A purchaser needed to submit an offer on a tight deadline without first speaking to their solicitor.  They were confident they were protected by including a solicitor’s approval clause covering both the agreement and the title.  They understood that these clauses meant their solicitor could review everything after signing and that they then had the right to cancel later if they changed their mind and/or were not happy with the solicitor’s review advice.

When the title search came back, the purchaser was unhappy to discover the property had a shared right of way.  They were concerned about future inconvenience and ongoing maintenance costs, so they instructed their solicitor to cancel the agreement on the basis that the title had not been approved.

Unfortunately, this is where the misunderstanding of the use of a solicitor’s approval clause became costly.  The shared right of way was not a legal defect in the title.  As the solicitor had no legal basis to withhold approval, the purchaser was unable to cancel and remained bound to proceed with the purchase.

Solicitor’s approval clauses often give purchasers a false sense of security.  Many purchasers believe these clauses allow them to walk away for any reason until they learn, usually the hard way, just how limited that protection really is.

Solicitor’s Approval of Agreement

This type of solicitor’s approval clause allows the purchaser’s solicitor to review and approve the agreement.  However, case law shows that this power is limited.

A solicitor may only withhold approval of the agreement based on the legal implications of the transaction. This includes matters such as:

• whether the agreement is legally valid;
• whether its terms are enforceable; and
• whether the legal obligations imposed on the purchaser are appropriate.

It is important to note that a solicitor cannot use this clause to:

• give general financial advice;
• assess whether the purchase is a “good deal”, or
• decide whether the property is a wise or suitable investment for the purchaser.

Solicitor’s Approval of Title Clause

This type of clause usually states that the purchaser’s solicitor will search, review and approve the title within a specific timeframe.

However, the solicitor’s right to withhold approval is limited. The agreement can only be cancelled if the title contains a legal defect, not simply because the purchaser is unhappy with what the review of the title revealed.

What Is Not a Defective Title?

A title is not defective simply because it contains features that a purchaser may find undesirable.

Examples of matters that are not legal defects of title include:

• the existence of multiple rights of way or easements;
• noise, dust, or traffic caused by the use of an easement;
• future maintenance costs associated with an easement;
• the cost of providing services such as water access; or
• consent notices that impose ongoing obligations or expenses.

These matters relate to the quality or use of the land, not the legal ability of the vendor to sell it.

A title approval clause should be worded so that it is the purchaser who is approving the title rather than the solicitor, as this provides stronger rights to cancel for reasons such as the above.

Conclusion

Solicitor approval clauses are not a general “get out of jail free” card. Their purpose is to protect purchasers from legal defects and implications.

We recommend if you have any concerns about including a solicitor’s approval clause, that you seek legal advice before entering into any agreement.