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 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 us know immediately, otherwise we will assume you are satisfied with the replies and documents and want us proceed to exchange and complete based on these.
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.
This is a search of 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 the works or if the works are 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.
The buyer 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?
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 additional enquiries are outstanding? On Report on Title to you as buyer, your lawyer will notify what enquiries the seller or the seller solicitors have been replied, 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.
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 non-standard 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.
Lack of communication is one of the biggest complaints made to the Ombudsman about lawyers. Take your time to find a lawyer who neither works alone on your case (ask what would happen if they were out, or on holiday etc.), nor works for a big team (where your case could get lost with less accountability and control). Don’t be shy to ask if your lawyer will be prepared to allocate a 2 or 3 person conveyancing unit to your case, covering issues if one or other is on the phone, for example.
What are Money Laundering Regulations? They were introduced by the Government by their Money Laundering Regulations 2002 and updated by legal directives issued by the Government. How strict are the money laundering rules. They are what are legally called ‘strict liability’ offences. This means someone can be in breach of money laundering rules even for innocent errors. Why were the Money Laundering Rules introduced? To reduce the risk of terrorism and illegal activity within the UK, and especially with billions of pounds being laundered in UK property. Are their penalties? Yes, penalties include thousands of pounds in fines, and in serious cases imprisonment. They can also lead to delayed completion, and risk the defaulting party paying compensation. these apply in all UK conveyancing transactions as these involve the use of money to purchase property. Lawyers are prevented from acting for any seller or buyer unless their client can pass these UK Money Laundering Regulations. Talk to your solicitor about this at your quote stage in case you have any risk of difficulties such if your passport is missing, or you don’t have sufficient ID evidence or your purchase money is coming from an external source, such as a family member etc., as this can slow you down and risk you not being able to move in time or at all.
Why is ID needed? Under the Government’s Anti-Money Laundering Regulations both buyer and seller must evidence their true identity. This is to combat the billions of pounds criminals and terrorist groups, for example, are money laundering in the UK by buying and selling property.
Do I have to pass?
Yes. This is a strict liability offence and you will be liable to penalty, both financially and criminal, even for innocent errors.
What ID do I need to provide?
Your lawyer will send you a list of Government approved IDs. Follow that list. As for ID, you can send, for example, your passport or photo ID driving licence. As proof of your address you can send two separate documents, ranging from a recent utility statement or bank statement etc., showing your residing address.
By post. Given the high level of fraud and money laundering activity in the UK, best practice is for you to post your ID documentation to your lawyers. Some firms ask for your original passport etc., while others will accept copies.
What is source of funds? The government requires a buyer only, or a donor of a gift to the buyer, to produce evidence that their funds are genuine. Why do you need to provide source of funds evidence? This is to battle the billions of pounds being laundered each year in the UK property market by criminals washing dirty illegal money by buying and selling property. Sadly, the strict provisions are needed, and cause extra work for both innocent buyer and seller but it is something both need to do, in order to buy and sell.
How do I pass source of funds?
Your lawyer will send you a source of funds questionnaire asking questions as to your occupation, income, savings, etc. It is not something they enjoy doing and please do not be offended when they ask you these questions as they are forced (for the right reasons) to ask these questions under the government Money Laundering Regulations Act 2002. Your lawyer will also ask for your latest bank statement showing source of funds. Each lawyer is different, but you must be guided by them.
New technology is allowing some lawyers to utilise digital face recognition software to allow their clients to reduce their need to send ID evidence by post. Ask your lawyer about this. We are currently using both copy postal and digital AML checking.
This represents the balance to be paid by the client to their lawyer in order to put their lawyer in funds to complete the conveyance. This amount will vary depending on whether the case is a sale or a purchase, on whether it is a freehold or leasehold and on third party disbursements such as stamp duty or the amount of the deposit paid. Essentially, prior to completion, your lawyer will send a completion statement to you, showing what you need to pay, i.e. on a purchase it would be the purchase price plus legal costs, plus 3rd party disbursements, less what you have paid so far.
The buyer must put building insurance in place in respect of the property on exchange of contracts. It is essential because if the property is damaged (i.e. fire, flood) they are responsible and could lose tens of thousands of pounds if not insured, of personal expense. If you have a lender, they will not allow you to exchange contracts without you firstly purchasing building insurance prior to exchange of contracts and secondly sending both them and us a copy of your insurance schedule before you exchange. If their interest is not noted, or you purchase the wrong cover which does not meet your lender mortgage conditions (or those of the Council of Mortgage Lenders), then you risk losing your 10% deposit and being sued for other losses such as hotel bills if the seller does not move in time and cost of their removals because your mortgage is delayed or withdrawn.
The completion date is the legal day the seller moves out and the buyer moves in. The time of day by which the seller must vacate the property on the completion date, is set out in the contract. It is normally either 1pm or 2pm. If the seller does not move out by the completion time on the completion date the seller can sue them for breach of contract.
When is this sent?
Your lawyer’s completions team will prepare a financial completion statement for you, sent 5 working days before the completion date.
When do I send completion money?
