Conveyancing Explained

Make sure you keep the following items handy;-

Kettle
Milk
Tea/Coffee
Sugar
Cups
Snacks
Bedding/Towels
Scissors
Toiletries
Money
Toilet roll
Light bulbs
Small tool kit
Lighter
Pen & Paper
Items of cutlery/crockery e.g. plates, tin opener, corkscrew, knife, fork, spoon
Keys, car etc.
First Aid Kit
Pet Food
Bottle of Champagne & glasses!

Final Preparations before you leave;-

Defrost the fridge/freezer
Last minute clean-up
Remove all rubbish from the property
Have all personal possessions to hand
Make arrangements for your pets
Get directions to your new property
Check with neighbours that they agree to large removal vans parking outside the properties
Find all keys for doors/window locks etc
Ensure meter readings have been taken
Ensure that all keys have been returned by friends/relatives holding them on your behalf.
Ensure that you leave any instruction/operating manuals

Use the checklist below to ensure that all organisations are aware of your new address;-

Who to Inform;-

Employer

School

Doctor

Dentist

Bank

Electoral Register

Building Society

Credit Card companies

Home/contents insurance company

Mobile phone insurance company

Life insurance company

Pet insurance company

Petlog (if your pet is microchipped)
08706066751

Car insurance company

Share registrars

Rental companies

TV Licensing Authority
08705 246 246

Post Office – mail redirection

Gas company

Water company

Electricity company

Phone company

Satellite/Cable provider

Internet service provider

Inland Revenue

National Insurance Office
0191 213 5000

Council Tax office

Driving Licence Centre (DVLA)
Car registration and driving licence
0870 240 0009

Breakdown assistance

Opticians

Subscriptions (magazines, charities etc)

Mail Order companies

Sports & Social clubs

Pension Companies

Savings/Bonds

Club cards – Boots/Tescos/Sainsburys etc.

Private Healthcare

Library

Milk delivery/Newspapers

Unions

Solicitor holding any deeds/wills

Accountant

Vet

I use this document to send to my clients to explain some of the terms that they might hear during a conveyancing transaction. I hope it will be of help to readers too.

Agreement – Another word for Contract (see below).

Bankruptcy Search – A search made by us to check whether a buyer or a borrower has been, is or is about to be declared bankrupt. This search is always required by the mortgage lender.

Borrower – The person taking out a loan or mortgage on a property that they own, also known as the Mortgagor.

Boundaries – The boundaries define the extent of the property and are usually marked out on the ground by fencing or hedging.  Boundaries are often, although not always, shown on the Land Registry plan.

Chain – These are the property buyers and sellers that link together to make the chain for your particular sale or purchase.  The chain may consist of only two people i.e. you as buyer and the person you are buying from as seller or it may consist of several buyers and sellers.  The beginning of the chain usually starts with a first time buyer or a buyer with nothing to sell and the end of the chain usually ends with a seller who is buying a brand new home or who is not buying another property.  Your sale or purchase can only proceed at the same pace as everyone in the chain, unless someone agrees to break the chain and usually move in with friends or family whilst the rest of the chain catches up. 

Completion Date – This is the date when the purchase becomes final and the Purchase Price is paid by the buyer’s Solicitor to the seller’s Solicitor.  The seller must move out of the property on this date. The keys are released to the buyer and they may move into the property.

Conditions of Sale – The conditions of the sale are detailed in the Contract that the seller’s Solicitor prepares and sends to the buyer’s Solicitor.  There are standard conditions set out by the Law Society, to which the seller’s Solicitor may add any Special Conditions.

Contract – The legal document that confirms the sale/purchase of the property. This is prepared in draft by the seller’s Solicitor and sent to the buyer’s Solicitor.  The buyer’s Solicitor then approves the contract and an identical copy is signed by each of the parties. It is then held by each Solicitor until their client is ready to proceed to exchange contracts.

Conveyancing – The legal description for the work that is done to transfer ownership of a property from one person to another. 

Conveyance – This is the old fashioned name for the document that transfers a property from one person to another.  Conveyances are rarely used nowadays and property is usually transferred by a Transfer Deed.

Covenants/Restrictive Covenants – These are obligations/restrictions that are attached to the property and would be legally binding upon the purchaser of the property, should they decide to proceed.  Think of it as a legally binding promise either to do or not do something. For instance there may be an obligation to maintain a fence or boundary which is a positive covenant. A restrictive covenant would be not to make any alterations or additions to the property without the prior consent of the original developer.

Defective title insurance – A defective title means that there is a problem with the deeds relating to the property. For example they could be missing, destroyed, lost or simply inadequate in terms that rights or restrictions that should appear are missing. A buyer will not usually buy a property with a defective title unless the seller provides him with an indemnity insurance policy to protect him and the mortgage lender against possible financial loss as a result of the defect.

