Guide to Conveyancing
Negotiation
Let us assume you have found the house you wish to buy. You will now be negotiating terms for the purchase and, unless you are a "first-time buyer", you will also negotiate terms for the sale of your present home.
These negotiations will normally be carried out on a verbal basis, however the important thing to remember when putting anything in writing is to include the phrase "Subject to Contract" in all correspondence. These words will deny that any binding agreement exists until all terms are agreed.
Draft Contract
The Seller’s Solicitor prepares a contract for the Buyer’s Solicitor to consider.
For this purpose the Seller’s Solicitor will need to obtain the Title Deeds to the property which are normally held by the Building Society, Insurance Company or Bank as security against any existing Mortgage, together with a copy of the Land Registry title. If you are the Seller, then it is essential that you advise us as early as possible of the name of your lender and your account number.
Once the deeds and any other relevant documents have been received and the Contract has been prepared, the Seller’s Solicitors will send two copies of the Contract plus other documents to the Buyer’s Solicitor for approval.
These Contracts are later signed by the parties and exchanged by the Solicitors. The transaction then becomes legally binding.
"Exchange of Contracts" is dealt with later on. (see stage 2)
Searches
The Buyer’s Solicitor is required to carry out a Local Authority Search and Enquiries relevant to the property being purchased. The search results can take up to 2 weeks to come back. In certain areas this period can be longer. It is therefore essential that the Buyer’s Solicitor receives the search fee from the Buyer as soon as possible.
The information contained in the replies from the Local Authority will only relate to the specific property being purchased. If you are worried about possible developments on another piece of land, drains, new roads, boundaries, rights of way, restrictions, schools or even the risk of flooding, please let us know as soon as possible. We can then make special additional enquiries.
Fixtures and Fittings
Anything that is fixed permanently to the house or land, such as sanitary fittings or built in cupboards, is normally sold as part of the property. However, the Seller may wish to remove certain fixtures and fittings. The Seller and Buyer should both know exactly what items are being included with the property before Contracts are exchanged.
That is why we ask that all items which are, or are not, to be included in the sale or purchase of a property are fully documented.
Surveys
The Building Society normally only inspects the property to see if the valuation is justified before the loan (mortgage) is granted.
This is not always a full structural survey, and you will be given the opportunity to select the type of survey you require. It is recommended that you obtain a Full Structural Survey from a qualified Chartered Surveyor.
Legally the Seller is not bound to give any guarantees as to the condition of the property, and the Buyer purchases it as seen.
Woodworm, Rot, Damp and Electrical Reports
In older properties, a specialist survey for a particular problem (i.e. timber or damp problems) is sometimes advisable. Most firms that specialise in these problems will conduct a survey free of charge although an electrical or gas report may attract a small charge.
The Mortgage
The Buyer should have received written confirmation of the Mortgage offer of Advance from the Building Society, Bank or Insurance Company.
Exchange of Contracts
Up to now verbal offers and acceptance are not binding. All you have is a Gentleman’s Agreement. The Seller can still sell his house to somebody else. This sometimes happens for one of two reasons:
- He may have received a higher offer from another Buyer, in which case you have been "Gazumped".
- Alternatively, he may have issued more than one contract and is waiting to see who will exchange first. This is called a Contract Race.
It is likely you will be involved in a chain of transactions in which nobody understandably wants to exchange contracts on the house that they are buying before they exchange on the one that they are selling.
As the Buyer you will receive a full written report which contains the Contract, Mortgage Deed and Stamp Duty Land Transaction Return Form together with various other appropriate forms which must be completed and returned to us as soon as you have read the same and are happy to proceed.
If you have any questions or queries regarding the report please contact us to discuss the same over the telephone or arrange an appointment to go through the report in person. It will be too late to raise issues after contracts have been exchanged. Any concerns that you have must be raised with us before exchange of contracts.
This is not Exchange of Contracts
Both parties are legally bound only when the contracts are formally exchanged by the Solicitors and a Completion Date is agreed at that time. A Completion date is the date that you will either sell your property and move out or the date you will finalise your purchase and move into your new property.
The Full Deposit
When the contracts are exchanged the deposit, which is traditionally 10% of the selling price, is payable to the Seller’s Solicitor. A 5% deposit is generally accepted by the Seller. The deposit cheque must be a Banker’s Draft or Building Society cheque. A personal cheque will not be acceptable. If you are selling at the same time, then we will always try to use the deposit offered on your sale towards your purchase.
Leases
Most of the procedures for house buying also apply to flats. There is, however, one important difference: with a flat you will be buying a lease.
Leases tend to be complicated and cover such things as pets, maintenance, cleaning, repairs, ground rents, gardens, roofs, car parking, foundations, insurances, neighbours and service charges.
