Conveyancing Explained

July 22, 2008

Step 1

Get quotations/estimates from at least three different solicitors, preferably in writing, so that you can compare like for like. If you can, have a chat to the remortgage solicitor, conveyancer or secretary in each firm to get a feel of whether or not you feel confident in instructing them. They should be knowledgeable and interested in your case. A willingness to explain and clarify any queries you have bodes well for the future!

Step 2

Confirm to the remortgage solicitor you want to act on your behalf that you are instructing them. The remortgage solicitor will then open a file and write to you, confirming the terms upon which they will act on your behalf. At the same time, you should get a written breakdown of their costs. They will probably also send you some forms to fill in, to give more information about the transaction. Be aware that at some point, they will need to undertake an identity check on all parties involved in the transaction. The solicitor might do this electronically with your passport number etc. or they might need you to make an appointment to have the ID checked in person. The earlier you arrange this, the earlier your remortgage solicitor can get on with their work!

Step 3

The next stage is really just to wait for your mortgage offer to come through from the new lender. If it seems to be taking a long time, don’t be afraid to pick up the phone and contact your lender or your financial advisor to ask when it’s likely to be available. Your remortgage solicitor can’t get any further with your remortgage without they have received a letter from the mortgage lender confirming that the lender wants them to also act on their behalf in the transaction (this is usual practice). At the same time, the remortgage solicitor will receive a copy of your mortgage offer.

Be aware that the instructions that the new mortgage lender gives to the remortgage solicitor mean that the solicitor is liable for negligence if they do not properly meet the lender’s requirements. This means that the remortgaging solicitor will need to undertake searches (or have you pay for indemnity insurance search policies instead) and investigate the title deeds to make sure that everything is in order. If not, then the new mortgage lender might not be able to sell the property on in the event of a repossession. Although in most cases, you might think “Well I’m not going to be in a repossession position”, that doesn’t matter to the lender or the remortgage solicitor, it still has to be thoroughly checked.

Mortgage instructions might for example contain the following;-

a) “Our valuer has indicated that an extension has been built at the rear of the property and the conveyancer should ensure that all necessary planning consents, building regulation approvals and covenant consents have been obtained.”
b) “The conveyancer is required to ensure that the property will be covered by adequate buildings insurance on completion and should require the borrower to provide a copy of the policy to ensure that it complies with our requirements.”
c) “The conveyancer must ensure that the borrower’s existing mortgage with e.g. Halifax Plc under account number 111111111 is paid off in full on completion.”

This gives you an idea of the sort of enquiries and instructions a remortgage solicitor might be required to deal with. He cannot allow the mortgage to proceed until everything has been checked.

Step 4

Your remortgage solicitor will apply for an up to date copy of your deeds from the Land Registry. Since the Land Registration Act was implemented in 2002, paper deeds are no longer held by the Land Registry, they are all held electronically. That being said, it is worth making sure that you pass to your remortgage solicitor any of the following that you might have in your possession;-

a) Paper title deeds and searches.
b) Planning consents, building regulation approvals and any plans.
c) Shale report.
d) Indemnity insurance policies that may have been taken out when you bought the property.
e) CORGI/FENSA/Electrical Certificates
f) Marriage certificate if the property was bought under a maiden name.

Any documents that your remortgage solicitor asks you to provide or anything that he asks you to sign should be dealt with straightaway if you don’t want to risk unduly delaying your conveyancing remortgage.

Once he has a copy of the up to date deeds, together with any extra documents that might be referred to in them, he will check that there is nothing that might cause him concern. He may ask you to read through a schedule of restrictive covenants to confirm that you have complied with the terms of them. Basically, covenants are in effect, legally binding promises and a restrictive covenant is something that you are not allowed to do, although sometimes consent can be obtained. Examples are that you must not make any alterations or additions to the property without first obtaining the consent of the builder who first erected it, or that you must not keep poultry or more than two animals for breeding purposes on the property. If you have breached any of the restrictive covenants, then all is not lost. You can usually either obtain indemnity insurance or retrospective consent. Your remortgage solicitor can advise you on this.

Step 5

Your remortgage solicitor will obtain a redemption statement from your existing mortgage lender. This is different to the monthly statement stating how much you owe, because it takes into account extra fees such as early redemption fees or administration fees. The remortgage solicitor needs to make sure that the loan that you are getting is sufficient to pay off the existing mortgage. If it’s not, he is going to need money from you to make up the balance before completion can go ahead.

Step 6

You will need to at this stage, sign the Mortgage Deed. This is completely separate to any acceptance form for the loan that you might have sent off to the lender. The remortgage solicitor will prepare the Deed and either send it to you or ask you to make an appointment to come in and sign it. If the remortgage solicitor does not have the signed Mortgage Deed, then he cannot send off for the remortgage loan monies so it’s in your interest to ensure that you do this quickly! At the same time, you should sign a document in respect of Stamp Duty Land Tax, confirming that no payment is due to the Inland Revenue because this is a conveyancing remortgage and not a purchase.

Step 7

Once he is happy with everything, your remortgage solicitor then sends a Certificate of Title to your new mortgage lender. Basically, this confirms that he has checked everything, is happy and is requesting the remortgage monies. A completion date can be set, an up to date redemption figure for the existing mortgage obtained dated at the completion date and a statement sent to you. This should set out what will be paid to you after completion, once the existing mortgage is paid off and the remortgage solicitor’s fees paid.

Bear in mind that different mortgage lenders take different amounts of time to send over the mortgage loan. Some can do so overnight, others require 5-7 working days’ notice. The reasons why it varies so much are unclear, even to me and I deal with lenders every day. It’s worth checking with your remortgage solicitor how much notice your particular lender will need, because this will affect the proposed completion date.

At this stage, the remortgage solicitor will undertake a Bankruptcy Search (required by the new mortgage lender) to make sure that no parties (i.e. you) in the transaction have been made bankrupt. He will also send a Land Charge Search to the Land Registry, which makes sure that you have not had any further financial charges added to the property in favour of any other financial institution since the date that the remortgage solicitor obtained a copy of the Land Registry’s electronic register showing your deeds.

Step 8

On the day of completion, the remortgage loan monies will be transferred into the remortgage solicitor’s client account. He will then use it to pay off your existing mortgage. Once the old mortgage lender has confirmed that they have received the money and the account is clear, (and this could be the next day, or a couple of days later), the remortgage solicitor should then account to you for any remaining monies. There’s nothing really for you to do at this stage, except ensure that you receive your money and any interest due to you – see my separate article on “Solicitors holding clients money – is interest due?”

Step 9

The remortgage solicitor will receive written notification from your old mortgage lender that they accept that they have received the money due to them and that their legal charge registered on the deeds against your property can be removed. The remortgage solicitor can then make an application to the Land Registry, requesting that the old mortgage charge is removed and the new one registered.

The remortgage solicitor will then receive a new copy of the electronic register held by the Land Registry, showing the new mortgage lender as having a legal charge registered against the property. He will then provide a copy of this to you and to the new mortgage lender. The remortgage solicitor can then close his file and send any leftover documentation back to you.