Conveyancing Explained

I know when you read my next sentence, you’re unlikely to be impressed. The old maxim “You get what you pay for” applies to a conveyancing service, just like any other.

I know everyone nowadays wants the cheapest deal and that people think solicitors are grossly overpriced in what they charge for fees. That may be true of some solicitors, I’m sure, but if you actually saw the amount of work that your conveyancing solicitor actually does, then I believe you’d be more agreeable to paying a proper fee and not just using a cheap conveyancing service.

I would expect to pay from £300.00 upwards for a conveyancing solicitor’s fees alone. That being said, for a single transaction freehold purchase, I would not expect to pay more than £500.00 for the solicitors’ fees.

Remember that your conveyancing solicitor’s total quotation will also include third party fees, known as “disbursements”. You need to ask when getting a quote what the solicitor’s actual fee is.

On average, I would estimate that a conveyancing solicitor on a freehold purchase transaction, is likely to send and receive at least 40 letters and telephone calls and would spend at least 2 ½ hours working on your file throughout the whole of the transaction. When you look at the amount of work that should be done, you can see that really, conveyancing solicitors don’t actually charge that much in terms of their fee!

I do understand that people want to save money, I’m no different, but if you want a proper job to be done, then you need to pay a reasonable fee to your conveyancing solicitor and not just pick the cheap conveyancing quote. If your solicitor reduces his price too much, then it’s simply not cost effective for him to spend time on your file making sure everything is done properly and you’re more likely to be passed to an unqualified unsupervised fee earner. Corners can be cut, and you could simply end up with more problems in the future.

Obviously there is nothing wrong with wanting to get a good deal but cheap conveyancing companies are not likely to give you all the information you need about your new house because it takes too much time. Ring around your local solicitors by all means but see my separate article on “What to look for when getting a conveyancing quote” before you decide who to go with.

Whether contained in the Home Information Pack or whether undertaken independently, the Local Land Charge Search will reveal any planning permissions and building regulation approvals granted in relation to the property. Your solicitor needs to check that there have been no breaches of any permissions or approvals that might leave you open to enforcement action in the future

If the permissions are dated within the last four years, then the terms of them are still enforceable by the Council if a breach has taken place; however, if a period of four years has elapsed, then breach of planning permission is no longer enforceable. This is because after this period of time, any action by the Council is statute barred.

So, if you’re buying a property and you’re asked to pay for copy planning permissions to be obtained, they only need to be provided if they’re dated less than four years ago and usually, they would be provided by the seller. That’s assuming of course that the seller hasn’t refused to pay for them, which does happen.

The time period may not apply in relation to building regulation approvals and completion certificates however. Due to the findings of a case called Cottingham v Attey Bower & Jones (2000), solicitors should always ask for and obtain copies of the building regulation approvals and completion certificates (if cc’s were granted by that Council at that time). Breaches of building regulations can be enforced via an injunction under Section 36(6) of the Building Act 1984 and therefore, the Council can take action at any time, (although usually a period in excess of ten years expired is seen as satisfactory by mortgage lenders if no action has been taken), for works undertaken since 1985.  Prior to that, building regulation breaches cannot be enforced.

If the building regulation approvals cannot be provided by the seller, then they should be obtained through the local Council. Depending on the age of the documents, you might be able to get copies via the Planning Portal, which now enables people to access planning permissions and building regulation approvals relating to any property, online. You can’t always get them if they’re older documents though.

Please note that a building regulation approval is issued at the start of the building works when plans etc have been checked. A completion certificate is a more recent document that is issued by the building control officer once the work has been completed satisfactorily following his inspection.

If the documents cannot be provided, then indemnity insurance should be obtained by the solicitor to protect both you and if relevant, your mortgage lender.

Whether contained in the Home Information Pack or whether undertaken independently, the Local Land Charge Search will reveal any planning permissions granted in relation to the property.

If the permissions are dated within the last four years, then the terms of them are still enforceable by the Council if a breach has taken place; however, if a period of four years has elapsed, then breach of planning permission is no longer enforceable. This is because after this period of time, any action by the Council is statute barred.

So, if you’re selling a property and you’re asked to pay for copy planning permissions to be obtained, they only need to be provided if they’re dated less than four years ago.