Completion
Generally, Completion (the day you move) takes place approximately 2 weeks after Exchange of Contracts.
On the Completion Date the Buyer’s Solicitor transmits the purchase money via the banking system to the Seller’s Solicitor and the Seller’s Solicitor hands over the legal documents which transfer the Title to the property. This is subject to all the necessary legal documentation and administration having been completed and finalised. The Buyer can then move in.
Insurance
- Buildings Insurance
This usually becomes the Buyer’s responsibility from Exchange of Contracts. Sometimes the Building Society, Bank or Insurance Company will arrange insurance for you. If you are buying a leasehold property it is likely that the landlord will insure. In all cases you must ensure that we are advised of your Buildings Insurance details prior to Exchange of Contracts if you are not arranging Buildings Insurance via your lender. - Life Insurance/Endowment Policy
Your Life Insurance or Endowment Policy must be put on risk from Exchange of Contracts and once again you must ensure that we are fully advised of the details of the policies prior to Exchange of Contracts.
Mortgage Redemption
This means paying off any Mortgages on the property you are selling. If you are a first time buyer this will not apply. We will arrange for the Mortgage to be discharged on the Completion Date.
Keys
Vacant possession is given when the keys are handed over on the completion day. This can sometimes cause hold-ups if there is a "chain" of Completions because nobody will hand the keys over to the Buyer until the money has been paid in full. On average, we would say that you should be able to obtain the keys of the property being purchased at about lunchtime on the day fixed for Completion. The keys should be collected from the Seller’s Estate Agent.
If you are selling then we would advise that the keys be lodged with your Estate Agent by 11am on the moving day. We confirm to your Estate Agent that the money has been paid so that the keys can be released to your Buyer.
WHAT HAPPENS NOW?
Now we account to you direct or to your Bank. We produce the Documents to the Inland Revenue and pay any Stamp Duty Land Tax required and, deal with Registration of your Title at H.M. Land Registry.
When the registration of title is complete, any Deeds will be sent to your Building Society, Bank or other Lender, together with any Insurance Policy (if applicable) as additional security for your loan. Lenders are not keen to store deeds and sometimes will send the Deeds to you, if this happens then the Deeds must be kept safely by you. If you are fortunate enough not to need a mortgage, we will gladly store any Deeds for you at no extra cost or forward the Deeds to you.
You should however note that in the vast majority of cases "Deeds" are now no longer being produced by HM Land Registry. The proof of ownership of the property is an official copy of the Land Registry entries relating to the property.
Payment of Costs and Disbursements
The Stamp Duty Land Tax and Land Registry fees are worked out on established scales.
You will already have received an estimate of these costs and disbursements when you instruct us to act on your behalf.
Costs are our fees. Disbursements are monies such as Search Fees, Stamp Duty Land Tax, Estate Agents’ Fees and Land Registry fees which we pay on your behalf. If your purchase is being partly financed by you we will notify you of our costs and the disbursements before Completion so that all monies can be paid at the same time.
If the Mortgage Advance and/or proceeds of sale are financing the purchase completely, then our costs and disbursements will be deducted on Completion and a statement will be provided.
Other Costs
If you own a large van yourself or intend to hire a van you will escape paying a Removal Firm to move your furniture for you. However, don’t forget that reputable removal companies are insured for damage and breakages. We leave this to you. A reputable removal company’s details are set out on this folder.
Most of what you have read so far is handled by us. There are, however, certain things we leave for you to attend to.
- Cancel or transfer your Contents Insurance
- Arrange for the continuation or disconnection of Gas, Electricity and Telephone Services. Have the meters read and arrange for new accounts to be transferred to your name
- Inform the Local Authority concerning the payment or refund of Community Charge
- Inform the water department relating to the payment or refund of water rates
- Cancel your existing Building Insurance on Completion
- Make arrangements with the Removals Company by giving them a provisional date until a Completion Date is finally fixed in the contract
- Cancel the Banker’s Order for previous Mortgage instalments as soon as possible after Exchange of Contracts.
Money Laundering
To satisfy the Money Laundering Regulations we will require evidence of your identity in all cases. This is normally satisfied by provision of a passport and an original bank statement or utility account showing your correct address. We may also have to ask you questions relating to the source of funds utilized in any purchase transaction.
Our Service to you
It is the principal aim of this practice to provide an efficient and effective service and the Solicitor or Conveyancer acting for you will be familiar with your file. However should there be any aspect of our service with which you are unhappy and which we cannot resolve between ourselves then you may raise the matter with Mr Dundas without any charge being made to you.
The contents of this guide are correct at the time of going to print and are not exhaustive.
We cannot be held responsible for any changes which could have taken place after that time, irrespective of the fact that they may affect the contents of this guide.