Care home room: High-risk investments
A solicitor who failed to advise clients adequately over the high risks of buying and subletting rooms in care homes has been fined, with the newly qualified who worked with him rebuked.
The Solicitors Regulation Authority (SRA) said Jonathan Sara was an experienced conveyancer who advised over 100 clients between February 2017 and March 2019 in relation to the purchase of rooms/suites in various care home developments.
A notice published last week said Mr Sara, who at the time was a director at Private Office Legal Services in Hertfordshire, “knew, or should have known, that there were significant risks in the transactions”.
The SRA had issued warning notices in September 2016 and June 2017 that highlighted the importance of practitioners giving full and proper advice to clients who had been persuaded to invest in the purchase of single hotel rooms or rooms in care homes – these types of so-called fractional developments have caused a lot of problems for the profession over recent years as many have failed, leaving investors out of pocket.
“Mr Sara treated the transactions as ordinary conveyances, notwithstanding the unusual elements of the deal. He failed to advise his clients about the high risks involved,” the regulator said.
“His conduct was not intentional and did not continue after it was known to be improper. Although it was repeated over a number of files, Mr Sara had made the same error of judgment on each file. It was not therefore a pattern of misconduct.
“The conduct had the potential to cause moderate harm to Mr Sara’s clients, who were the proposed investors in the schemes.”
According to Companies House, Mr Sara resigned as a director of Private Office Legal Services in September 2019. The firm went into liquidation in December 2020. He now works at fee-share consultancy firm Nexa Law.
In mitigation, the SRA acknowledged that Mr Sara “did not intentionally flout his regulatory obligations”, there was no suggestion that he acted dishonestly or with a lack of integrity, and his clients were not vulnerable individuals.
Applying the SRA fining guidance led to a figure of 8% of his annual gross income, a figure of £5,165, plus costs of £1,350.
Meanwhile, Anca-Florina Mitrana – who was a newly qualified solicitor at Private Office Legal Services at the time – was rebuked for the same breaches between September 2017 to November 2018.
Though her actions “constituted more than a single negligent mistake”, the SRA said a more serious sanction was not proportionate given her that she was newly qualified and working under the supervision of “a more senior and experienced property lawyer”.
There was a low risk of repetition, it went on, while “there were no allegations of dishonesty or lack of integrity and Ms Mitrana had not acted intentionally in breach of her regulatory obligations”. She now works at national firm Taylor Rose.