The time period does not apply in relation to building regulation approvals and completion certificates however. Due to the findings of a case called Cottingham v Attey Bower & Jones (2000), solicitors should always ask for and obtain copies of the building regulation approvals and completion certificates (if cc’s were granted by that Council at that time). Breaches of building regulations can be enforced via an injunction under Section 36(6) of the Building Act 1984 and therefore, the Council can take action at any time, (although usually a period in excess of ten years expired is seen as satisfactory by mortgage lenders if no action has been taken) where works were undertaken from 1985 onwards in breach of the regulations.  Prior to that, such breaches cannot be enforced.

If the building regulation approvals cannot be provided by you, then they should be obtained through the local Council. Depending on the age of the documents, you might be able to get copies via the Planning Portal, which now enables people to access planning permissions and building regulation approvals relating to any property, online. You can’t always get them if they’re older documents though.

Please note that a building regulation approval is issued at the start of the building works when plans etc have been checked. A completion certificate is a more recent document, that is issued by the building control officer once the work has been completed satisfactorily following his inspection.

If the documents cannot be provided, then indemnity insurance should be obtained by the buyer’s conveyancing solicitor to protect both the buyer and if relevant, the mortgage lender. You will be asked to pay for this if you cannot provide the documents to prove that the permissions or approvals haven’t been breached.

If your solicitor has told you that you need one of these policies, it’s either because;-

1) He is protecting your interests if you are buying without a mortgage.

2) He is protecting both the interests of you and your mortgage lender, if you are buying with a mortgage.

If option 2) is relevant to you, then it’s unlikely that you have any choice in the matter. The mortgage lender will not allow the conveyancing solicitor to proceed to get your mortgage monies without the relevant policy is in place, protecting the mortgage lender’s security.

It is unlikely that your conveyancing solicitor benefits in any way by recommending policies to you. To my knowledge, it’s not something that the solicitor makes any money from, the money is just a third party fee (known as a disbursement) paid direct to the insurance company on completion.  Solicitors usually use the cheapest insurers offering the best cover, or they should do if they want to offer a good service to their clients.  Some I suppose may receive an incentive from the insurer for passing clients to them but if this is the case, then the solicitor is duty bound to inform you, so check the small print.  If this is the case, then ask for alternative quotes, because you may find a cheaper supplier.

If your seller refuses to provide a policy for something that’s wrong at the property, then you can either pull out of the transaction, threaten to do so and see what the result is, or bite the bullet and pay for the policy yourself. Unfortunately, some sellers point blank refuse to pay for policies, even though those policies are required due to something that the seller has done. In my view, this is completely unreasonable but as explained above, your conveyancing solicitor can’t actually proceed if you’re getting a mortgage without the policy is in place. It’s therefore up to you as to how you want to proceed.

It’s worth asking your conveyancing solicitor whether or not they obtain their indemnity insurance policies online. I get mine through a company called Legal & Contingency Limited. Their online policies are actually quite a bit cheaper than the paper ones, I recently managed to save my client over £50.00 on two policies by getting them online. Otherwise, the conveyancing solicitor basically has a file of sample policies, called “instant issue policies” which they just write out, and then send the cheque to the insurance company.

Before issuing the policy however, you should see a copy of the proposed policy, its terms and the quotation as to cost.  I always provide these documents to my clients for them to look through before we go ahead and instruct Legal & Contingency.  GCS and Norwich Union also offer such policies; however in my experience, they are more expensive, even when obtained online.

Many people think that if they bought a property in their maiden name that either, 1: They won’t be able to sell the property until this has been changed or 2. They need a solicitor to get the surname changed. Neither of these is correct!

Regarding point 1;-

If the house is in your maiden name, when your conveyancing solicitor instructed to act on your sale has a look at the deeds, he will see this. He will then ask you to provide your original marriage certificate, take a copy of it and return the original to you. The copy is certified by the conveyancing solicitor as being a “true copy” of the original. When your conveyancing solicitor sends the contracts and Official Copies of the Register (the name for the electronic register of deeds held by the Land Registry since paper title deeds were abolished) to your buyer’s solicitors, he will also send the certified copy of the marriage certificate. This proves to the buyer’s solicitors that you have legally changed your surname and that you are entitled to sign the contract as the owner of the property in that name. It’s that easy!

Regarding point 2:-

All you need to do is send a letter to the Land Registry, explaining that you are now married and supplying your original marriage certificate. If I was doing so, to make sure it gets there, I would send it by recorded delivery. It might also be helpful if you included a stamped addressed envelope for the return of the certificate.

