Conveyancing Explained

The purchase of property or land is probably the largest financial commitment entered into by most people within their lifetime. An integral part of the modern conveyancing process is a search of the Register of Local Land Charges maintained by local councils.

A Local Authority Search is required to inform a potential purchaser of the existence of obligations or ‘charges’, enforceable against successive owners by local authorities, or central government.

A ‘charge’ describes a burden imposed on land with which successive owners or occupiers of land and/or property must comply. The charges detailed on the Local Land Charges Register would not normally be disclosed by looking at the title deeds or inspecting the land or property itself. Local Land Charges may be of financial or non-financial nature.

A search of the Register is made to ensure that prospective purchasers are not caught unawares by any charge placed on the land or property which may be enforceable against owners. It would inform a potential purchaser as to whether the local planning and local highway authorities have any proposals for the area.

A search of the Council’s records ensures that there are no hidden surprises, such as:

• Repayment of monies owed to the Council e.g. Improvement/Renovation Grants
• Conservation Areas: These areas have been designated by the authority as areas containing special architectural or historic interest. Obviously it is desirable to preserve or enhance these areas and the Local Authority may not allow future development of the buildings or surrounding land as a result.
• Listed Buildings – A listed building would have strict rules as to what you would and would not be allowed to do in the development of the property/land.
• Preservation Order on a tree(s) situated on the land
• Future developments that could affect the property
• Compulsory Purchase Orders
• Proposed Tree Preservation Orders
• Many informal notices under Planning and Highway Laws which cannot be found on any register.
• Road proposals or Schemes (including road widening)
• Proposed enforcement action.
• Environmental Issues
• Smoke Control Orders Only certain approved types of fuel can be used in Smoke Control Areas e.g. smokeless coal.

In addition to the registerable items revealed on the Local Land Charges Register a potential purchaser will also wish to know of any notices about to be served on the property which will become binding upon any new purchaser upon completion. A search is also undertaken of such unregisterable charges.
Please note that the search only covers the land and property shown on the land registry plan which you propose to purchase. It will not provide your conveyancing solicitor with details regarding any future proposed developments and plans for the surrounding areas. If you want your solicitor to obtain this information, you will need to pay additional fees for him to undertake such enquiries with the council.

One of the questions I’m most often asked is, what time can I move in?

Unfortunately, the answer is not usually what my clients want to hear!

The difficulty is that technically, keys should not be handed over until the seller’s solicitor has received the purchase monies into their client account. Your solicitor needs to have the mortgage monies and any balance from you, together with the monies on any property you might be selling at the same time. Only then can he send a payment request to his bank for the purchase monies to be sent to the seller’s solicitors.

Once your solicitor’s bankers have received the request, it will usually be processed electronically in a queuing system. At this point, the time it takes is out of your solicitor’s hands, it is solely down to how busy the bank are, how many other payments are going through on that day and whereabouts your payment request is in the queue.

This always causes problems for buyers, because they don’t want to hire a removal van for longer than absolutely necessary. As a general rule, if your solicitor has got the mortgage monies in his client account the day before, which I like to do as a matter of good practice but in fairness not every mortgage lender will allow this, then you can probably expect the monies to go through early in the morning from 11am onwards. If you’re also selling a property though, bear in mind that your buyer’s solicitor has to go through the same process to get the money to you, hence the usual delays.

Its best to ask your solicitor whether or not he can get the mortgage money the day before, because at least then, you’re not waiting for this to come through as well as any sale money on your existing property. Also, if you want to complete early, avoid popular days such as the Friday before any bank holiday, because the banking system is always manic!

Do I get the deeds? How do I get a copy of my deeds?

After completion, your conveyancing solicitor should provide you with a receipted bill (you should have already paid in full by this stage really and if not, he’ll be asking you for the balance) and should account to you for any balance due.

