The conveyancing process is one that many don’t truly understand, so it’s only natural that you have lots of questions. Tony and Angelo have put together a great collection of videos covering all of our most frequently asked questions, I hope we answer yours?
If you’re still unsure about something, or there’s a topic we have not covered, don’t suffer in silence, book a free legal surgery consultation, we will be happy to help.
In fact, why not send us a video of your question. We’ll send a video reply back and we may even post it on post it on our website to help others who might have the same concern.
So, what are Additional Enquiries? They are questions asked by the buyer solicitors where the seller is selling a property where the buyer solicitors has noticed missing documentation (building regulation completion certificate or planning permission, FENSA, electrical certificates etc; or defective title deeds, such as missing access. If the title is perfect then there should be no need for the buyer solicitors to raise additional enquiries. E.g.: Missing planning/BR consents, missing access, defective deed. Aaagh!!!!
These can go on … and on … and on … and on (for weeks, if not months if these are not tackled). Quick fixes can include, the seller responding faster, or the buyer solicitors asking less questions or taking a view.
This date is best organised between the estate agents and parties directly. This is because if it is left to the buyer and seller solicitors then there are likely to be delays as they cannot speak to both parties. It means that they have to ask their client for a date. The client then speaks to the agent or the other party, or both. They get back to their solicitor with a possible date. The solicitor then has to write to their opposite number, the other solicitor, who then in turn takes instructions from their own client and so on, and then they have to get back to the other solicitor. This can go on and on and on. Far the simplest is for the estate agents to become involved. Speak to both parties. Negotiate a date where both parties are happy to fix. Then ask each client to notify each solicitor. At that point the solicitors can exchange contracts. Only then, as each solicitor will need a fixed agreed date before they are allowed to exchange contracts.
This only applies to the buyer and only if they have a mortgage. It’s the final document which their solicitor can sign off to request the mortgage funds, but only if the buyer can prove to the lender solicitor that they have complied (discharged) all their obligations under their lender’s mortgage conditions set out in the offer and in the CML handbook. Until they discharge these, their solicitor is not allowed to order the funds by completing the Certificate of Title (COT). From the date of receipt of the COT, Lender’s normally ask that they be given 5 working to release their funds to the buyer solicitors in order to allow the buyer to complete.
This is the date the seller moves out of the property and the buyer moves in. It is when ownership legally passes from the seller to buyer. This usually happens around 1.00-2.00 pm on the day of completion, but can take place later at any time before 5.00 pm. What can go wrong? If something goes wrong on the day then this is known as late completion. This can cause complications including the buyer not being able to move in and buyer and seller fighting regarding losses (and can subject to litigation). How long to leave between exchange and completion? This is why the parties should instruct their solicitors to leave sufficient time between exchange and completion for their solicitor to reduce the risk of last minute problems before completion. This is also why the Law Society Contract 5th Edition, recommends 20 working days between exchange and completion. The parties can leave less time and whilst this is becoming more common, it is at their risk of potential loss. The added risk is where the parties leave less than 5 working days between exchange and completion because most lenders require 5 working days between requesting the funds and releasing the mortgage money on completion date.
The contract is the document drawn up by the seller solicitors and sent to the buyer solicitors for amendment or approval. It is also the final document which the parties will use to ‘exchange contracts’ and bind the parties to proceed to completion. It contains not only specific conditions drafted by the lawyers, but also a set of Law Society produced contract conditions to which the vast majority or residential sale contracts are subject. They are normally known as the standard conditions of sale 5th Edition. These include the most foreseeable eventualities which could arise in a conveyancing transaction and includes clauses such as what would happen on a ‘late completion’ and ‘who is responsible for insurance’.
How much is the Deposit? Usually 10%. It can be less but only by prior agreement with all the parties in the chain. The buyer needs to notify their solicitor in advance if they have less than 10% deposit in case the chain does not accept this. What does a Deposit do? It secures the property for the buyer. When is the deposit paid? This is paid on exchange. In fact, the seller solicitors will not exchange contracts until they have been notified that the buyer has sent all their deposit to their solicitors (as cleared funds). To reduce risks of delayed exchange the buyer should send their deposit to their solicitor by Bank Transfer (CHAPS payment) at least or more days prior to exchanging. Paying cheque is possible but this can delay matters by a week or more (due to postal delays and then waiting 5 working days for funds to clear.