Deposit – There are two types of deposit that you may be asked to produce.  Sometimes the estate agent will ask for a “Goodwill” Deposit to secure the property. You should not pay this deposit without first consulting with your Solicitor.  The second type of deposit is the one which the purchaser will pay to the Solicitor to hand over with the Contract. Traditionally this is 10% of the purchase price but often less than this is accepted and nil deposits can sometimes be agreed.

Disbursements – This means fees that the conveyancing solicitor must pay to other companies on your behalf.  Typically these are indemnity insurance policies, Stamp Duty Land Tax, Land Registry fees and searches. Obviously these payments are separate to fees for dealing with the transaction on your behalf.

Easement – This term means a right given to the property owner over adjoining property or land i.e. a right of way or access, a right to drainage etc. Sellers must disclose all “Latent” Easements but not “Patent” Easements to the buyers.  Latent Easements are those that cannot not be discovered by search or survey, in other words they are not easily found out.  Patent Easements are easements that can be discovered upon inspection or investigation of the property.

Equity – This is the value of the property that is left over taking into account its current worth and deducting from that any mortgages or financial charges outstanding on the property.

Exchange of Contracts – The buyer’s Solicitor and the seller’s Solicitor “Exchange Contracts” on the telephone.  If there is a chain, the solicitors for everybody in the whole chain “exchange contracts” at the same time using a Law Society formula.  Basically this means that they agree verbally that they have a contract signed by their clients and that the terms of each contract are the same. Once contracts are exchanged, the sale/purchase is legally binding on each party to the transaction and the completion date is fixed. At this stage, the deposit is also paid.

Financial Advisor – The Financial Advisor is usually responsible for arranging the mortgage or finance to purchase the property and will often arrange any life insurance, mortgage protection insurance etc.

Freehold – This is the legal term for the way that an owner holds the property.  The other terms are Leasehold and Commonhold.  With freehold land, the owner owns the property/land outright, subject to any mortgages, charges, easements, covenants etc. shown by the deeds.

Gazumping – This is where the seller sells to another buyer for a higher price.  This can only happen before exchange of contracts.

Gazundering – This is where the buyer lowers his offer on the property after agreeing a price.  This can only happen before exchange of contracts.

Ground Rent – This is the annual rent paid to the Landlord, usually on a Leasehold property where there is a long lease.  It can be as little as a peppercorn, the legal equivalent of “nil”. Ground Rents are payable on some freeholds, although this is now rare.

Joint Tenants – Where two or more persons buy a property, they are called joint tenants or tenants in common, whether the property is freehold, commonhold or leasehold. Where a property is held as a joint tenancy, if one owner dies the property passes to the other owner automatically without a Will.  If the property is held as Tenants in Common, each buyer owns their own share of the property which can only be passed on by sale or by a Will. (See my separate article on this for more information.)

Leasehold – A Leasehold property means that the owner does not own the property or land outright.  There is a lease which for a term of years grants the owner the right to occupy the property/land.  There may be a rent or a ground rent to pay to the Landlord.

Lender – The Bank or Building Society who lend money to property owners, sometimes also known as the Mortgagee.

Listed Buildings – Listed Buildings are protected by the Local Authority. Properties that are listed are subject to planning/development restrictions and you will have to obtain special consent to make alterations or additions to the property from the Council.

Management Company – If the property is leasehold, there will often be a management company set up to deal with the day to day running of the property and repairs and renewals.  The management company collect the service charge to pay for their services and for the upkeep and maintenance of the building.

Mortgage Deed – This is the document the borrower signs to agree to the terms set out in the Mortgage Offer.  This document is sent to the Land Registry who register the Mortgage as a Financial Charge on the property which is shown in the Charges Register.

Mortgage Offer – A written offer to lend money on a property.  The Mortgage Offer will contain all the terms of the Loan and the conditions upon which the money is loaned.

Mortgage Valuation Fee – The borrower generally pays a fee to the Lender to have the property valued for mortgage purposes.  This enables the Lender to take a commercial view on whether the property is worth what the borrower says it is and whether it is suitable security for the Mortgage.  The Mortgage Valuer will not necessarily inspect the physical condition of the property and you should always consider at least paying for a Home Buyer’s Report. The valuation report is not undertaken for or to protect you, only the lender’s security.

New Build – Where a property is being purchased for the first time from the Builder or Developer.

Off Plan – Where a property is being bought at the planning stage and is yet to be built. A detailed site map often available for viewing at a site office.