You then need to send this money to complete prior to your completion date, to ensure your lawyer can send the balance payable to the seller on the completion date. Don’t forget, this money must appear as cleared funds, so the sooner you send the balance the less complications you risk, such as delayed completion. As a buyer, this will show you how much balance you will have to pay, first deducting your deposit, but adding third party costs such Stamp Duty, Land Registry, search disbursements, and legal costs, for example. If you are buying a leasehold, the completion statement may arrive just before completion because your lawyer may be waiting for apportionment statements from the seller’s solicitors or the management company, to ensure you don’t overpay for unpaid service charges owed by the seller for example. Overall for both freehold and leasehold, please expect a delay in general due to unforeseen circumstances that can apply.
On a sale, you will be owed money, so the completion statement will be calculated fully to your completion date and sent to you on completion to ensure no last minute figures are miscalculated. On completion, arrangements will also be made to send the seller their balance, after paying off any mortgage, third party disbursements, legal costs and estate agent commission and so forth. If leasehold, your lawyer will need your help in dealing with apportionments with any service charges etc. that you have paid upfront, or are due to pay prior to completion, or these can be deducted from the sale proceeds as an apportionment.
This document is the legal agreement between yourself and the seller.
This is the contract signed on exchange of contracts which binds the seller and the buyer. It sets out the terms of what has been agreed such as the property, the price and the names of the parties. It also deals with the process if something goes wrong. It is no longer necessary for the parties to meet to sign the same contract. The seller’s solicitor prepares two copies of the same contract with each party signing their own copy of the document and at exchange, the contracts are exchanged between the respective lawyers, by telephone, at which time the completion date is inserted in the contract, and the deposit transferred to the seller’s solicitors.
The document you enter into with the management company to ensure you agree to pay for any service charges etc.
This is a document relating to the property that may have rights or benefits affecting the property.
A deposit is a sum of money, 10% of the purchase price, which the buyer pays to the seller (but via their own lawyer, sent to the seller’s lawyer) on exchange of contracts. It’s a deposit which legally binds the seller to sell, and the buyer to buy on the agreed completion date (also fixed on the exchange date).
The Law Society Contract of Sale, used by buyer and seller conveyancers to exchange contracts, states the deposit normally at 10%. If the buyer does not have 10%, this is more complicated, but your lawyer will explain your options. You may need to negotiate if they will accept 5% for example. If as the buyer you have a related sale, and your deposit is coming from that sale? This is easier to negotiate as the person you are buying from should allow you to use the deposit money coming from your sale to purchase, but knowing that even if you don’t complete, you are still liable to pay the seller the entire 10%. So on a related simultaneous sale, just send the difference.
When to send the deposit as a buyer?
You will be notified by your lawyer when they send you a Report on Title as they will also send you a letter which tells you the next steps you will need to take to proceed towards exchange.
When is the deposit payable by the buyer?
On exchange of contracts. It should arrive with your lawyer a few days to a week or more in advance.
Why should it arrive earlier than the exchange date?
Because the seller solicitors will require your deposit to be in your lawyer’s bank as cleared funds otherwise the seller solicitors cannot allow exchange. Many buyers send their deposit potentially a week in advance to ensure those funds are cleared and ready to be transferred to the seller solicitors on the day of exchange.
Should I send as soon as possible?
Yes, because your seller solicitors will not allow you to exchange contracts without knowing that you have transferred to our account cleared deposit funds.
How do I send the deposit?
By Bank CHAPS/ TT (Telegraphic Transfer) and not by BACS and cheque (to avoid clearance delays). Your lawyer will have provided their bank details in their very first letter to you.
Sometimes the buyer will not always be able to provide a full 10% deposit, this may be because they are obtaining a 95% mortgage, or they are receiving less money coming up the chain. What this means for the seller is that on exchange the reduced 10% deposit, sometimes 5% if normal, will be paid. However, the contract provides that if anything goes wrong and the buyers cannot complete, then after a process is followed, the seller keeps the buyer’s 10% deposit. If the buyer doesn’t put the 10% deposit down, then the seller will have to pursue a claim, potentially via a litigation lawyer. The chance of a failed completion is slim, but still a risk for you to be aware of.
Each home that comes on the market for sale will need an EPC. This means the property has to be inspected and an Energy Performance Certificate prepared. The Energy Performance Certificate is similar to the certificates now provided with domestic appliances such as refrigerators and washing machines. Its purpose is to record how energy-efficient a property is as a building. The certificate will provide a rating of the property from A to G, where A is very efficient and G is very inefficient.
This is when a legally binding contract is made. Until contracts are exchanged nothing is binding – either party can walk away from the transaction with no penalty. After exchange of contracts neither the buyer or seller can change their minds, the seller cannot increase their price, the buyer cannot reduce it, the buyer is protected if someone tries to ‘guzump’ (outbid your price) and the seller is protected if prices go down. This is also the day the move-in-completion date is fixed and provided to the lawyers in order for them to insert it into the exchanged contract. This date is mutually agreed between the buyer and seller, via their estate agent, and not through the solicitors as this will cause delay. Prior to exchange the seller and buyer will agree dates between themselves and then notify their respective solicitors who will try to fit in with the suggested date. If there are unforeseen delays, for example, if the buyer does not receive a search or mortgage offer in time, or any other complication then the completion date does not take place and the defaulting party will be in breach and pay compensation. For this reason, do not firm up commitments such as giving notice on a job, arranging removals or arranging to go away without exchanging contracts.
