Guide to Selling and Buying your Home
Selling
and buying property can be one of the most stressful periods in anyone’s
life. So, what can you do to ensure
that the process goes as smoothly as possible?
Choosing a legal representative to assist you through the process and to
provide you with competent advice can be difficult with so many firms to choose
from. The cost of legal fees is not the
only thing to consider – finding someone that you feel comfortable talking to
and who can guide you through the process efficiently and professionally should
also be a major factor to consider before you instruct someone to act on your
behalf.
Solicitors and Licensed Conveyancers are
professionals qualified to undertake the complicated legal work involved in the
conveyancing process. But, with so many
legal firms out there, how do you choose which to act for you?
At C Nicholls Solicitors, our friendly
team of David Pitcher and Secretaries
Margaret Rowe and Lucy Allister, are committed to providing a service that you
can rely on to make the process as stress free as possible.
We are an established firm of solicitors
with the major advantage of local knowledge of the Cornwall area. We are happy to answer any queries that you
may have by telephone and, of course, you may not be so far away that it would
be impossible for you to make an appointment to call in to see us should you
wish to discuss anything face to face.
At C Nicholls, we firmly believe that all
of our Clients should be able to discuss their own requirements with someone
that they can trust. Every transaction
is as individual as you are and we feel that it is very important that you are
able to make contact with the person dealing with your case from the start
right through to completion.
So, you have found a seller and/or buyer,
you have instructed your legal representative, but what happens next? This guide has been produced to help you
understand the legal work involved in buying and selling a property and to help
you to help us to manage the process as quickly and as efficiently as possible.
The average conveyancing transaction will
take around 4 to 8 weeks depending upon the length of any chain. However, not all transactions are
straightforward and more complicated sales and purchases can take longer than
this. If you are within a lengthy chain
or if you require a Mortgage to assist you with your purchase then it is not
always easy to arrange completion for a specific date and you may need to be a
little flexible. In these
circumstances, our general advice is not to make any firm arrangements
regarding completion dates without first discussing the situation with us. Wherever delays look likely then we will
discuss the situation fully with you and advise you what steps we are taking to
try to resolve the situation in accordance with your wishes.
a) The Contract
It is advisable for you to consult your
solicitor as soon as your property is placed on the market, even before a buyer
has been found. We can prepare your Home Information Pack (HIP), if you are selling, FREE of charge other than the cost of the searches and other expenses. We can then arrange for
your Title Deeds to be sent to us in good time for a Contract to be prepared
and sent out to the buyer’s solicitor as soon as an offer has been
accepted. If your property is mortgaged
then your Lender will probably have your Deeds. We will need details of your Lender and your mortgage account
number so that we can order your Deeds from them. Copies of your Deeds are sent to the buyer’s solicitors to assist
them in raising any enquiries about the property.
Many solicitors have now adopted the Law
Society’s TransAction Scheme, which was introduced to simplify the selling and
buying process. Under this scheme much
of the information about a property is supplied with the Contract, in standard
forms, which are widely used and replace the need to raise time-consuming
standard enquiries.
The Sellers Property Information Form
provides the buyer with standard information about the property, such as who is
responsible for the boundaries, whether or not there have been any disputes
with neighbours or other organisations and whether or not the property has ever
been altered or changed.
The Fixtures, Fittings and Contents List
is completed at the start so that everyone is clear about what is to be
included in the sale and avoids last minute quibbles about whether or not the
light fittings or loo roll holder are to remain at the property!
If the property you are selling is
Leasehold, then an additional Leaseholders Information Form will also need to
be completed and this gives the buyer information about any Management Company
involved in managing the property and details of the ground rent and service
charges payable.
These forms are included as part of the
Contract package. It is important that
they are completed as accurately as possible because the buyer will rely upon
what you say and if the forms are deliberately misleading then the buyer could
have a case to sue for misrepresentation.
It would greatly assist us if any
documentation relating to the property, for instance, any guarantees or deeds
and documents passed to you when you completed your purchase of the property,
could be sent to us at this stage to assist us with answering any enquiries
that the buyers may raise.
b) Valuations
and Surveys
If
you are buying a property with the assistance of Mortgage finance then your
Lender will carry out a mortgage valuation for which you will have to pay. However, this is for valuation purposes only
to guarantee the security of the loan and the report will be purely for the
lenders benefit.
For
an additional fee it may be possible for you to instruct the valuer to carry
out a full structural survey of the property and to provide a copy of the
report to you for your information. Alternatively
you may prefer to instruct your own surveyor to carry out this type of
survey. We would always advise that a
structural survey be carried out wherever possible, as the surveyor will
investigate the whole of the property from the roof to the floorboards, where
practicable.
Structural
surveys can be expensive so it is always a good idea to obtain a quotation from
more than one firm and do check whether or not the fee includes the cost of the
mortgage valuation. In addition, check
that the firm that you instruct to carry out the survey is a member of the
Royal Institution of Chartered Surveyors or the Incorporated Society of Valuers
and Auctioneers.
