RECENT HIGH-PROFILE cases involving solicitors' undertakings given to financial institutions were an aberration, and 99.9 per cent of such undertakings work well, the Oireachtas Committee on Justice, Equality, Defence and Women's Rights was told yesterday.
The Law Society and the Irish Bankers' Federation (IBF) were appearing before the committee to discuss the system of undertakings used in conveying property.
At the outset of the meeting the committee chairman, Peter Power TD, said there could be no discussion of cases which were before the courts or where Garda investigations were going on that could lead to prosecutions.
James McGuill, president of the Law Society, said that the system of undertakings had arisen to facilitate house buyers, where previously three solicitors were involved in house sales, representing the purchaser, the vendor and the financial institution.
This led to additional expense and delay, which often led to the further expense of bridging finance at a time when interest rates could be 20 per cent.
The system of undertakings, where the solicitor guaranteed the title of the property and that the lender had the first legal mortgage on it, among other things, was devised to assist people acquire a home.
It was never intended to apply to commercial property transactions, he said.
However, Majella Egan, of the society's conveyancing committee, acknowledged that such undertakings were sometimes used in commercial property transactions.
Ken Murphy, its director general, said that in 2004 a guidance note had been issued by the society stating that such undertakings were not intended for commercial transactions.
Pat Farrell of the IBF said that the existing system does work, and recent cases only represented about 0.1 per cent of all transactions.
He pointed out that the IBF was in discussions with the Law Society about improving the current system.
He stressed the urgency of moving towards e-conveyancing, which would mitigate the potential for mortgage fraud, and be a competitiveness gain.
Mr Farrell pointed out that Ireland ranked eighth in the world in competitiveness, but only 79th when it came to registering property.
"There is an absence of ownership and leadership of the whole e-conveyancing project," he said. "It needs to be led by an individual or an agency who would sort out a timetable."
Asked by Mr Power about their attitude to a legal prohibition on solicitors acting for themselves in such transactions, Mr Farrell said the IBF did not have a view.
Mr McGuill said that the members of the Law Society were engaged in discussion about this and related issues, and the council would come to consider it in due course.