When buying a house and completion has taken place, obviously, the house will need to be registered in your name. The conveyancing solicitor will need a few documents in order to be able to do this.

If your seller had a mortgage on the house, then your conveyancing solicitor needs a written notice confirming that it has been paid off. In practice, the seller’s conveyancing solicitor will give an undertaking (legally binding promise) to your conveyancing solicitor do this on completion and to provide the written notice, it’s not something you need to worry about.

Your conveyancing solicitor will also need a Transfer Deed (TR1 or TP1) signed by you and the seller, and duly witnessed.

Your conveyancing solicitor will usually file the Stamp Duty Land Tax Return Form on your behalf following completion and make any stamp duty payment on your behalf. He’ll get a certificate to confirm that this has been done.

Once all these documents are ready, your conveyancing solicitor will apply to the HM District Land Registry to have the property registered in your name. The Land Registry will note the discharge of the seller’s mortgage, the transfer of the property to you and the new mortgage in favour of your mortgage lender (if any) on the electronic register. Once the register has been updated, your conveyancing solicitor will get a copy and he’ll send it to you, together with any guarantees, sundry title deeds and searches not required by HM Land Registry, indemnity insurance policies etc. He’ll also send a copy to your mortgage lender, if you have one.

Since the implementation of the Land Registration Act 2002, all paper deeds have been “dematerialised”. All this means is that instead of being kept on paper, which can easily be lost, the deeds are recorded electronically at HM Land Registry on a register. This means that you might not actually get any deeds after completion, you might just get a copy of the new register showing you as owner. This doesn’t necessarily mean that your conveyancing solicitor is holding anything else, he may just have no other relevant papers to give to you, sundry title deeds and searches may not be available nor do you really need them for anything other than historical interest.

The electronic register can be accessed by anyone, it is a public register. If your neighbours want to get a copy of your deeds to see how much you paid when buying your house, (and vice versa) then they can do. If you want to get a copy of your deeds, (or anyone else’s for whatever reason) visit www.hmlr.gov.uk and click on Land Register Online, coloured blue on the right hand side of the home page. The service costs from 3 pounds.

Again, as with the sale of a property (see my separate article), if you’re buying a house in England & Wales, no matter where it is, you’re likely to get the benefit of a HIP.

The HIP might not be as useful to you as you might think. The standard documents that have to be provided to your conveyancing solicitor are;-

1) Energy Performance Certificate
2) Copies of the electronic register held at HM Land Registry proving ownership of the property by the sellers, together with a copy of the Land Registry filed plan.
3) Local Land Charge Search result.
4) Water & Drainage Search result.

Firstly, when your conveyancing solicitor looks at the HIP, they may still have to ask the sellers for extra deeds. In the electronic register, reference might be made to other deeds that are of particular importance, deeds that create rights or create obligations that would become legally binding upon you and your conveyancing solicitor will need to see them. Unfortunately, full details of these deeds are not always set out in the register.

You might think that such deeds would be provided in the HIP as a standard requirement. Not so! Usually however, you don’t need to pay for copies of these deeds, they will be obtained and provided by the seller’s conveyancing solicitor.

The second issue is the search results. It depends upon the date of the searches as to whether or not new ones are needed. If you’re getting a mortgage, then the mortgage lender will only allow your conveyancing solicitor to accept searches that are up to 6 months old at the date of moving (i.e. the completion date). If the property has been on the market for a while, the conveyancing solicitor might advise that you should get further search results, which obviously, you will have to pay for. Bear in mind that the entries revealed in a search are only valid as at the date the search was undertaken and more entries might be made in the months following. (More information is available in my separate articles relating to each search).

Certain mortgage lenders will only accept searches that have been undertaken through the relevant statutory bodies i.e. the Local Authority (Council) and the local Water Provider. In my area, this will be the Middlesbrough, Redcar or Stockton on Tees Council and Northumbrian Water.