A
cheaper option than the full structural survey is to instruct a surveyor to
carry out a House or Flat Buyer’s Report.
It is more concise than the full structural survey but more
comprehensive than a mere valuation.
The surveyor will inspect the main structure including the roof space,
if accessible, and the drainage and will identify any legal issues that need to
be clarified.
Whichever
type of survey you choose, once it has been carried out please pass a copy of
the survey report to us so that we can investigate any of the legal points
raised. If the report reveals anything
unsatisfactory it may be possible for you to negotiate with the seller to
reduce the asking price. Usually
nothing can be done about any defect that is discovered after exchange of
contracts.
If
you are not obtaining a mortgage then it is essential for you to instruct a
survey.
c) Searches
Upon receipt of the Contract package the buyer’s solicitor
will obtain a Local Search from the Local Authority as well as any other
searches that are deemed to be necessary.
The Local Authority Search will provide us with information
concerning the planning history of the property (if there is any) together with
any other information known by the Local Authority about the property and which
may have a bearing on its sale.
This search has a ‘shelf life’ of three months. If it takes some time for the buyer to
receive a mortgage offer or if the purchase is delayed for some other reason
then the buyer will need to know if the search is still valid. In some cases, a special Search Validation
Insurance is available to cover the property for six months from the date of
the search. If the buyer finds any
proposals that may affect the property that occurred between the date of the
search and the expiry date of the insurance policy then the insurance company
will pay compensation for any damage the buyer may incur. The cost of this type of insurance cover is
much less than the cost of redoing the search.
Wherever necessary we can supply full details if you are interested in
this type of insurance.
Full details of the searches relevant to the area in which
you are purchasing, and the cost of those searches, are included in our
standard Terms of Business letter which is sent to you upon receipt of your
instructions. Some of the searches are
necessary to meet any lenders requirements and some searches are optional and
need only be carried out at your request.
If you are unsure about which searches you will need then it may be
prudent for you to rely upon our local knowledge and legal expertise. In the absence of any specific instructions
from you as to which searches to carry out then we will request all of the
searches that we believe to be relevant to the area.
Searches take, on average, approximately ten working days
but sometimes longer if the Local Authority have a backlog, for instance, over
the Christmas period.
d) Additional
Enquiries
Upon receipt of the results of the searches the buyer’s
solicitors will review the results in conjunction with the information provided
by the sellers with the Contract package.
The buyer’s solicitors will then decide whether or not they need to
raise any further enquires about the property and will submit a list of
relevant questions to the buyers, for example, if an extension has been built
then the buyer’s solicitors will need to see copies of the relevant planning
permissions and building regulation approval documents.
Some enquiries can be dealt with by the solicitor acting
for the seller, from the information contained with the Deeds, but others may
need to be referred to the seller who may need to provide further information.
e) Legal
Indemnity Insurances
The conveyancing process has changed in various ways in
recent years as a result of precedents set by the Courts. In some cases this can mean that a buyer’s
solicitor will request information that was not perhaps necessary when the
property was originally purchased even only a few years beforehand.
The most common example of this is the need for some
sellers to provide an insurance policy against certain contingencies that may
not have been deemed necessary when the property was bought. For instance, the seller may have purchased
a property in the knowledge that building works had been carried out without
necessary planning consents a few years previously. Because the relevant consents are not in place, this is now
considered to be a defect in Title. In
this case a new buyer would almost certainly insist upon an insurance policy
being issued to provide cover against possible losses incurred should the Local
Authority take any enforcement action.
The requirement for this type of policy is relatively
recent and the onus usually falls to the seller to pay for and provide such a
policy to repair any defects discovered in the Title. If such a defect is discovered then we will discuss this with you
in greater detail at the time. Wherever
necessary, we are able to issue certain types of Policy from our office and we
will be happy to discuss this further with you should the need arise.
f) The
Mortgage Offer and our Duty to the Lender
Most people purchase a property with the assistance of
mortgage finance. You should contact
your Financial Advisor as soon as you make the decision to purchase a property
and he will go through the mortgage application process with you.
Once your mortgage application has been accepted then the
Lender will issue a formal Mortgage Offer to you which describes the terms and
conditions of the loan. A copy of your
Mortgage Offer is also provided to the lender’s solicitor for their information
and many lenders will also instruct the solicitor acting for the buyer to
represent their own interests and to ensure that the property upon which they
will be lending is a good risk.
When a solicitor acts for both the buyer and the lender he
has a duty to report anything that may affect the lender’s security to the
lender. For instance, if the purchase
price of the property is different from that stated in the mortgage offer then
the solicitor must report this fact to the lender so that the offer can be
revised and reissued where necessary.
The mortgage offer will detail the full terms and
conditions of the loan and the solicitor must ensure that all of these terms
and conditions are met. Once all enquiries and searches have been carried out
and the buyer is ready to proceed towards completion of the purchase the
solicitor must certify to the lender that all of the necessary conditions have
been complied with. Failure to comply
with the conditions could lead to withdrawal of the offer of loan by the lender
and the solicitor can be held to have been negligent.
g) Buildings
Insurance
If you are buying then buildings insurance cover should be
arranged upon exchange of Contracts.