This varies in the UK depending on your chosen lawyer, on the time of year (as some periods are busier than others) and if you have a chain for example. This can range from 3 to 4 months. Completion can take up to 5 months from the start of you instructing your lawyer. Speak to your lawyer before you instruct them. Our own average is within 2 months.
The Law Society Conveyancing Contract states you leave 20 working days between exchange and completion dates. If you wish to amend this to a shorter time period then you can do so. However, it will involve solicitors squeezing in 20 days’ work into fewer days, for which solicitors charge an expedited fee.
Expedited – 16-20 working days:
We make no charge for goodwill purposes.
Expedited – less than 15 working days between exchange and completion:
This is so short that we have to charge something. For additional work the SRA costs code allows our terms to charge an hourly rate (at £200 per hour). This could take in the region of up to two additional hours. However for goodwill we charge a one off discounted fee of between £97 and £149 (depending on how many days you leave and how busy we are). We hope this helps you. We repeat that whilst the Law Society Contract of Sale (5th Edition) asks you to leave 20 working days, we will try to meet an expedited date and we will charge a nominal discounted rate for this additional work.
Note, if you do want an expedited completion date of less than 20 working days, then please let us know as soon as possible so we can check whether we can fit you in.
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, so that both parties understand what is included in the selling price. If you are the seller, when you let us have the form we will send you a copy back so that you know what you have agreed to. If you are the buyer, we send you a copy of the form as soon as it is received by ourselves from the seller’s solicitors so that any difficulties can be resolved at an early stage.
This describes how the land is owned. Land is either freehold (usually houses) or leasehold (usually flats).
This document provides your instructions and authority to exchange.
The government AML – Anti Money Laundering Regulations apply to any person introducing money into the purchase. This includes a donor (someone making a gift, such as a relative). We understand it can be frustrating to ask the donor to not only make the gift, but then put them through the added stress of having to complete documents, make certain declarations, and provide ID and evidence showing where those funds came from. It is equally frustrating for us, with many more hours spent than we actually charge you, but it is a necessary complication due to money laundering in the UK.
Due to the billions of pounds being illegally laundered in the UK, through property, to fund criminal and terrorist transactions, the government requires this procedure before you are allowed to use donor money in a property purchase. One of the main requirements is that the government needs you to show where all of the purchase money is coming from, and they require us as solicitors to make sure that this is complied with.
If you are getting a mortgage to help you buy the property, your lender also needs you and your donor to provide both ID and Source of Funds documents together with signed declarations confirming that the money is a gift. If the requirements of both are not fully satisfied your lender won’t release the mortgage funds and the government wouldn’t let you purchase as all buyers have to comply with these. Also if you are obtaining a mortgage, your lender will either insist or prefer you purchase an indemnity insurance policy to cover where the borrower (i.e. you) are subject to a claim at any time within 5 years of your purchase. This is because the administrator in bankruptcy can reclaim that gift against you within those 5 years. It also covers if the donor gift is disputed, for example by a third party they owed money to, or if they change their mind or the estate disputes that gift. Your lawyer will notify you of this policy, and its cost, if applicable, but it is fairly cheap.
What do we do?
Our own process is very comprehensive so as to fully protect our clients and safeguard their risk of claim against their lender, or not obtaining their loan, if the gift process does not meet the lender requirements on or post completion. We will send you our gift procedure as soon as you notify us if you are buying with the assistance of a gift.
Where you are a buyer and another buyer outbids you or increases their offer and it is accepted pre-exchange of contract. You will have lost the purchase to that other party. The government currently does not prevent this.
This is the legal document that outlines the property on a plan.
A landlord is also known as the freeholder. It is the person or company that owns the freehold, and from which you take a part of that freehold building and own as a leasehold for a term of years, under certain conditions, including service charges being applied yearly as well as Ground Rent.
Landlords can appoint a Management Company to manage the blocks within the freehold for which they charge a service charge. A management service company is appointed to carry out services, such as maintenance in the building or its grounds (for example, grass cutting, window cleaning etc.).
Your lender needs someone to act on their behalf during the conveyancing transaction. This can be either us acting on behalf of your lender or an independent third-party solicitor acting on behalf of your lender.
We must be on your lender’s panel and comply with your lender’s rules during the transaction (which is stated in the CML handbook). The work involved acting for a lender imposes strict duties on the solicitor involved. Some of the duties involved are the tasks which we have listed below for you:
How much are lender lawyer costs? Mortgage providers estimate these in their mortgage offer but this is an estimate only. Check with your lawyer as they will provide the correct figure for you. This applies if you have a lender for your purchase (mortgage). Lender lawyer costs can range from £200 to £600. We charge £397.
This is the legal transfer between yourself and the seller.