This is when a legally binding contract is made. This is also the date where a fixed completion time is set. Until exchange NOTHING is binding; either party can walk away from the transaction with no penalty. The faster the parties exchange the less risk of a transaction falling through. The average abortive rate in England & Wales is up to 37% of cases never reaching exchange of contracts. It is rare for a case to abort after exchange. At exchange the buyer must have their 10% deposit to send to the seller solicitors. The minute the exchange takes place the transaction becomes binding – The seller must sell and the buyer must buy at the agreed price and at the agreed time and date.
This is a list of the items at the property which the seller must complete stating if they are either included or excluded from the agreed price. This form is completed at an early stage by the seller and sent to the buyer (via solicitors) so that both parties understand what is included in the selling price. One alert from Customs and Excise (tax authorities) is that these separate items cannot be used to reduce stamp duty. They have issued warnings that if by separating these items it reduces the purchase price below the next band of stamp duty than that will be a fraud on the revenue and subject to criminal proceedings. In those instances, the seller needs to have a professional valuation of items so they can provide evidence to the revenue that the purchase price is at reasonable market rate.
This describes how the land is owned. Land is either freehold (usually houses) or leasehold (usually flats).
Gifts are applicable where some buyers use a gift from a relative for example to purchase the property. They are allowed, but where you also have a mortgage, your lender will want your solicitors to take additional precautions, which will can delay your purchase. These include the Donor passing UK Money Laundering Regulations etc. If the gift procedure is done right, you won’t have issues. If wrong, you could risk losing your mortgage loan or significant delay.
Leasehold transactions are more complicated than freehold as there are a number of additional issues which can go wrong. Whether the lease is short and needs to be extended. Whether there are arrears of service charges Etc; whether there are major works which the buyer will become liable for, various notices, if any covenants (obligations have been breached); whether the buyer purchases with a full set of rights, such as access. What does leasehold mean? Leasehold means the buyer will purchase a term of years left on the lease. The original lease gives the original terms of years when created. This can be 99 years, 125 years or 999 years. To know what years the buyer is purchasing they simply need to deduct the current date, from the original lease date. Work out the years, and then deduct this from the term of years fixed in the original lease.
The UK, especially London and surrounding areas, has become the capital of the money laundering world. All buyers and sellers who buy and sell in the UK must pass the UK Anti Money Laundering Regulations. Risk of breach can include imprisonment as it is a criminal office not only for the buyer, but also for the estate agent and solicitor. For both buyer and seller they must pass ID. The buyer in addition has to pass money laundering requirements of showing the source of funds is not subject to criminal activity. This has to be proved to the solicitor in order for the solicitor to progress the purchase. Ensure both buyer and seller collate all documentation in advance of instructing their solicitor.
These are obligations imposed on the buyer by their Lender. The lender expects a buyer to also appoint a solicitor to act independently for them to ensure the buyer discharges their mortgage conditions without which the Lender will refuse to release their mortgage money to the buyer on the day of completion (and risk the buyer losing their 10% deposit). The mortgage conditions are strict and contained in the buyer’s mortgage offer as well as in the Council of Mortgage Lender’s handbook (CML). There are too many obligations to be listed here, but two include:-the buying having to organise ‘Lender approved’ building insurance (prior to exchange) on freehold properties (and some leaseholds); ensuring the buyer investigates any gifts, ensuring they pass money laundering issues and that the gift is genuine and that insolvency indemnity insurance is purchased by the buyer. There are numerous other obligations which the solicitor is duty bound to report to the lender.. If the buyer does not want their solicitor to report these then the solicitor has not notify the lender that there is a ‘conflict of interest’ and the solicitor may have to stop acting.
Just under 50% of buyers in England need a Mortgage. Getting the mortgage offer is half the battle, the other half is ensuring the buyer complies with their Lender’s mortgage obligations. Failure will risk the Lender not releasing the loan money and in turn leave the buyer at risk of losing their 10% deposit. These conditions are set out in the offer itself and in the Council of Mortgage Lender’s Conditions (called CML). The buyer needs to instruct an expert lender solicitor who is used to dealing with these strict obligations. They can appoint the same solicitor who deals with their conveyancing. Alternatively they can instruct someone else or a solicitor one appointed by their Lender. Whoever they choose, note that the lender solicitor cannot start work until they receive their version of the mortgage offer (which is often towards the end of the purchase). It will be different from the buyer’s version (as it has a legal section) and will not arrive normally until between 1-2 days after the buyer receives theirs.
