A guide to Moving Home
Moving home should be exciting but for many people it is frustrating and stressful. In this leaflet we will give you a brief outline of the conveyancing process together with information about the firm and our approach to property transactions to help reduce the stress; coordinate the transaction and ensure that you understand what is happening every step of the way.
The Conveyancing Process
Do you know what frequently used terms such as “exchange”, “searches” and “completion” really mean and what happens when?
If not the following step-by-step guide may be of assistance.
The same procedure is followed on sales and purchases throughout England and Wales (Scotland and Northern Ireland have their own systems) and if you are buying and selling at the same time it is often necessary to co-ordinate the two transactions.
- DRAWING UP THE CONTRACT
The draft contract is always prepared by the seller’s solicitor. If you are holding any original deeds such as the lease you will be asked to provide them at this point.
- SUBMITTING THE CONTRACT
The seller’s solicitor sends the draft contract along with relevant title documentation to the buyer’s solicitor.
The seller’s solicitor will ask his client to complete some forms at the outset of the transaction including a property information form and a fittings and contents form. These forms are sent to the buyer’s solicitor along with the draft contract and provide the buyer with information about the property such as who is responsible for the maintenance of boundaries and fences; whether the property has been altered by the seller in any way and whether there have been any disputes with neighbours. The fittings and contents form is an inventory of exactly what items are being left at the property on completion of the sale. With flat sales an additional form (the leasehold information form) has to be completed to deal with such matters as maintenance and insurance of the building.
- APPROVAL OF THE DRAFT CONTRACT
This is the task of the buyer’s solicitor. He checks the draft and makes any changes which he considers to be necessary and then returns this to the seller’s solicitors to agree the amendments and forward a clean copy for signature.
At this stage the buyer’s solicitor will also raise any additional enquiries that he or his client may have about the property and the seller’s solicitor may have to take further instructions from his client.
- THE LOCAL SEARCH
This is carried out by the buyer’s solicitor upon receipt of contract papers. It is a search carried out with the local authority for the area in which the property is situated. It reveals details of such matters as planning permissions on the property; improvement grants which may have to be repaid; road schemes in the immediate vicinity and such matters as compulsory purchase orders and notices under the Public Heath Act.
This stage of the conveyancing process used to be the cause of serious delays due to the amount of time it took for local authorities to process searches. It is now much quicker due to the fact that many local authorities have become computerised in recent years. The average turnaround period for a local search is normally less than two weeks. Increased efficiency has however led to an increase in price! In 1986 a local authority search cost £16.30 throughout the country. An average search in Greater London now costs approximately £200 and each Borough fixes its own fee.
The search lasts for a period of three months from the date of issue. As a result some buyers will not apply for a search until they are absolutely sure that they are proceeding which can be after they have received their survey result.
- MISCELLANEOUS SEARCHES
In most cases, the buyer’s solicitor may need to carry out some additional searches prior to exchange of contracts. Normal searches that are carried out are drainage, environmental and chancel tax liability searches.
- THE MORTGAGE OFFER
Unless the buyer is purchasing the property entirely with his owns funds then the buyer’s solicitor will wish to ensure that the buyer has a mortgage offer prior to exchange of contracts.
There are many different mortgage products currently on the market and the buyer will need to choose the package to suit his requirements whether it be a repayment; interest only; pension or other type of mortgage. The buyer’s mortgage broker will be able to advise him as to which mortgage to choose and how the scheme he chooses operates.
The lender will consider the buyer’s application and will carry out a valuation survey on the property he intends to buy. When this process is complete a mortgage offer will be issued. Most high street lenders will instruct the buyer’s solicitors to act for them as well as for the buyer. If so the buyer’s solicitor will also receive a copy of the offer and some instructions. Some smaller lenders still instruct their own solicitors to act for them which means that the buyer’s solicitor will have to liaise with them and the buyer will also have to pay their fees.
The mortgage offer will contain some special conditions and the buyer and his solicitor must ensure prior to exchange of contracts that these can all be complied with.
