Studio 50 Soho Wharf 1 Clink Street London SE1 9DG DX 132079 LONDON BRIDGE 4 Telephone: 020 7089 7300 Fax: 020 7357 6698 Email: ted@oakleyshee.com Website: www.oakleyshee.com Partners: Edward Oakley Frazer Shee Amanda Woolven A GUIDE TO CONVEYANCING The information set out below is not intended to be a resume of the law relating to conveyancing nor is it a comprehensive guide to each and every aspect of the conveyancing process, however, it should provide you with some information as to what will happen throughout the transaction. This guide is not, without question, an inspiring document! If you cannot face reviewing this in one sitting please ensure that you read it before exchange of contracts! The vast majority of transactions are completed within six weeks to two months, however, there is no hard and fast rule on the time taken: so much is dependent on the speed of third parties that it is impossible to estimate the time a transaction will take. The procedure will vary dependent on whether the property is leasehold or freehold; whether it is registered at the Land Registry and whether it is residential or commercial. Much will also depend upon whether the solicitors involved have adopted the Law Society's convention for conveyancing protocol known as 'Transaction' and whether a secretary is in fact dealing with the matter rather than a qualified solicitor! (this is becoming increasingly common). Most conveyancing transactions may be divided into five sections:- 1. Pre contract matters; 2. Exchange of contracts; 3. Post exchange matters; 4 Completion; 5. Post completion. Before Exchange of Contracts The Seller's solicitor Once the seller has accepted an offer for the property the agents will send particulars of the property and the transaction to both the buyer's and seller's solicitors. The seller's solicitor will obtain the relevant deeds and documents. The Seller should have completed the various property information forms and the list of fixtures, fittings and contents. Once the seller's solicitor has received all relevant documents he will send the draft contract to the buyer's solicitor. The Buyer's Solicitor The buyer's solicitor usually acts for both the buyer and the lender when a mortgage is required. Once an application has been made for the mortgage the prospective lender will instruct a surveyor to value the property. If all is satisfactory the lender will make a formal mortgage offer to the buyer. A copy of the offer is usually sent to the buyer's solicitor with the lender s instructions to act. The lender is only concerned as to whether the property is of sufficient value to be adequate security for its loan: the valuation survey is therefore limited in scope. All buyers are advised to carry out a full structural survey. It would be best for the buyer to liaise with the lender to discover whether it will be possible for the lender s surveyor to carry out the structural survey at the same time as performing the valuation. This could be cheaper than instructing different surveyors for the two tasks. Local Authority Search - Limitations The local authority search will disclose - amongst other things - whether there are any proposals to develop the roads within a radius of 100 metres from the property; whether there have been any planning applications in respect of the property and
whether the road adjoining the property is publicly maintained. The local authority search will not give details of any plans for the development of adjoining property. The search will only relate to the property being searched. It is therefore necessary to make a search specifically of the adjoining property if the buyer wishes to discover if there are any plans to develop the same. An additional fee will be payable to the local authority. The results of the search contain a certificate signed by the local authority to the effect that the results of the search are correct at the date of the search. This means that the search may only be regarded as correct at that date. There is nothing to prevent the local authority from making an order or proposal after the date of the search which would adversely affect the property: the buyer would take the property subject to that adverse entry. It is, however, possible to obtain insurance so that you are covered against any subsequent adverse entry. If you wish to effect such insurance you should let us know. A personal local authority search (obtained by agents attending the local authority and obtaining the relevant information) is not acceptable to the vast majority of lenders. The advantage of a personal search is that this can be carried out quickly but the disadvantages are that no certificate is given by the local authority as to the accuracy of the search and frequently information made available to the personal search agents by the local authority is limited. Other searches may also be necessary subject to the whereabouts of the property e.g. if in a mining area the buyer's solicitor will carry out a mining search to determine if there are any mining works likely to affect the property. Once the buyer's solicitor has received the contract, property information forms and other relevant documents from the seller's solicitor he will review them and revert to the seller's solicitor with any observations and additional enquiries he may have. Once all the searches have been obtained and the buyer's solicitor is satisfied with the vendor s solicitors replies to enquiries he should report to the buyer. Exchange of Contracts If the buyer is happy with the property the parties respective solicitors will