Our Jargon Buster series explains some of the common parts of the Conveyancing Process.
What is an Additional Enquiries & Replies Pack?
This pack includes additional enquiries (questions) we have had to ask the seller solicitors before you are in a position to decide whether you want to complete your purchase or not. The replies received are also attached for you to read – including letters and documents. If you have any questions or wish to raise more enquiries of the sellers let your Conveyancer know immediately. If you do not they will assume you are satisfied with the replies and documents and want to proceed to exchange and complete based on these.
What are Restrictive Covenants?
A restrictive covenant is a private agreement between land owners where one party will restrict the use of its land in some way for the benefit of another’s land.
Restrictive covenants, once agreed between the parties, are placed in the title deeds to the property. They bind the land and not the parties personally.
Your buyer is asking you to confirm that these have not been breached.
Once we receive the Buyer’s Solicitor’s enquiries, we will highlight the relevant sections on the title for you to read.
What are Local Authority referred documents?
The local authority search interrogates the local authority’s records, including planning, building control, highways department etc. It is a search of the subject property only.
You should hold documents from when you carried out any works or if works were carried out prior to your time of ownership your previous solicitor (from when you purchased) should have obtained these for you. If you do not hold these your buyer’s solicitors are asking that copies be obtained from the Local Authority. Please have a look at their website for details on how to order copies.
Once we receive the Buyer’s Solicitors enquiries, we will highlight the relevant references on the extract from the local authority search which will assist you in obtaining these documents.
What is Retention/Allowance?
The buyers solicitor has asked you to deduct money from your sale price to cover a ‘Retention’. This is not a legal issue but a commercial decision only you can take.
What is a Retention?
This is a sum of money deducted by the buyer to cover the risk of a shortfall in ‘service charge underpayments’ covering your period of ownership but only revealed often up to a year after you move out (simply because it takes that time for the Management Company accounts to be completed, sent to their accountant, audited and certified and returned to the Management Company to issue).
What is an Allowance?
You simply agree to deduct the retention figure from your sale price and forget about it.
Most clients choose this because it is cheaper in the long run, faster and cleaner. If you choose to give with a one-off allowance and not a retention I will, as goodwill, carry out the extra work for free, to amend the contract to add this extra deduction clause (called a legal ‘allowance’).
What Replies are Outstanding?
In the Report on Title we send to you as buyer, your lawyer will notify what enquiries the seller or the seller solicitors have been replied to, those that you can take a view on, and those that you can’t.
Until that point, your lawyer will still be title checking and will still be waiting responses and documentation from the seller’s solicitors to ensure there are no issues on the property you are purchasing.
Prior to completion your lawyer will send you a Report on Title and comprehensive document pack, and also send some of these as your case progresses, such as searches. At report stage you will receive all relevant correspondence from the enquiries, property information form, fittings & contents form, leasehold information form (if a lease), guarantees, warranties, planning documents, building regulations certificates and copies of deeds and plans from land registry.
Do I need Indemnity Insurance and what does it cover?
Legal indemnity insurance is obtained in order to offer protection to a buyer (and a lender) where there is a defect in the title which cannot be resolved. It often provides a quick and low-cost alternative to the work required to correct a defect which will usually cost several hundred pounds in legal fees and will take several weeks.
The premium for a legal indemnity insurance policy is paid only once, and in most cases is automatically transferred to successors in title and lasts for the life of the property.
If you are purchasing: It should be remembered, and be pointed out, that legal indemnity insurance does not remedy the insured defect, but merely offers financial compensation. You should also check each policy individually to see what actions might invalidate the cover. For all indemnity policies however, it is a condition that their existence must not be revealed to third parties.
How much will an indemnity insurance policy cost?
The premiums for indemnity insurance policies are charged on a sliding scale, depending on the value of the property, and they also vary depending on the risk insured. The cost will range from as little as £20 to as much as £300, or occasionally more for a nonstandard policy.
What will an indemnity insurance policy cover?
The answer to this question depends on the particular risk you are intending to insure, but basically indemnity insurance covers loss of value to the property and legal costs.
You may also wish to read our client guide What are Additional Enquiries?
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