The reason I mention this is because when the seller pays for the HIP, it is often cheaper for them if the searches are undertaken through a private agent. These searches are known as “personal searches”. Whilst this is great for them, those buying a house may find themselves with a mortgage lender (Darlington Building Society, HSBC, First Direct to name a few) that won’t accept them. Your conveyancing solicitor then has to ask you to authorise him to undertake new searches that are acceptable to your lender i.e. through the statutory bodies and you will have to pay for this.

So, whilst the aim of the HIP was to speed up the conveyancing process and to save money for those potentially buying a house, you need to be aware that there are circumstances in which the HIP is pretty useless and that you may have to pay more money out to supplement the information in them!

Your conveyancing solicitor’s obligations to the mortgage lender when you are buying a house are explained in a separate article.

If you’re buying a house, you need to be aware that if you’re getting a mortgage (unless the mortgage company has instructed separate conveyancing solicitors), your solicitor has to act on behalf of you and your mortgage lender.

The Council of Mortgage Lenders’ Handbook gives conveyancing solicitors special instructions regarding what they must do when they come across certain issues in a conveyancing transaction. If you want to read it, you can find the Handbook at http://www.cml.org.uk/handbook/frontpage.aspx

If what you tell your conveyancing solicitor to do contradicts what the mortgage lender tells him to do, then unfortunately, your solicitor has no option but to refuse to act for either of you. Conveyancing solicitors are not allowed to act on behalf of parties who have a “conflict of interest” either when buying a house or when selling a house.

This means that such issues that might not be of concern to you may still be of concern to the lender and the conveyancing solicitor may still need to investigate them.

For example, I had a client who was buying a house in Middlesbrough. The house had a loft conversion to use as a bedroom, with a fixed staircase. The seller hadn’t bothered to obtain the usual building regulation approval.

I had to tell the buyer that if she wanted to go ahead, this issue had to be resolved. She said, “Well I know it’s safe, it’s been there for years. I’m not really bothered about it”.

The problem here was that because the client was getting a mortgage when buying a house, she didn’t really have any option but to have the issue resolved. One of the conditions in the CML Handbook states that on behalf of the lender, the conveyancing solicitor has to make sure that all relevant building regulation approvals have been obtained. This is because building regulations (unlike planning permissions) are enforceable by the Council indefinitely and they can take proceedings to enforce them. Whilst this is unlikely, it might potentially de-value the property and this would of course bother the mortgage lender (and probably the client)!

The conveyancing solicitor faces negligence claims by lenders if he doesn’t comply with the terms of the CML Handbook and no firm would want to put themselves in this position.

Just something to bear in mind when buying a house, next time your solicitor tells you that an issue has to be resolved!

Some matters to bear in mind when you view the house you intend to buy;-

Outside the property:-

Brickwork:

• Is the exterior brickwork worn or cracked?

• Is the property rendered? Is there any cracking? How old is it? Bear in mind that rendering can be used to cover over faulty cracked brickwork.

The roof:

• Are any roof tiles missing?
• Are the chimneys safe?
• Is any flashing missing?
• Is the guttering leaking? Are the drains leaking? Visit the property on a rainy day to check.
• Are the fascias in good condition? These are the wood sections under the roof.

The windows:

• Are they double glazed? Ask the owner when they were installed and whether any guarantee is available. If they were installed after April 2002, a FENSA Certificate should also be available.
• Do the window frames look secure, can you see any gaps?
• Can you see condensation on the inside of the windows?

Security:

• Is there a burglar alarm? Ask the owner when it was last serviced, if they use it does it work?
• Check the door locks, are they five lever?
• Are window locks installed? Does the owner have the keys for them?

Inside the house:

Check inside each room for;

• Condensation
• Exposed wires
• Cracks
• Required redecoration
• Required replacement flooring

When buying a house, always;-

• Check whether any electrical works have been undertaken since 1st January 2005. If so, they made need an electrical certificate. Does the owner have this?