The Land Registry will then update its electronic register and return the certificate to you. Very simple and no need for a solicitor.

In October 2008, all Estate Agents selling residential property must be members of an Estate Agents’ Redress Scheme. Such a Scheme has to be approved by the Office of Fair Trading.

There are currently two approved estate agents redress schemes. In June 2008 the OFT approved the Ombudsman for Estate Agents Company Limited’s estate agent redress scheme.

The scheme has been put in place because recent research by the OFT has found that there is a high level of customer dissatisfaction with estate agents, but those who are dissatisfied find it difficult to complain and gain redress when problems do occur.

The purpose of the approved redress schemes is to deal with a range of complaints about estate agents relating to their acts or omissions in relation to a Home Information Pack (including providing advice as to whether a Pack is required) and to award redress where complaints are upheld. In addition, the approved redress schemes will have to pass information to Trading Standards and the Office of Fair Trading regarding misconduct.

All estate agents must join an approved scheme by October 2008, failing which they can be fined or ultimately banned.

Make sure when instructing your estate agent that you check whether they are members of an approved scheme and if so, which one. Check how you can seek redress in the event of a complaint that is not dealt with to your satisfaction through the company’s complaints procedure.

The Solicitors’ Disciplinary Tribunal recently found in a case brought to them that solicitors must specify clearly to you when preparing your bill, what they are actually paying out on your behalf for a bank charge and what they are charging for “organising the transfer”. In my view, no admin charge should be made, seeing as the work required is minimal and should form part of the conveyancing process.

If a solicitor is charging you more than the direct cost to them, plus VAT, they must make it clear to you that the excess is a charge by the solicitor and not an expense.

The recent decision by the SDT involved a case in which a firm of solicitors charged clients £30 plus VAT for telegraphic transfers. The actual cost in bank charges to the solicitors was £10 for each TT (a TT or telegraphic transfer is just a same day electronic payment from account to account). The remaining £20 represented profit for the solicitors, to reflect the work they did in organising the transfer; they billed their clients for a “disbursement” of £30, without making it clear how that figure was calculated. It is my view on speaking to clients that many other solicitors, certainly in my area, have done the same.

The SDT found that the solicitors had attempted to deceive their clients. This was a breach of their obligation to act with integrity (under rule 1 of the Code of Conduct to which all solicitors must comply) and of their duty to give clear information about costs (rule 2 C of C). The partners of the firm were fined £1500 each.

The same principle applies to fees for undertaking Money Laundering electronic identification check (EID). Some firms charge their clients more than the EID costs the firm. They cannot do so without making this clear to the client.

If you find yourself in any way unclear regarding disbursements, always bear in mind that you have the right to ask how the figure is calculated and whether it represents exactly the fee charged to the firm by the relevant third party.

Any breach of the Solicitors’ Regulation Authority Code of Conduct is treated very seriously and you would be entitled to make a complaint if you find yourself being deceived in the way described above.

Yet another thing to be aware of regarding solicitors’ costs!

As you may be aware, due to the current market difficulties, the Government announced on 3rd September 2008 that for one year, the stamp duty land tax threshold would be increased from £125,000.00 to £175,000.00.

This means that if you are buying a property for £175,000.00 or less and you complete the transaction before 2nd September 2009, you will be exempt from the requirement to pay stamp duty land tax.

On current information, it appears that on 2nd September 2009, the SDLT bands will revert to the usual thresholds i.e. £125,000.00 or less = no duty, £125,001.00 to £250,000.00 = 1%, £250,001.00 to £500,000.00 = 3%, £500,000.00 plus = 4%.

If you are having electrical works undertaken at the property, then you may need an electrical certificate under Part P Building Regulations Electrical Safety January 2005. This depends upon the type of work being undertaken. It can either be issued by a qualified electrician or you can apply for a Building Control Officer from the Council to inspect the work.

A Competent Person is a business that has been adjudged to be sufficiently competent to self-certify that its work complies with Part P of the Building Regulations of England and Wales.

The work must be undertaken by a “Competent Person”, who must be registered with a scheme that has been approved by The Department for Communities and Local Government (DCLG). Schemes authorised by the DCLG are listed on its website at http://www.communities.gov.uk.

