Our step by step guide to the legal process of house buying:
What is conveyancing?
Conveyancing is the legal and administrative work associated with the transferring of land or buildings from one person to another. This can be a straight forward paper exercise but may involve a range of more complex tasks so it’s important to get the right advice.
Once you have found your new home, or agreed to sell, what happens next?
1. Find and instruct your solicitor or conveyancer.
Many factors can affect your choice of solicitor, such as cost, location, personal recommendation etc. You need to instruct a solicitor with who you are comfortable with and completely confident in. Clear communication is vitally important as is ease of contact and the ability to explain legal matters clearly.
It is always best to meet with or at least speak to your chosen solicitor before instructing them. You may have questions to ask and you should be looking to build a working relationship with your adviser.
When you have chosen your solicitor you should be ensure that you discuss any aspects of the transaction that you do not fully understand. Your solicitor should explain the main steps and keep you informed throughout the transaction.
2. Get the right mortgage. Check out the property. Progress legal matters.
It is always best to see a mortgage advisor who offers whole of market advice. They will help find the most suitable mortgage and deal with the paperwork associated with the application. The lender will send copies of the mortgage offer to you and your solicitor. Your solicitor will then ensure that all necessary legalities are complied with prior to completion of your purchase. During the mortgage application process the property you are buying will be surveyed.
Types of survey:
- Full Structural or Building Survey
- Home Buyers Report
- Mortgage Valuation
Full Building Survey
This is the most comprehensive survey and is suitable for all residential properties. It’s particularly good for older homes or homes that may need repairs.
This type of survey typically costs upwards of £600 and provides detailed advice on repairs. It’s very extensive and in some circumstances worth the extra money but it does not usually include a valuation.
Although this survey can’t look under floorboards or behind walls it should include the surveyor’s opinion on the potential for hidden defects in this area.
The surveyor should also provide information on potential repair options. Again, you could try to save money by comparing the details of the repairs required against the lender’s valuation.
A Homebuyers Report is a survey suitable for conventional properties in reasonable condition. Costs start at £400 on average.
This will help you find out if there are any structural problems, such as subsidence or damp, as well as any other unwelcome hidden issues inside and outside. But the Homebuyer Report doesn’t look beyond the floorboards or behind the walls.
Some homebuyer’s reports include a property valuation, so you may be able to revise your offer if the survey reveals a lower price than the mortgage lender’s valuation.
If there’s no valuation included, you could use the report’s suggestions for repairs to renegotiate the price. For example, if it’s going to cost you £5,000 to carry out work on the property’s damp walls, it’s reasonable to offer £5,000 less than the asking price.
When you apply for a mortgage, the lender will require a Mortgage Valuation. The main purpose of this type of survey is to assess whether the property represents a suitable security for the amount of money you are borrowing. This is not really a survey as such and may not pick up defects or faults which you may wish to know about. It is carried out with a view to protecting the lender not the purchaser. The cost of a mortgage valuation varies from lender to lender. Sometimes they are available free.
While you are applying for your mortgage, the vendor and there solicitor will be preparing the draft contract pack for forwarding to your solicitor. The vendor will complete the “Protocol Forms”. These are a list of the fixtures and fittings included or excluded from the sale and a detailed questionnaire about the property. This includes information regarding the property such as utility providers, rights and obligations and furniture that will remain at the property. These will be included in the pack along with detailed title information and a plan obtained from the Land registry and of course the contract which the seller’s solicitor intends to use to transfer the ownership of the property.
In the case of leasehold properties additional information will also be obtained and forwarded to the buyer’s solicitor including: details about the management company, whether there are ground rent and service charges to pay and any restrictions, which might apply.
Once your solicitor receives this initial information they will apply for searches. These cost around £200 dependent on exactly what’s required and might include:
• Local Authority Search
• Water and Drainage Search
• Environmental Search
• Chancel Search
Local authority search
This search will reveal specific information regarding a property and the surrounding area. It takes about two weeks. The search will reveal information about some or all of the following: planning applications, listed buildings, conservation areas, tree protection orders, improvement or renovation grants, smoke control zones, future developments, nearby road schemes and motorways, road proposals by private bodies, public paths or by ways, advertisements, completion notices, houses in multiple occupation, noise abatement, urban development areas, enterprise zones, simplified planning zones, land maintenance notices, mineral consultation areas, hazardous substance consents.