• Check the age of the electrical wiring. If its not been serviced for some time, and certainly if the wiring is over 25 years old, you really must have the system checked by a qualified electrician before you proceed to exchange of contracts.

• Check the age of the central heating system and when it was last serviced. I had one client who when buying a house, refused to have the system checked before exchanging contracts, which was of course contrary to my advice. He moved into the property and a week later, the system packed up. He was left with a bill of 1500 pounds to replace it. If he had listened to advice and had it checked by a CORGI registered engineer, he might have been able to renegotiate the price of the house!

The viewing information was taken from the Which? Viewing Checklist. View and download the full Checklist at www.which.co.uk/propertychecklist. I’ve added some extra questions and information above as you will see.

The Valuation Report

When buying a house with a mortgage, this report is obtained by the mortgage lender. A valuer will visit the property to give a basic opinion to the lender as to whether or not it is sufficient security for the loan you have applied for i.e. whether on consideration of the value and condition of the property, it is worth the mortgage lender making a loan to you secured on the house.

You shouldn’t rely merely on the valuation report when reaching a decision on whether to proceed with buying a house, whether it is adequate for your needs and whether its condition is adequate. The exception is if the property has the benefit of an NHBC Certificate and has been built within the last ten years. You can find more information about the NHBC Scheme at www.nhbc.co.uk

The Home Buyer’s Report

This is a more detailed report which usually costs around 400 pounds plus. The surveyor prepares a more detailed report for you, indicating matters which require urgent attention or that may require attention in the future. This report is prepared on your behalf when buying a house and is not for the benefit of the mortgage lender.

People often think that they have had a survey done if they’ve simply had a valuation report undertaken. Not true! At the very least, you need a Home Buyer’s Survey when buying a house.

If your surveyor does spot a potential costly problem, such as extensive woodworm, damp, wet rot etc, then you might be able to negotiate a reduction in the purchase price to take repairs into account. In this way, the survey can pay for itself. Bear in mind that the seller is not legally bound to tell you about any structural problems; it’s up to you as the buyer to find them. Are you likely to be able to find them yourself? Most would answer “No” and this is why the survey is so important.

Make sure you read the small print though; the surveyor may not inspect unexposed or inaccessible areas, for instance below the floorboards or the roof space.

The full structural survey

This is the most expensive type of survey and obviously, the most detailed. Most people are put off by the cost of this type of survey but when buying a house, surely it is better to know what you are letting yourself in for! There are circumstances when full structural really is the only option;-

1) If the property is more than 80 years old.
2) If the property is of high value.
3) If you plan to alter the property structurally.
4) If the property is not of standard construction, in poor condition or in need of renovation.

This type of survey in theory gives the true state and condition of the property but again, make sure you read the small print for exclusions!

If you’re unsure as to which survey you should choose when buying a house, don’t hesitate to seek legal advice from a conveyancing solicitor. You can also find more information at;-
www.rics.org/Property/ResidentialProperty.

When buying a house, you need to be aware that you must always have a survey carried out before contracts have been exchanged. This is because upon exchange of contracts, you and the seller become legally bound to go ahead with the transaction upon the terms and at the price agreed.

The principle of caveat emptor applies, which simply means “let the buyer beware”. It’s basically up to you to discover any physical defects in the property, the seller doesn’t have to tell you about them.

A survey (and not a basic valuation) is always money well spent because not only might a physically defective house be dangerous for you to live in but it will also be difficult to sell in the future. In addition, the cost of putting problems right could be huge and the market value of the house could be reduced if you don’t put them right! You could be paying more than you should for the property and a full survey is the best way to avoid this.

Sometimes when buying a house, a survey of a neighbouring property might be necessary e.g. if you are purchasing a flat or a property attached to a neighbouring property. In these cases, you can ask your surveyor to inspect the main structure of the house and the adjoining house.

