The mistakes associated with leases are legendary - to such an extent that this type of work warrants a medium to high-risk rating.

When acting for clients purchasing a leasehold property, solicitors must ensure that not only do they read the lease, but they explain the contents to the client. While time-consuming, this is essential, even though this will place additional pressures on an already narrow profit margin.


Firstly, read the lease. Obvious enough, but never assume that as the property has changed hands several times that the lease 'must be all right'. You may in effect be perpetuating an error, as the previous solicitors may not have read it either. Mistakes may either be the fault of a word processor, or human error, for example, cutting and pasting an irrelevant clause into the document.


Check all the pages of the lease are there, if one is missing and you overlook it, it is Sod's Law that it will contain a crucial clause. Then make sure that the clauses are all there and in the appropriate order. Always check cross-references in one clause to another. Problems often arise when a clause is deleted at drafting stage and the cross-reference is overlooked. The result is that the clause referred to does not exist. Check that the plan is correct, and all colour references in the body of the lease match up with the plan. However tempting, do not draw up the plan yourself unless you have the necessary expertise.


Secondly, explain the contents of the lease to the client. This will help avoid the well-known allegation being levelled at you some time later: 'Had I been aware of that then I would not have gone ahead with the purchase.'


If you do not see the client, then a detailed report letter is called for. This may well be in a standard format, but it is important that all information relevant to the particular lease in question is brought to the client's attention, for example, rent, rights of way, covenants, term of the lease, and regulations. Simply sending the lease to the client saying, 'please read and let me know if you have any queries', is unlikely to discharge your duty of care.


Regulations are particularly important as they are often contained in a schedule or tucked away at the end of the lease and overlooked. However, regulations such as no pets, or a ban on commercial vans parking in designated parking spaces can cause real problems to clients, and had the client known about such a regulation they may well not have proceeded with the purchase.


This column was prepared by AFP Consulting, a division of Alexander Forbes Risk Services UK