Overriding Interests – Not all matters affecting property are registered or capable of being registered at the Land Registry.  Nonetheless the property is still subject to such matters.

Pre Contract Enquiries – This is a set of questions that is sent to the seller’s Solicitor by the buyer’s Solicitor relating to the property. Typically these questions will consist of enquiries relating to boundaries, easements, persons living at the property etc.

Property Information Forms – These are standard forms completed by the seller giving details about the property.  The form is legally binding on the seller and you should be very careful when completing it. If any of your answers change before exchange of contracts, you must let your conveyancing solicitor know straight away or the buyer could sue you for breach of contract (the replies given in the form effectively are part of the contract).

Redeeming Your Mortgage – When a property owner pays back the mortgage on the property, it is known as “redeeming the mortgage”.  You will first need to get a statement of what is owed which is called a Redemption Statement.  If you are paying the loan back early you may be charged a Early Repayment Fee.

Seller – This is the person selling the property sometimes also known as the Vendor.

Stamp Duty – This is the tax payable on the purchase of a property, based on the purchase price and the annual rent, if applicable.

Stamp Duty Exempt/Disadvantaged area relief – Some types of purchase or transfer of land are exempt from Stamp Duty Land Tax.  The Government has designated certain areas as exempt. 

Subject to Contract – Before Exchange of Contracts (see above) all negotiations relating to the property are subject to contract. This means they are not binding unless contracts are actually exchanged. Your conveyancing solicitor will not exchange contracts on your behalf without your express confirmation that you wish him to do so.

Surveyor – The person who is responsible for surveying the property, who will usually be a member of the Royal Institute of Chartered Surveyors (RICS).

Tenants in Common – See Joint Tenants above.

Transfer Deed – This is the legal document that transfers the legal ownership of the property from the seller to the buyer.

New regulations apply to replacement windows and doors installed since 1st April 2002. Basically, all replacement windows, rooflights, roof windows and glazed doors (more than 50% glass) will have to comply with the FENSA Regulations/new Building Regulations.

Either a FENSA Certificate or Building Regulation Approval/Completion Certificate should be available.

If you’re buying, you need to ask the seller whether there are any such replacements. If so, do they have a FENSA Certificate/Building Regulation Approval? Whatever their answer, tell your conveyancing solicitor, as this document is now required by law. The solicitor can ensure that it is available and that you will get the original Certificate on completion. If it is not available, then remedies such as indemnity insurance or retrospective building regulation aproval can be obtained.

If you’re selling a property and you’ve recently had replacements made, then find your Certificate, because the buyer’s solicitor is bound to ask for it. If you had a FENSA Certificate and you’ve lost it, a replacement can be obtained from the FENSA website at a cost of 10 pounds. Obtaining this sooner rather than later will avoid delays in exchange of contracts. If you didn’t get a FENSA Certificate or Building Regulation Approval, then you need to make sure that you tell your conveyancing solicitor. As indicated above, it is usually possible for you to either pay for an insurance policy to cover the buyer or to contact the Council for retrospective building regulation approval. If you use the latter option though, be aware that if retrospective approval is refused, you cannot then get insurance, because the insurance company will consider the Council as being notified of the breach and therefore likely to take enforcement action against you.

You can find more information from the Building Control Department of your local Council or by visiting www.fensa.co.uk.

If you want to make sure that your sale runs smoothly from the outset, it’s a good idea to make sure that you put together all the documentation that your conveyancing solicitor will need at the earliest opportunity.

When selling a house, your conveyancing solicitor will need the originals of the following if you have them;-

• Any title deeds and sundry searches.
• Any planning permissions, plans and accompanying documents.
• Any building regulation approvals and completion certificates
• FENSA Certificate
• Gas Safety Inspection Certificate
• Electrical Safety Inspection Certificate
• Proof of boiler servicing/CORGI Certificate
• Any guarantees, together with any contracts, quotations and plans (particularly for damp proofing works).
• Any indemnity insurance policy that was put in place when you bought the property.
• Details of your existing mortgage e.g. account number and approximately how much is outstanding, together with account details for any additional financial loans or charges registered on your property.

In addition, if your property is leasehold and not freehold;-

• Latest service charge receipt
• Latest ground rent receipt
• Lease
• Share certificate
• Management company’s details
• Memorandum of Association & Articles of Association for the Management Company

In addition, whether you are buying a house or selling a house, your conveyancing solicitor will need proof of your identity because they are required to check this for Money Laundering requirements. The conveyancing solicitor will give you more details of any documents he requires, but usually a passport/photocard driving licence and bills/bank statements are sufficient.

The answer to this is probably. All properties actively marketed for sale from 14th December 2007 in England and Wales will need a HIP.