- THE SURVEY
The valuation survey carried out by the lender is for valuation purposes only and to guarantee the security of the loan. We would always advise the buyer to arrange a more comprehensive survey, either a house or flat buyer’s report or a full structural survey.
If the lender’s surveyor is already carrying out a valuation survey it may be possible to arrange for the valuer to carry out a more comprehensive survey on the property at the same as the mortgage valuation.
A house or flat buyer’s report and valuation is a concise and economical report on the condition of a house or flat, and includes a valuation. The surveyor will inspect the main structure including the roof space, if it is accessible, and drainage.
The flat buyer’s report will also cover the condition of common parts and services such as central heating.
A full structural survey is particularly useful for old or large properties. The surveyor will report on everything that is visible, the outside of the roof will be examined and a sample of the floor board taken up where practicable. The survey will cover the structure of the buildings, out buildings, nearby trees that may cause damage and water services and drainage. The surveyor may suggest that you should have further tests carried out by experts for example if dry rot is suspected.
Whichever type of survey you choose it should be carried out by a member of the Royal Institution of Chartered Surveyors or the Architects and Surveyors Institute.
If the survey report reveals anything unsatisfactory, you or your solicitor may wish to negotiate with your seller to reduce the asking price. Nothing can be done about any defect which you discover after exchange of contracts which is why surveys are so important.
- EXCHANGE OF CONTRACTS
When all the terms have been agreed; additional enquiries answered satisfactorily; a mortgage offer received and a satisfactory local authority search has been obtained, you are at last ready to exchange contracts!
Your solicitor will send you the contract for signature together with the legal report about the property you are buying. At this stage you should raise any final queries you may have about the property before returning the signed contract and deposit to your solicitor in readiness for exchange. The deposit is usually 10% of the purchase price.
The seller’s solicitor also sends the seller’s part of the agreed contract to his client for signature at this stage.
Exchange of contracts takes place over the telephone. The solicitors for the buyer and the seller complete the necessary details in their respective parts of the contract including the completion date and they are “exchanged”. The buyer’s solicitor then sends the buyer’s signed contract and deposit to the seller’s solicitor and the seller’s solicitor sends his part of the contract to the buyer’s solicitor. From the point of exchange of contracts the deal becomes binding on the parties and if either one of them backs out he or she will incur penalties.
If the buyer is purchasing a house then his buildings insurance must be placed on risk on exchange of contracts when the risk formally passes to him. As most flats are insured by the freeholder of the building insurance arrangements will usually be in place already.
The completion date is a mutually agreeable date agreed between seller and buyer. It can be within a few days of exchange or much longer if required. The buyer must ensure that all funds are available prior to the completion date as late completion will attract financial penalties.
- FINAL FORMALITIES
After exchange of contracts the buyer’s solicitor carries out a search at the Land Registry to check, for example, that no additional mortgages or other onerous matters have been entered on the title to the property since the “office copy entries” were issued.
With unregistered land a similar type of search is carried out with the Land Charges Registry in Plymouth.
If the buyer is obtaining a mortgage, his solicitor will carry out a bankruptcy search against him on behalf of his mortgage lender.
The solicitors for both buyer and seller will send their clients the remaining documentation for signing such as the transfer which transfers legal ownership of the property on completion and the mortgage deed and stamp duty form. The buyer and seller will also be sent financial statements showing how much they will need to pay or will be receiving on completion.
This stage of the process is a busy one for the buyer and the seller. The parties should contact the gas; electricity; telephone and water authorities to arrange for the transfer of services. The local authority should also be notified of the move for Council Tax purposes. Removal men need to be booked for the completion day, change of address cards ordered, and arrangements made for the redirection of mail.
At this stage the contract which has been exchanged is formally “completed”. The buyer’s solicitor sends the balance required to complete to the seller’s solicitor by electronic bank transfer. Once this is received by the sellers solicitors the keys to the property are released to the buyer. All the buyer has to do now is move in.
After completion, the buyer’s solicitor will deal with registering the property into the buyer’s name at the Land Registry. The buyer will be sent an up to date copy of the register showing them as the new owner once registration has been completed.
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