1. From 1 December 2009, as a result of new PII regulations contained in SI no 384 of 2009, undertakings (as set out at 4(a) to (d) below) given on or after that date by solicitors to lending institutions in commercial loan transactions, where the solicitor acts either
   • For the borrower alone or
   • For the borrower and the lending institution jointly,

are no longer covered by the minimum terms and conditions of professional indemnity insurance cover that solicitors are obliged by law to hold.

The regulations provide that undertakings given by a solicitor in relation to a commercial loan transaction where that solicitor acts solely for the lending institution in the transaction are not affected. 

Practitioners should carefully read the new PII regulations.  They contain definitions of ‘Commercial Development’, ‘Commercial Property Transaction’, ‘Financial Institution’, ‘Relevant Undertaking’, ‘Residential Property Transaction’ and ‘Undertaking’, and practitioners are urged to familiarise themselves with these regulations.

Any queries on the content or implications of these regulations should be referred to the Society’s PII helpline for solicitors at 01 879 8790 or email piihelpline@lawsociety.ie  

2. In order to have insurance cover for such undertakings given after 1 December 2009, practitioners will have to obtain separate additional cover.
   • Where solicitors obtain 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, it will be necessary to renew the additional cover (or obtain run-off cover if the solicitor ceases practice in the interim period) for the relevant period required by these and other PII regulations.
   • 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 each and every claim).
3. Any solicitor contemplating giving an uninsured undertaking to a lender or to any other party would be advised not to do so, as this would place their personal assets at risk.
   
4. The Conveyancing Committee is not in a position to give any interpretation of the regulations or any legal opinion on what specific categories or types of undertaking are to be excluded from the minimum terms and conditions of cover. The regulations provide that the following types of undertakings are affected:
   
   a) An undertaking given to a lender to provide the lender with a certificate of title relating to any commercial property. Effectively, 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 committee will keep the matter under review and will issue further practice notes if necessary as the practical operation of the new regulations becomes clearer.