negotiate the terms of the contract and once the contract has been agreed the solicitors will have them signed and the buyer will pay the appropriate deposit to his solicitor. Each party s solicitor will hold a copy of the contract and when both parties are ready to enter into a binding agreement their solicitors will effect this by "exchanging contracts". i.e. the buyer's solicitor sends to the seller's solicitor his contract duly signed by the buyer or the buyer's solicitor on behalf of the buyer and the deposit. The seller's solicitor does the same in respect of the solicitor's part of the contract. At the time of exchange the completion date is inserted in the contract. Once exchange has taken place the parties will be bound by the terms of the contract. After exchange The Buyer's solicitor The buyer's solicitor will notify the buyer's broker (if applicable) that any life polices relating to the mortgage should be placed on risk and should draft and send the deed of transfer along with a number of enquiries known as requisitions on title (which generally deal with arrangements for the day of completion) to the seller's solicitor and will make arrangements with the Seller s solicitor for the transfer of the balance of the purchase price on completion. He will prepare the Mortgage Deed and will arrange for the buyer to execute the documents. The Buyer's solicitor will then carry out a search of the Land Registry to discover whether any adverse matters have been registered (such as a mortgage over the property). When acting for the lender the solicitor will carry out a further search against the buyer to ensure that there are no bankruptcy or other proceedings against him. A report on the property will be sent to the lender requesting the mortgage loan to be sent on the completion date. A statement of account and invoice showing the amount required from the buyer to complete the purchase will be forwarded to the buyer. Cleared funds will be required on or before the date of completion. A personal cheque given to the buyer's solicitor on the date of completion will not be satisfactory. The Seller's Solicitor A completion statement showing the sum required from the buyer to complete the purchase will be sent to the buyer's solicitors together with details of their bank and whether the keys will be available from the agents or directly from the seller on
completion. If there is a mortgage over the property he will request the lender to supply the figure required to pay off the mortgage on the day of completion. Once this is received he will send a statement of account to the seller together with his invoice. Completion Before formal completion takes place the buyer should attend the property with the seller in order to inspect the state and condition of the property and ascertain whether all of the items contained in the list of fixtures, fittings and contents are at the property. They should also have the gas and electricity meters read. The buyer should inform his solicitor that all is well (or otherwise) and his solicitor will forward the outstanding balance of the purchase monies to the seller's solicitors. The transfer of funds is dealt with between the respective solicitors' banks through the CHAPs system (i.e. the Clearing House Automated Payment system). When funds are sent this way there is no guarantee of their time of arrival at the destination bank save that they will arrive on the same day. Occasionally (though rarely) delays do occur leading to a delay in completion which can be nerve wracking for all concerned, particularly if there is a long chain of transactions. The only way of avoiding this would be for the buyer's solicitor to have the funds available and transfer these on the day before the date due for legal completion. If you are buying you must confirm whether you want to deal with completion in this manner. The disadvantage is that you would start paying interest on the mortgage advance a day earlier, however, this would far outweigh the potential liability should the funds be delayed on the date of completion. Obviously such an early completion will not be possible where the buyer is dependent on completing the sale of his existing property in order to obtain sufficient funds to complete on his purchase. The keys are usually deposited with the agents on completion. Once the money has been received by the seller's solicitor he will give an undertaking to send the deeds to the buyer's solicitor. The seller's solicitor will then instruct the agents to release the keys to the property. Unless the mortgagee has arranged the insurance the buyer should ensure that the buildings insurance is placed on risk as from the date of completion unless he has been advised to arrange this as from the date of exchange. After Completion The Seller's Solicitor Will send to the seller the balance of the sale proceeds having deducted his fees, the agents fees (if instructed to do so) and the amount payable to the seller's lender. The Buyer's Solicitor Will pay the stamp duty land tax and apply to the Land Registry to register the change of ownership and any new mortgage over the property. LEASEHOLD TRANSACTIONS The above will apply to leasehold transactions save that it may be necessary for the seller s solicitors to submit a questionnaire to be completed and returned by the landlord. It may also be necessary to obtain a letter of consent from the landlord to the sale of the lease (a ' licence to assign'). This can delay matters considerably. It will also be necessary to serve notice on the landlord that the transfer has taken place. Other complexities may exist where the property involved is an underlease. COSTS It is important that both the seller and the buyer budget for the transaction. The seller should ensure that there will be sufficient funds to pay off the mortgage and other fees upon completion. The buyer should also be aware that cleared funds will be required on completion. Useful websites Smartmove.com Simplymove.com Ihavemoved.com
