Reminder - Law Society approved form accountable trust receipt (ATR)
Practitioners are reminded of the Law Society approved form of ATR, as it has been brought to the attention of the conveyancing committee that certain lenders’ solicitors are requesting accountable trust receipts (ATRs) from borrowers’ solicitors that contain additional obligations.
Colleagues should be mindful that, like all solicitor’s undertakings, ATRs should be sought on terms that the same practitioner should be willing to give.
Practitioners should note:
Caution should be exercised in dealing with other forms of ATRs, and firms acting for lenders are reminded that this form has been recommended to avoid unnecessary negotiation of them;
An undertaking to pay the full amount of any claim against the documents in event of breach of the ATR is not recommended as the amount of that claim may well be in excess of the value of the relevant property or security;
An indemnity from a solicitor in respect of a breach of an ATR confuses solicitors’ undertakings with simple contractual obligations and is not recommended. A breach of an ATR is a matter of professional misconduct on the part of the solicitor and a lender’s remedy in this regard is a matter for the Court to determine in the usual way; and
ATRs should only be released by the solicitor receiving the documents when the documents have been received and checked, and the practice of requiring ATRs to be given and released in advance of doing so obviously creates risks. Practitioners are also reminded that the sender of the documents to which the ATR relates bears the risk of the documents until such time as they have been actually received by the solicitor providing the ATR and as such the ATR does not come into effect until the documents are so received.
Practitioners should promptly check the documents received and acknowledge them, along with noting and communicating to the sender any necessary revisions to the ATR schedule.