These are official entries held at the Land Registry for registered land. Each property has a unique HMLR title number. The buyer solicitors cannot start investigating title (or even order searches) until they have these. They are equivalent to a full set of title deeds. The official copy is divided into three parts. Section 1 ‘Property register’. This records for example how the property is held; whether it is a freehold or leasehold; whether it has full title; easements (benefits and burden that run with the property) and its property address. Section 2 ‘Proprietorship’ register. This records matters such as, whether the owner has ‘title absolute’; the name of the owner; previous price paid for the property; it also includes any ‘restrictions’ or ‘notices’ on the property such as a matrimonial Court order. Section 3 ‘Charges’ register. This records covenants (obligations) imposed on the land owner (not to do something called ‘negative’ or to do something, called ‘positive’). The other key feature found here is any loans and mortgages registered on the property. If the property is a leasehold then it will refer to the leasehold title number. The Office Copy should also include a ‘File Plan’. This is required in order to order searches. It defines the land edged in red.
This is a questionnaire sent by the seller solicitors to the seller for them to complete as it is needed by the buyer solicitors. Some buyer lawyers will not start working without it. It covers such questions as are there any alterations, if so does the seller have the correct planning approval and building regulation completion certificates. If yes, they have to send those to the buyer solicitors. Other questions include are there any neighbour disputes, where are the boundaries, is there an occupiers at the property. Failure to answer honestly and disclose information by the seller may give rise to the buyer taking legal action against the seller after exchange. If the seller does not know an answer to a question, they can answer ‘don’t know’ and it will be for the buyer solicitors to ask additional enquiries if they require further information.
On a purchase, the solicitor investigates title for the buyer, which is the conveyancing process for checking relevant documents such as searches, deeds, enquiries etc. Once they gather in all relevant documents hey make an assessment on the risks and send an official report to the client so they can understand what they are buying into. This is called a ‘Report on Title’. This the last thing that is sent to the buyer just before exchange of contracts. The buyer reads the report, signs the accompanying documents such as the Contract, Transfer-TR1; Mortgage Deed; Report and returns these to their solicitor, allowing the solicitor to proceed to exchange of contracts.
Searches look for potential problems such as restrictions, benefits and conditions which may affect the property and ultimately the buyer’s use and enjoyment of it. All buyers must order searches because of the legal principles such as ‘buyer beware’ and ‘sold as seen’. The Law assumes the buyer will have seen problems the searches would have revealed, has they been ordered. Whilst there are two mandatory searches costing about £250 or less (Local Authority search and Water search), the buyers’ lender (or the prudent buyer) may require additional searches. There are some 60 optional searches but there are three common optional searches which most buyers will take out to better protect them against loss: Environmental search (looking for dangerous substances under or near the property); Flooding search (to satisfy the lender insurers, even if the property is not near a river) and ‘Chancel’ search (which risks losses into the tens of thousands of pounds). Some solicitors are able to negotiate a bundle of discounted ‘searches’ at commencement, whereas if purchased separately, not only does it risk delay on their case by several weeks, but it also costs the buyer more money as they will be buying these individually and lose the bulk discount. The buyer will need to ask their solicitor whether they offer a discounted searches pack.
Stamp Duty is a government tax charged to the buyer only. Unless an exemption applies the buyer is liable to pay for this tax at completion. The buyer’s solicitor can work out the Stamp Duty tax due. They should be able to work this out when they send the buyer their quote estimate. It is based on the purchase price. This is a tax form and the buyer’s solicitor should have the expertise to do this. Most will charge a fee for completing this form. It should be contained in their terms. The benefit of this for the buyer is firstly, it saves them time as the form is quite long; secondly, there are penalty implications if the form is completed incorrectly. So, if a buyer pays a solicitor to complete the form, then they, and not the buyer, face the government penalty for getting it wrong.
There are three types of survey. The most basic is the lender’s valuation ‘Condition Report’. This is insufficient for a buyer as they cannot rely on it and they will be at risk as the law provides for ‘sold as seen’. This is simply used by the Lender to ensure that their lending criteria has been met. The best survey for the buyer to commission is a RICS Full Building Survey. This provides an analysis of the property’s condition and includes advice on defects, repairs and maintenance options. The other is a RICS Home Buyers Report. this looks at the condition of the property, highlights any urgent defects and provides a market valuation and insurance rebuild costs. It also includes advice on defects that may affect the value of the property with repairs, and ongoing maintenance advice.