There are some exceptions though;-

1) Properties that haven’t been marketed (e.g. sale to a member of your family).
2) Non-residential properties.
3) Seasonal or holiday accommodation.
4) Mixed sales (e.g. the sale of a shop with a flat).
5) Right to Buy transactions (e.g. buying your home from the Council).
6) Sales of portfolios of properties.
7) Properties not being sold with completely vacant possession.
8) Unsafe properties and properties that are to be demolished.

If these exceptions don’t apply, then you need to find a HIP provider. Conveyancing solicitors, estate agents, or independent providers can help you with this but it pays to shop around to find the best deal. Find out;-

• How much it will cost.
• What you will have to pay if you change your mind about selling.
• If your provider will update any part of your pack if the house doesn’t sell in six months.
• If your estate agent is to provide it and quotes the HIP as free or included in the commission price, will they require you to pay if you switch estate agents or if you take the house off the market?
• When the house is inspected for energy efficiency, can you lift up the floor boards or remove panels to assist them in making an accurate assessment?
• Make sure you give any relevant certificates to the assessor to prove any work that you have carried out to improve its efficiency e.g. Gas Safety Certificate for a new boiler, FENSA Certificate proving energy efficient glass.

You can visit www.homeinformationpacks.gov.uk for more information on HIPS and www.c-nlis.org.uk for a guide on standard searches.

You can find a provider online, those registered with the HIP Code (www.propertycodes.org.uk) have a complaints procedure and insurance for negligence.

Likewise, you will probably receive a HIP on the property you’re looking to buy. I’ll discuss how useful this might be to you in a separate article!

SEE MY NEW ARTICLE – 8/9/2008 ON ESTATE AGENTS’ REDRESS SCHEME

OK, so being in the business already and for a period of eight years, I’m not going to name estate agents in the Middlesbrough, Redcar and Stockton on Tees areas whom my clients have had bad dealings with, because I want to give a totally unbiased view (although there is more than one agent that I wouldn’t instruct). All I will say is that during the conveyancing process in Teesside, it’s not uncommon for clients to pay three thousand pounds commission for a service provided by the estate agents and to find that the solicitor is never actually contacted by them.

A good estate agent should make regular update calls to both the buyer’s solicitor and the seller’s solicitor to find out what stage has been reached and what is still outstanding. They can then contact whoever is holding the transaction up and try to hurry things along. Some agents will do this every couple of days, some every week, every two weeks, every month or, as I have often found, never!

This as you may appreciate, can really help the process along. The estate agent can often negotiate price reductions more quickly for example, as they do this via telephone, whereas the solicitors will write to each other and negotiate in writing. An estate agent should be able to provide you with regular updates as to the progress reached by the other party in the transaction. A conveyancing solicitor is only really able to comment upon the stage reached by you, although they may have been provided with some information by the other party’s conveyancing solicitor. An estate agent is more likely to know whether the other party has search results, mortgage offer in place etc. if they are in regular contact with the solicitor.

If you’re selling a house, the estate agent should;-

1) Give you written confirmation that you have instructed them to sell.

2) Give details of their commission fees and tell you when you will have to pay them e.g. if they are to be your sole agency, then they should tell you that you still have to pay their commission if you sell through a different agent. If you agree to sole selling rights, they should tell you that you will still have to pay them if you sell the house privately.

3) Not discriminate against someone who wants to buy your house but who doesn’t want to apply for a mortgage through them.

4) Tell the buyer whether you are taking the house of the market when you have accepted an offer.

Bear in mind that although some agents may offer a lower percentage in terms of commission, they may not be the agent for you if they cannot give your property maximum exposure to potential buyers. Do they seem to be selling many other properties in your area? What will the costs of advertising be? Are they advertising properties on sites such as www.rightmoves.co.uk or www.fish4homes.co.uk, both of which are pretty popular with potential buyers.

If you’re not happy with the service offered by your estate agents, then bear in mind that you can dispute their bill. To do this, you really need to be making a note of whom you speak to during the transaction, the date, time and what you’re not happy with. You might be able to negotiate a reduction in their fee if you don’t think that they have actually done what they told you but you need to check the agreement which you signed with them.

If you want to do this, then you really need to let your conveyancing solicitor know so that they don’t just pay the estate agents automatically on completion. Obviously, it is much easier to negotiate if you are withholding monies rather than if you have already paid them!

There is an Ombudsman for estate agents who you can contact regarding complaints; however, many estate agents are not members of the Ombudsman Scheme and you should check this out before you sign a contract with a particular agent.

SEE MY NEW ARTICLE – 8/9/2008 ON ESTATE AGENTS’ REDRESS SCHEME