INTRODUCTION
There are many steps in a property transaction. The main ones are summarised below.
NEGOTIATION
Once the deal has been agreed it is important that the buyer and seller give their solicitor full details of the terms immediately. The seller will need to give his solicitor the title deeds or details of the name and account number if held on mortgage by a building society or a bank. Once a sale is agreed it becomes subject to contract.
DRAFT CONTRACT
The seller's solicitor prepares a contract from the deeds and obtains up to date information about the property from the seller to go with the contract, such as recent extensions, improvements, and copies of planning consents. The seller will also need to complete a list of fixtures and fittings included in the price, which becomes part of the contract. A separate price can be agreed for additional items such as curtains, carpets etc. The seller's solicitor then sends the contract with all other documents to the buyer's solicitor for approval.
APPROVING CONTRACT AND MAKING SEARCHES
Once he receives the contract the buyer's solicitor will examine all the papers in detail and will need to make additional enquiries by way of local searches raised with the local authority and water board. These searches ask questions relating to the property and surrounding area concerning road schemes, planning matters, drainage etc. If in a former mining area a mining search will also need to be made. Fees vary from council to council.
MORTGAGE APPLICATION AND SURVEYS
If you apply for a mortgage, the lender will arrange a survey of the property but note that this is only a basic survey not a structural survey. Please consider having a full survey carried out, particularly if an older property. In fact many lenders will not supply you with a copy of their valuation report.
In law the seller does not have to give any guarantees, and the buyer purchases as seen, so you must be completely satisfied before committing to a contract. We strongly advise anyone paying cash for a property to have a full survey carried out.
The lenders survey may advise you to have specialist's reports for timber, damp, or electrics and we urge you to arrange for these to be done. If a report finds work needs to be done it may be possible to negotiate a reduction with the seller or for the seller to carry out the work prior to completion.
PROFESSIONAL ADVICE
Whilst it may be tempting to try to do your own Conveyancing without using a solicitor, the lender will insist on a solicitor or a licensed conveyancer checking the title to the property. You will be charged for this. If you have your own solicitor, he or she will usually be able to advise you and the lender so it is worth instructing a lawyer. The lawyer's fees for acting for you and the lender will not be very much higher, a house is the most expensive thing you will ever buy and it is clearly worth taking as much professional advice as you can get.
ADVISING ON CONTRACT TERMS AND DEPOSIT
Once the buyer's solicitor has the draft contract, results of the searches, and the buyers mortgage offer, he will advise the buyer on these matters in detail. The buyer will need to make arrangements to give his solicitor the deposit he is putting down. The buyer pays the deposit to his solicitor who will pass this onto the seller's solicitor on exchange of contracts. This is usually 5% or 10% of the purchase price. If the seller is also buying a property it will be agreed that this deposit can be used on his purchase.
EXCHANGE OF CONTRACTS
Until now nothing is legally binding and the seller can still sell his property to someone else. You may be involved in a long chain and if one party pulls out the whole chain could fall apart. Both sides only become legally bound once contracts are exchanged.
The buyer, if completely happy with everything, will sign his copy of the contract, give his solicitor his deposit and suggest a date for the legal completion, usually 2 to 4 weeks after exchange. "The Completion Date".
The sellers solicitor will get the seller to sign his copy of the contract and see if the seller can agree to the suggested "Completion Date". If there is a chain, all the parties have to agree to the same date. Once this has all been done the seller's and buyer's solicitors date and exchange contracts, pass the deposit, and the date for completion is fixed.
BEFORE COMPLETION
The seller's solicitor prepares a statement showing all the financial details of the sale for the seller. The buyers solicitor will request the advance monies from the lender, carry out final searches and collect from the buyer any monies needed to complete, which must be cleared by the solicitor at least 7 days before the completion date. The buyer has to call to sign the mortgage deeds and the transfer deed, which will legally convey the property to him. The transfer deed is then sent to the seller's solicitor who must get the seller to sign prior to the completion date.
COMPLETION
The buyer's solicitor transfers the balance of the purchase money to the seller's solicitor on the day of completion, usually by way of bank transfer. Only when the seller's solicitor receives the money he will authorise the release of the keys to the property to the buyer (usually via the estate agents), and forward the title deeds to the property to the buyer's solicitor.
If you are in a long chain it could be early afternoon before the money is passed all the way along, and this can cause delays in the releasing of the keys. If purchasing from a builder they will not release keys until the money has been transferred into their bank. However if the seller and buyer are happy that completion will take place, there may be some agreement to release keys direct between them.
AFTER COMPLETION
The seller's solicitor will discharge the seller's mortgage from the sale monies, pay estate agents and then account to the seller for the balance due or pay into a bank account if wished. The buyers solicitor will send the transfer deed for stamping, pay any stamp duty, deal with life assurance, date the mortgage deed and send for registration at H.M. Land Registry. When registration has been completed, the deeds will be sent to your lender. If you are fortunate enough not to have a mortgage, your solicitors can store them in their strong room.
LEASEHOLD PROPERTY
Most of the procedures set about above are the same for flats and leaseholds. However they will be more complicated as the lease must cover things as insurance, cleaning, maintenance, ground rent, service charges and, in some cases, a separate contract with the freeholder (landlord) about complying with the terms of the lease.