Upmystreet.com Knowyourneighbour.co.uk Primelocation.com Rightmove.com IMPORTANT Insurance Subject to the terms of the contract the buyer must arrange for the property he is buying to be insured as from and inclusive of the date of exchange. If the property is damaged or destroyed between exchange and completion the buyer will still be obliged to complete the purchase (subject to any contrary term in the contract). Survey A buyer should obtain a full structural survey of the property. Joint Ownership Where two or more persons are buying the property they may hold it as 'joint tenants' or 'tenants in common'. these terms apply whether the property is freehold or leasehold. If they hold property as ' tenants in common' their shares in the property will be ascertained in accordance with the amounts they have contributed towards the purchase price, their respective liabilities pursuant to the mortgage and any contribution towards improvements. In order to avoid uncertainty in the future we would recommend that the parties enter into a deed of trust to regulate their ownership of the property. If one of the owners should die during the period of ownership the deceased's share will be inherited by the person named in his Will (or in accordance with the rules of intestacy if no will exists). If they hold property as joint tenants they will be deemed to own an equal share in the property regardless of any inequality in their contributions. Upon the death of one of the joint tenants the deceased's interest will pass automatically to the survivor regardless of the provisions of the deceased's will. Local Searches Please take note of the limitations of local searches set out above.
A Summary The Seller's Solicitor The Buyer's Solicitor The Seller The Buyer Pre-Contract Receives Agent's details and instructions from client sends property questionnaire and list of contents to seller for completion Receives Agent's details and instructions from client Mortgage Application Obtains relevant documents & sends questionnaire to landlord Upon receipt of deeds, questionnaire and list of contents prepares draft contract and submits to buyer's solicitor Reviews draft contract and documents of title. Raises additional enquiries, if necessary. Applies for local authority search and any other relevant searches. Reports to Client Responds to additional enquiries. Agrees contract terms Agrees contract terms. Receives deposit and mortgage offer 2. Arranges building insurance to be placed on risk as from exchange (not applicable to leaseholds) 3. Signs contract Exchanges contracts. Requests a redemption statement from the lender in respect of any existing mortgage. Approves draft transfer, replies to requisitions and prepares completion statement. Sends transfer to seller for signature Completes transaction. Sends deeds to buyer's solicitor; pays off mortgage Pays estate agents and balance to buyer. Exchanges contracts upon receipt of deposit & formal mortgage offer. Completes and returns questionnaire and list of contents Signs contract Makes removal arrangements Post-Contract/Pre-Completion 1. Drafts transfer deed and requisitions on title: sends to Seller's solicitor. 2. Reports to mortgagee and requests advance cheque 3. Land Registry and Bankruptcy searches Upon receipt of completion statement sends statement of account to buyer showing sums required on completion Signs transfer deed Survey Sends deposit funds to solicitor. 1. Ensures any life policy required for the mortgage is ready to be placed on risk upon exchange. Makes removal arrangements Signs mortgage deed Sends balance of funds required to complete to solicitor. Signs transfer deed and stamp duty form Completes transaction Reads meters. Moves out! Reads meters, inspects property. Moves in! Pays stamp duty -Applies to Land Registry to register change of ownership. In leasehold cases serves notice of mortgage and transfer on landlord and notifies insurers. Post-Completion
Moving - A checklist You can now notify several parties of your change of address at once over the internet. Try the websites referred to above. It is unwise to make any firm plans until exchange of contracts has taken place. Once contracts have been exchanged:- 1. Notify : gas, electricity and telephone companies. arrange for reconnection at new home. 2. Arrange for plumber/electrician to disconnect cooker and washing machine and reconnect them at new home. 3. Notify bank and cancel direct debits/standing orders re: mortgage repayments, water rates, council tax. 4. Arrange for mail to be re-directed to new home. 5. Transfer medical and dental records. 6. Arrange with agents to deposit keys on the completion date. 7. Book removal firm 8. Cancel delivery of milk/newspapers. 9. Deposit important documents and valuable with your bank until the move is completed. 10. Arrange for locks to be changed on new home on the date of completion. 11. Notify the following of the change of address:- Local authority Bank Credit card companies Life, motoring and contents insurance companies Employer Drive Vehicle Licensing Centre Premium Bonds Office National Savings Certificate Office Hire Purchase Companies Doctor Dentist Accountant Inland Revenue