Water and drainage search
The Main information which this search reveals is whether the property is connected to a mains water and sewer supply, whether the property has a water meter and where the drains and sewers are located
This search will reveal whether there are any environmental issues which affect the property. The search contains information on historical Land use and any contaminated land issues. It will reveal if an area is affected by radon gas. If there are issues with ground stability and the reasons why, and flood risks.
This search will reveal whether the property is located within an area where the owner of the property is at risk of potential chancel repair liability. This is a historic financial liability, which means you could have to contribute to cost of repair of nearby religious buildings, normally churches.
In certain circumstances other searches may also be required. For instance a mining search could be required to check if mines run under or near a property. This would only be required in an area where mining has occurred previously. This would probably be highlighted in the environmental search.
Once the contract pack and searches are to hand, the buyers solicitor will review the information they contain and then raise enquiries with the vendor’s solicitors. Enquiries are questions and requests for additional information. These relate to any matters which are unclear in the paperwork received. It could be as simple as needing to know when a central heating boiler was installed or a far more complex matter. The vendor’s solicitor will then liaise with the vendor and potentially third parties to gather information and formally answer the questions. This is referred to as replying to enquiries.
If incomplete or unsatisfactory replies are received the purchasers solicitors will raise further enquires until they are satisfied with all the answers.
The buyer’s solicitor also acts for the mortgage lender and has an obligation to ensure that all the requirements of the mortgage offer are complied with.
Once all the questions have been answered and all relevant paperwork is to hand, the buyer’s solicitor will prepare to report to the buyer. They will go through the title documents, replies to enquiries and your mortgage offer explaining the relevant parts of each. The buyer will then be required to sign the legal documents in readiness for exchange of contracts. These consist of, the contract and mortgage deed and in some cases other documents. They will also provide a completion statement detailing the financial aspects of the transaction. Including a breakdown of all the fees and disbursements incurred. This will enable the buyer to understand what monies are required in order exchange contracts and complete the transaction. At exchange of contracts a deposit of 10% is normally payable.
3. Exchange of Contracts
When your solicitor is satisfied with everything, it is possible to liaise with all parties in the chain and agree a completion date. This is normally done by your estate agent. Although dates can be discussed at an earlier stage this can be problematic if there are delays and previously agreed dates have to be changed. The completion date will need to be agreed and deposit monies received by the purchaser’s solicitor before exchange of contracts can take place. Your solicitor will also need to carry out a bankruptcy search on each purchaser plus, if they are receiving a Loan or gift from any family members or friends a bankruptcy search will also need to be carried out on each person.
Exchanging contracts will make the transaction LegalIy binding and neither party can pull out or change the completion date without Legal consequences.
The usual method of exchanging contracts today is by telephone where the seller and purchasers solicitor will read out the details of the contract and then send their clients signed copy to the other solicitor along with the agreed deposit. The deposit will held buyer the sellers solicitor until completion.
This is the best part of the transaction. The day eager buyers and sellers have been waiting for.
The purchasers solicitors will have already arranged for the buyer to have lodged sufficient fund to conclude the purchase. These will have been previously detailed in the completion statement. They may also obtain funds from the lender if a mortgage is involved. On the day of completion they will forward sufficient monies to the vendors solicitor to conclude the purchase. When the funds arrive in their account completion has taken place and the buyer can collect their keys.
The seller’s solicitors will ensure that their client has signed a transfer in readiness and will send it to the purchasers solicitors. They will also obtain redemption figures if mortgages are involved repay these and settle third party bills such as estate agents invoices.
On the day of completion a seller should aim to be packed up and ready to vacate the properly by around noon. The completion time is usually around for 1 pm-2pm, but this can vary.
5. Post Completion
After completion has taken place the seller’s solicitor will send to the purchaser’s solicitor the signed transfer, any original deeds and any guarantees they may hold.
The purchaser’s solicitor will submit an application to the Land Registry in order to register the title in the purchasers name. The purchaser’s solicitor will also need to submit stamp duty return form along with any stamp duty payable. This must be done within 30days to avoid penalties. The land registry may take several weeks before they confirm that the buyer is now the registered owner.
The seller’s solicitor will have repaid any charges (mortgages) on the day of completion. They will then wait for confirmation that the lender has informed the land registry.
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