The purpose of this document is not to give you specific advice on any individual matters concerning or affecting your transaction or transactions. It is to give general advice on some of the main issues which apply to all transactions and on some of the general questions which we find cropping up repeatedly.
There are two stages in the Conveyancing process:
- exchange of contracts
The first stage is prior to exchange of contracts, at this point draft Contract documentation will be prepared the seller’s solicitors and the buyer’s solicitors would then have to consider the documentation and submit all appropriate preliminary searches and enquiries in relation to any matters revealed in the documentation and searches.
Once satisfactory replies have been received, and the results of searches available, an exchange of contracts can then be achieved. At this time a completion date will be agreed and this is usually a period of between 7 and 14 days. Once exchange of contracts has taken place all parties have a legal commitment to proceed to completion. If, having exchange contracts, a buyer did not proceed to completion then generally the buyer will lose their deposit (usually 10% of the purchase price) and risks being sued by the seller for the balance of the sale price and other costs incurred by the seller.
The second stage of the transaction is completion and further documentation has to be produced by the buyer’s solicitors for signature by the seller in readiness for completion.
Upon completion the seller having signed the Transfer Deed transfers title in the property to the buyer with all purchase monies having been paid to the seller’s solicitors.
Do I need to specify what is included and what is excluded with the property?
These days solicitors use extensive schedules of fixtures and fittings and try to define everything that is included and excluded. The position is that if you sell your property then that automatically includes all "fixtures and fittings" - that is to say everything which is attached to or growing in the property. As a rule everything that is loose standing would not be a fixture or fitting but in certain circumstances even that can be wrong. For instance a specialist bookcase or shelving system built to be accommodated in a particular room could be a fixture. The best thing is to make a list of all those things which you may think are fixtures or fittings and which you wish to exclude from the sale. In relation to additional items (such as carpets curtains and light fittings and the like) make a list of those also.
Specific reference can then be made in the contract and both parties will be in no doubt as to what fixtures are excluded and what additional items are being sold with the property.
When do I have to move out?
You may be familiar with the 2 critical stages in any property transaction. The first is "exchange of contracts". That is when the contract becomes legally binding. The second is "completion". That is the day on which you receive your money and your mortgage will be redeemed. That is also the day on which vacant possession must be given. Generally people are moving from one property to another. You will want to move to the property which you are purchasing as soon as you can and likewise the person purchasing from you will want access to your property as soon as possible. It is commonplace for parties to speak to each other and arrange times informally in this way. It is best for you to arrange to vacate your property as early as you can on the day of completion. Completion is very often on a Friday. There is no entitlement to stay in the property over the weekend. You have to give vacant possession of the whole property on that day.
What happens about electricity or gas readings?
You should arrange final readings on the day of completion. Your purchaser (and you if you are a purchaser of another property) should arrange for new supply agreements to be made with suppliers in advance of completion. Otherwise the services may be disconnected and there could be fees payable for reconnection.
What happens about my mortgage and any insurance on the property?
Please ensure you tell us if you have created more than one mortgage. Your existing mortgage(s) will be redeemed. That is to say the balance due to the lender will be paid on the day of completion. You will receive a "redemption statement" sometime before completion. If you have any queries about that redemption statement you must raise them immediately with the lender and clear them up before completion. Otherwise the mortgage will be redeemed on the basis of the information in that redemption statement on the day of completion. Your insurance is generally cancelled after redemption and a refund can be obtained. If you do not have a mortgage then you should remember to contact your insurers direct and arrange for that cancellation and refund. If you are purchasing a property then the property is "at your risk" from the point of exchange and not completion. Again if you are having a mortgage the property will generally be insured under the terms of the lender's block policy from the date of issue of the mortgage offer. If not then you must effect full and adequate insurance for the full reinstatement value of the property from the time contracts are exchanged - not completion.
Can I transfer my existing mortgage to my new property?
This is frequently a source of confusion. The answer is "no". The existing mortgage must be redeemed. You must apply either to the same lender or to any other lender for a new mortgage for your new property.
Do I need a survey?