Work that need not be certified/notified;-

1. Replacing accessories such as socket-outlets, control switches and ceiling roses.

2. Replacing the cable for a single circuit only where damaged for example by fire, rodent or impact (on condition that the replacement cable has the same current carrying capacity, follows the same route and does not serve more than one sub-circuit through a distribution board).

3. Re-fixing or replacing the enclosures of existing installation components (if the circuit’s protective measures are unaffected).

4. Providing mechanical protection to existing fixed installations (if the circuit’s protective measures and current-carrying capacity of conductors are unaffected by increased thermal insulation).

or

Work that is not in a kitchen or special location (see below) and consists of:

1. Adding lighting points (light fittings and switches) to an existing circuit (only if the existing circuit protective device is suitable and provides protection for the modified circuit and other safety provisions are satisfactory).

2. Adding socket-outlets and fused spurs to an existing ring or radial circuit (only if the existing circuit protective device is suitable and provides protection for the modified circuit and other safety provisions are satisfactory).

3. Installing or upgrading main or supplementary equipotential bonding (such work will comply with other applicable legislation, such as the gas safety regulations).

If any of the above work is undertaken in a special location (below) it must be notified.

Special locations;-

Locations containing a bath tub or shower basin
Swimming pools and paddling pools
Hot air saunas
Electric floor or ceiling heating systems
Garden lighting or power installations
Solar photovoltaic (PV) power supply systems
Small scale generators such as microCHP units
Extra-low voltage lighting installations, other than pre-assembled, CE-marked lighting sets

New installation must be certified / notified although modifications in the following areas are exempt:-

Bedrooms
conservatories
dining rooms
halls
integral garages
landings
lounge
stairways
studies
tv rooms.

Work of any nature in the following must be certified / notified ;-

Bathrooms
Bedrooms containing a shower or basin
Ceiling (over head) heating
Communal areas of flats
Pre-assembled CE marked lights
Garden – lighting and power, greenhouses workshops and sheds
Kitchen
Kitchen diners
Remote buildings
Remote garages
Saunas
Shower rooms
Small scale generators
Solar power systems
Swimming pools
Under floor heating
Extra low voltage (E.L.V.) – under 50v ac

The regulations do not apply to computer and telephone cabling.

OK, you’re in the process of selling your property and the buyer’s solicitor comes back to your solicitor, saying that they want you to pay for indemnity insurance because you’ve “breached the restrictive covenants“. What does this mean?

Put simply, freehold or leasehold land can be affected by covenants. There are positive covenants and restrictive covenants. Think of a covenant as a legally binding promise either to do something (positive) or not do something (restrictive).

I see more and more cases where people have bought a property and their conveyancing solicitor at the time has not made them aware that covenants affect the property. Restrictive covenants are often breached, particularly in relation to the requirement to gain consent of a third party, often the original builder. This covenant is put in place to ensure that the design of the overall development stays the same in future years.

So, if you didn’t know about them, how can you breach them? Well the answer is simple. The covenants are there in your deeds, whether or not you had actual knowledge of them. Therefore, you are assumed to have knowledge of them in law.

If you breach a covenant, then the person with the benefit of the covenant can enforce it against you. This could mean ripping down an extension that you’ve had built without consent!

Be aware that covenant consent is completely separate to planning permission or building regulation approval. Often, the Council can have the benefit of the covenant and a client will say to me, “Well they must have consented to it, they gave me planning permission/building regulation approval”. Unfortunately, it doesn’t work this way. The Council must be approached (usually through their legal department) to provide consent under the terms of the covenant.

If you have breached a covenant and you are now in the process of selling, then you usually have a few options;-

1. Remove the breach by rectification i.e. tearing down that lovely extension.
2. Obtain retrospective consent from the third party with the benefit of the covenant – bear in mind that this can be time consuming, you’ll probably have to pay a fee, and you have no guarantee that they will agree.
3. Pay for an indemnity insurance policy – although there are specific requirements of the insurance company that must be met i.e. no action or dispute must be currently in effect, the breach must have continued for “x” number of years.
4. If there has been a continuous breach for over 20 years, then the breach can be viewed as “statute barred” and therefore unenforceable. This means that the third party has allowed the breach to continue for all that time and they are therefore prevented from taking action in relation to it.

Your conveyancing solicitor will be able to advise you how to proceed in your particular circumstances.