Lawyer Fined £10,000 for Failing Offplan Property Investors
A property lawyer who did not outline the risks of staking cash in off-plan buy to let investments was fined £10,000 by his professional body.
David Hayhurst, the senior partner of now defunct 174 Solicitors Ltd, of The Wirral, Merseyside, was handed the fine and a bill for £15,000 costs by the Solicitors Disciplinary Tribunal.
He admitted giving lousy advice to investors buying into four high-risk developments.
Clients were referred to Hayhurst by the developers. He handled the contracts, which called for investors to put down 40% and 80% of the price of yet-to-be-constructed flats.
Investors handed over £2.9 million for 118 units, but the builders went bust, and none of the developments was finished.
The Solicitors Regulatory Authority felt the schemes carried a high risk for investors as their properties were worthless if not finished.
Hayhurst felt the advice was outside of the scope of his retainer but confirmed he had a duty of care to highlight any risks that arose while he acted for the clients.
The SRA disagreed with his claim that he was not responsible for the £5,000 reservation fees clients paid before his involvement.
The SRA felt the reservation fees were “transparently part of the commercial pressure” from the developers to encourage investors to complete deals.
“A solicitor ought to have seen through that and not allow it to get in the way of providing proper and adequate advice,” said the SRA.
The inquiry also revealed the typical investor profile to be teachers aged in their 30s investing from their savings rather than speculators snapping up property to make a quick profit.
The SRA also noted that the investors were risk-averse and should be treated as such, and they are unlikely to see the return of any money.
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