Remarkably most people are prepared to purchase a property without a structural survey. If you are borrowing money then your lender will insist on instructing a surveyor to advise them. They are concerned to establish that the security is adequate and very often the type of examination undertaken by the surveyor will be of a general nature concentrating more on the value of the property than on its condition. He will not undertake a full structural survey unless you instruct him to do that. The purpose of the full structural survey is to draw to your attention any problems of a significant nature which could be an immense drain on your resources in the future. The purchase of the property is a major investment and it is not something which you should be prepared to leave to chance. You ought to have the peace of mind of knowing that the property is sound or, if it is not, details in advance of its defects. It is too late after contracts are exchanged. If you are going to have a survey, as you should, then it must be done beforehand.
What about boundaries?
Very often conveyancing plans are expressed to be "for identification purposes only". This means that the position on site is crucial. More often than not when the land is not registered there is either no plan or only an inadequate plan and it is important to inspect the boundaries fully and ensure that they are well established and that the full extent of the property is clear "on the ground". Any doubts about this should be reported to us immediately.
What about other rights over the property?
We will be raising enquiries on your behalf asking whether any rights exist or whether there is anyone else in occupation. You should inspect the property carefully yourselves and let us have any information which suggests that there are or may be rights over the property. Are there any gates in the boundaries? Is there anyone else obviously living at the property other than the seller or sellers? Is any part of any adjoining property overhanging your property? If the answer to any of these questions is "yes" or "possibly" you must draw this as well as anything else unusual to our attention.
Planning in property transactions
We will not advise you on the planning implications of your proposed purchase unless specifically requested to do so by you, otherwise than by reporting to you on any relevant information provided by the results of the local search.
Other property disclaimers
It is not our responsibility to carry out a physical inspection of the property, but if you wish us to do this for any reason please make a specific request. We shall not advise on the valuation of the property nor the suitability of your mortgage nor any other financial arrangements. We shall not advise generally on environmental liabilities where we shall assume, unless you tell us to the contrary, that you are making your own arrangements for any appropriate environmental survey or investigations. We may, however, need to obtain on behalf of your lender at your expense an environmental search.
What is the position if I am buying a building plot for development?
In this case you are acquiring the legal ownership to a piece of land only without any buildings upon it. If you are then going to build your home or any other building upon it you should ensure beforehand that:-
(a) the site is physically suitable for what you have in mind;
(b) that the terms of any existing planning consent and in particular any reserved matters are such that you will be able to build what you have in mind;
(c) the building will be undertaken either by a builder registered with the NHBC or Foundation 15.
Alternatively, if the builder is not registered, the construction must be supervised by an architect. Otherwise a lender will not advance money on the security of the property and if you want to mortgage it yourself or if you need or decide to sell the property at a later date and you have no such certificate great difficulty will be encountered. Be sure that the person you employ is suitably and fully qualified to give a certificate which will be acceptable to most lenders and to yours in particular;
(d) You should ensure that services are available to the property at normal anticipated costs and that there are no hidden reasons why the cost of providing water or electricity would be greater than you would normally expect.
Does it matter if I buy the property alone or jointly with my spouse or partner?
Generally speaking, in the case of married couples, most people choose to have the home vested in them jointly. There are two forms of joint ownership. What distinguishes them is the principle of "survivorship". In the case of a "joint tenants", immediately upon the death of one joint owner the survivor becomes the owner of the whole. In the case of "tenants in common" that is not the case. Each party owns a specified share or percentage in the property and that share, whatever it may be, passes according to the terms of the Will of the deceased joint owner and not automatically. Married couples often (not always) own their property as joint tenants.
In the case of other co-owners (apart from spouses) it is much more likely and indeed appropriate for the property to be owned as tenants in common. It is highly desirable that you decide in advance precisely what shares each co-owner is going to own and specify that in the deeds. The reason for this is that if you fail to specify the shares and then disagree in later years the courts can only untangle the situation and decide the percentages in which you own it by reference to your "contributions" over the years. This can be a very time consuming and therefore a very expensive legal exercise. It can all be avoided by you agreeing in advance what shares each of you is to have. Generally speaking that is then the definite position.
It is different in the case of married couples because the divorce courts (in the event of dispute) have powers to adjust and vary the ownership even if it is specified. In the case of other co-owners however that jurisdiction does not exist. You should make an agreement about this in advance and tell us about it so that it can be expressed in the deeds.
Should I make a Will?
It is generally advisable for everyone to at least consider making a Will. Many people first think about this at the time of acquiring a property. In the event of death it is necessary to consider what is to happen to the property or your share and interest in it particularly if you have endowment insurance or other life insurance to protect the mortgage. Please feel free to contact us to discuss your individual needs.