It's one of those rock 'n' roll legends that turn out to be true: in the 80s rock band Van Halen famously (or infamously) had a rider in its contract which required promoters to provide the band a large number of M&Ms in the dressing room. But brown M&Ms were forbidden. If the band found a single brown M&M, the promoter forfeited his earnings. Why?
It was actually a clever test. Van Halen stage shows were elaborate productions. To get ready, a promoter had to follow a set of lengthy, complex instructions provided in the contract.
The brown M&M provision was buried, at random, among these instructions. If the band members went backstage and found brown M&Ms, that meant that the promoter had not read the instructions and there were potential problems with the show. Any mistakes could be life threatening.
In Colorado, the band found the local promoters had failed to read the weight requirements and the staging would have fallen through the arena.
When you think about it, that's a nearly costless way to check for quality control.
Conveyancing solicitors operate in a new environment of evidential compliance and risk management. The CML handbook is analogous to the complex instructions that Van Halen issued. No one would argue against the assertion that lender requirements are becoming increasingly complex and difficult to follow. Last year over 1000 Part 2 sections were changed.
In recent years it is not uncommon for Lenders to shoehorn requirements into seemingly unrelated section of the Handbook. By way of example Part 2 for the CML Handbook Section 5.13.1 reads “If different from 1.11, contact point if borrower is not providing balance of price from funds/proposing to give second charge”
One would expect this to be a simple answer of either stating that the address is the same as Paragraph 1.11 or, alternatively specify the different address. It is a dangerous game to assume the content of a Part 2. The significant benefit that Van Halen had about their quality control plan was that it was very apparent when the brown M&Ms were not in the bowl. As is the case with many of the provisions buried within the Part 2’s a Lender would have to look at the file – which could be years later to see if the solicitor had complied with their requirements.
As pressure bears upon Lenders to justify their panel selection it is easy for them conduct a relatively low cost and simple tests to examine whether a firm complies with CML Part 2 requirements. Here are a number of examples of the equivalent of the brown M&M test.
Many lenders have specific requirements relating to submission of a form CH2 at the Land Registry. A lender can easily request the Land Registry a report on specific firms to see if the appropriate entry on the title exists.
Approximately 50% of Lenders now require the Land Registry to retain the original mortgage deed. It is likely that there are still lawyers who send certified copies of the mortgage deed with the original mortgage deed to the Land Registry. It is very easy for a lender to make a request and find out from the Land Registry if they are holding original mortgage deeds from specific law firms.
It’s hard to counter the argument that a lender can raise when they state that as a law firm if you can't submit CH2s or send the correct documents to the Land Registry how confident can they be that you are complying with the rest of their requirement. If lenders start to lose faith in CQS as determination of law firm quality, lenders will take matters into to their own hands to start scoring law firms. It is possible that lenders can learn as lesson from Van Halen so do look out for that particular tune even if you don't like heavy metal.