This is particularly relevant when buying a flat, because if the main building is in poor repair, you might find yourself paying an increased service charge to the landlord to repair it in the future.

When choosing a surveyor, make sure they are registered with the Royal Institute of Chartered Surveyors and get three quotes for comparison. You can check registration or find a surveyor in your area by visiting;-

http://www.rics.org/Usingasurveyor/Findasurveyor/spotlight.htm

Don’t forget that the surveyor won’t move furniture during his inspection. Horror stories of missing plasterboard, holes, missing carpet, concrete instead of flooring etc. do exist for good reason! Inspect carefully and don’t hesitate to ask your conveyancing solicitor for his advice.

You probably know all these things already, but I’ve compiled a list of reminders for you to use in what can be a very stressful time!

On the day of completion;-

• Make sure the seller has taken meter readings for the electricity and gas supplies and has telephoned the relevant company. It’s prudent to get the details of the companies concerned and do the readings yourself just to make sure.
• Make sure the seller has given you all the keys, including for window locks, the shed, garage etc.
• Make sure the seller has provided you with the alarm code for the burglar alarm.
• Make sure that the seller has left any manuals relevant for items left in the property such as the boiler/burglar alarm/cooker etc, together with any original documents that they agreed to leave in the property rather than send through solicitors.
• Check the property thoroughly to make sure that no items that were supposed to be included in the sale have been removed.
• Check that no damage has been caused in the removal of the seller’s items.
• Ensure that your buildings insurance is in place because the seller is no longer responsible for insuring the property.

In the following days;-

• Make sure the utility companies know that the seller has vacated the property and has your new details.
• Visit www.uswitch.com to make sure you’re getting a good deal from the current provider. If not, switch! Personally, in the Teesside area, I’ve found that Atlantic Electric & Gas are pretty cheap.
• Notify the Council that the seller has vacated the property and you have moved in to make sure you receive council tax bills (a pain I know, but better this than a backlog of fees!).
• Notify the Water Company that the seller has vacated the property and you have moved in. Check whether the water is metered if you don’t already know.
• Make sure you apply for a TV licence.
• Change your address with all the relevant companies/clubs/banks etc. See my Change of Address document, which you can download for free.

Buying a house is one of the biggest financial commitments that you will ever make in your life. Would you really risk your investment for the sake of spending a few extra pounds at the beginning? Why would you not want the most detailed and relevant information available to you regarding the property?

You can find some basic free information for properties in your area by entering the postcode at relevant sites online.

www.homecheck.co.uk provides free flooding information.

www.environment-agency.co.uk provides free environmental information.

This is only the most basic information and it would be prudent to have an environmental and flooding search undertaken on the property when buying a house. Your conveyancing solicitor will undertake these searches on your behalf.

Although this will result in additional cost to you, in the Teesside area search providers usually charge around 30 pounds. Surely this cost is justified when buying a house when you consider that if the house is in a flood risk area, in addition to the possibility of your house flooding, you may find that some insurers won’t provide you with buildings insurance!

According to a recent article published in the Law Society’s Property in Practice magazine, currently 2.2 million homes in the UK are classed as being at flooding risk (equal to 1 in 10 homes). Added to this, the same article indicated that 70% of new build homes are built on brownfield land, sites which are statistically more likely to be affected by contamination and pollution.

Despite the potential importance of environmental and flooding searches, you won’t find them as a standard search document in the HIP when you’re buying a house. Your conveyancing solicitor should offer to undertake the search for you and let you make the decision for yourself, unless he knows that the property is high risk and then your conveyancing solicitor will insist that the search should be undertaken, particularly so if you are getting a mortgage. Remember he has a duty to the mortgage lender to make sure all necessary searches are undertaken.

Here’s a link to a specimen report by leading provider Ground Sure for you to get an idea about what might be contained in your search result;-

http://www.groundsure.com/files/GroundSure%20Home%20Environmental.pdf