holiday home is commercial property for the purpose of the regulations. The regulations specifically provide that ‘buy-to-let’ properties are classed as commercial property.

(b) an undertaking given to a lender to provide the lender with title deeds to any commercial property.

(c) an undertaking given to a lender to pay or procure the payment of any stamp duty or to register or procure the registration of title to any commercial property.

(d) an undertaking given to a lender to discharge or procure the discharge of a commercial mortgage or other security or a commercial loan.

The Conveyancing Committee would like to urge practitioners to read the new PII regulations very carefully. The regulations contain definitions of ‘Commercial Development’, ‘Commercial Property Transaction’, ‘Financial Institution’, ‘Relevant Undertaking’, ‘Residential Property Transaction’ and ‘Undertaking’. Practitioners will have to obtain separate additional cover in order to have insurance cover for such undertakings given after 1 December, 2009. Where solicitors obtain such additional cover for commercial undertakings, it should be noted that, in order to ensure there is PII cover in place at the time of any claim, the Law Society have advised practitioners to renew the additional cover (or obtain run-off cover if the solicitor ceases practice) for subsequent indemnity periods (normally for at least six years). The same requirement applies where solicitors obtain top-up cover for any amount in excess of the current minimum level of cover (which after 1 December, 2009 will be €1.5 million for each and every claim).

The Conveyancing Committee would strongly advise practitioners not to give uninsured undertakings to a lender or any other party as this would place their personal assets at risk. The Conveyancing Committee would refer practitioners to the recent Practice Note issued by the Law Society Conveyancing Committee in this regard.

Julie Doyle
Chair of the Conveyancing Committee