Where you are obtaining a mortgage, the lender will make it a condition
of the loan that the property is adequately insured and will usually arrange
cover in conjunction with your mortgage.
If you intend to insure the property elsewhere then it is important that
your lender is aware of this fact and you will need to provide us with a copy
of your buildings insurance schedule so that we can confirm to the lender that
adequate cover is in place. Lenders
will often, but not in all cases, advise you of the amount of cover that they
require.
If you are selling then it is important that the buildings
insurance cover is not cancelled until your completion date.
h) Reporting
to You and Signing the Contract
Once we have received your mortgage offer, carried out all
of the necessary searches and received replies to our additional enquiries then
we are ready to report to you about your purchase. In all cases we will provide you with a full report detailing all
of the information that we have regarding your purchase. We will also invite
you to raise any final enquiries through us that you may have yourselves.
Once you are happy with the report and information provided
we will then invite you to the office to discuss any final points and to sign
the contract and mortgage Deed.
If you are selling, we will usually send the contract to
you for signature as soon as the buyer’s solicitors have approved it so that we
are ready to exchange contracts in accordance with your requirements and
whenever the buyers are ready to do so.
Whether you are selling or buying, it is important for you
to understand that you have not committed yourself by merely signing the
documents. It is only when contracts
are exchanged that the contract will become legally binding.
i) Exchange
of Contracts
Once both parties have signed the contract and agreement
has been reached regarding a mutually acceptable completion date, then
contracts are exchanged, usually by telephone between the two solicitors
acting. The completion date is fixed
and the deposit is paid to the seller’s solicitors at this stage and the
contract becomes legally binding. If the
buyer backs out after exchange of contracts then his deposit is forfeited.
j) Financial
Arrangements
Following exchange of contracts we will prepare your
statement of account and our bill showing our fees and disbursements for your
records. We need all monies required
for completion to be available as cleared funds in our account on or before
completion day. Where we are holding
large sums of money on your behalf for longer than seven days, then Solicitor’s
Practice Rules provide that we must hold this money on special deposit so that
it is earning interest for you.
Where you are buying we will be unable to complete your
purchase unless we are holding enough funds (including any mortgage advance) to
cover the purchase price, Stamp Duty Land Tax, Land Registry fees and our own
fees and disbursements.
Where you are selling we will obtain details of the amount
needed to repay any mortgage over the property at completion date. The sellers will require us to make a solemn
promise to pay any financial charges, such as a mortgage or secured loan, at
completion and to provide them with evidence that these have been paid. It is important therefore that you tell us
about all Mortgages or charges, bank loans or other financial commitments that
could be secured over your property well before exchange of Contracts.
We will also obtain a copy of the Estate Agent’s commission
account and arrange for this to be paid from the proceeds of sale if that is
what you would like us to do.
Details of any payments to be made from the sale proceeds
will be agreed with you before completion date so that you are aware of the
amounts that are to be paid and the balance due to you.
k) Legal
Completion
This is the date which is fixed in the contracts upon
exchange, when the purchase price is paid to the seller’s solicitors, the keys
are released to the buyer and the signed Deeds are passed to the buyer’s
solicitors.
The purchase price is usually sent to the seller’s
solicitors electronically through the banking system. In a long chain it can often take some time for the seller to
receive the money and it may well be that the keys might not be released until
the afternoon. This can be frustrating
if you are sitting outside your new property in the removal van waiting to get
in! In these circumstances please bear
with us and be assured that we are doing our very best to try to get you in to
your new property as early as possible.
We will, of course, keep you fully informed of any developments
throughout the day.
Where you are selling we will repay the mortgage, the
Estate Agent’s commission account, our own fees and disbursements and forward
any net proceeds of sale to you. We can
arrange to send any monies due to your bank account electronically at no extra
charge if you so wish and the funds will be shown as a credit in your account
on the day of completion (assuming that the sale monies are received by us
before 3.30pm which is the close of the banking day).
l) Final
Formalities
When you have bought we will apply to the Inland Revenue to
pay Stamp Duty Land Tax on your behalf.
Once a certificate of payment is received from the Inland Revenue we
apply to the Land Registry to register the change of ownership.
Once registration is completed we will forward the Title
Information document provided by the Land Registry to any lender for them to
hold as security for the duration of your mortgage. Copies will also be sent to you for your records.
Other Important Things to Consider
Joint
Ownership
There
are two ways in which property can be held in joint names. You may hold the property as Beneficial
Joint Tenants where, if one co-owner dies their share of the property
automatically passes to the survivor(s).
Alternatively you may hold the property as Tenants In Common where, if
one co-owner dies their share does not pass automatically to the survivor but
forms part of their estate which passes under their Will.
Please
see our separate form regarding Joint Ownership for more information in this
respect and which will assist you in choosing the best method of ownership for
your individual circumstances.
Making
a Will
If
you are a property owner or are in the process of buying your own home then it
is vital for you to make a Will if you have not already done so. Please contact David Pitcher who will be
happy to discuss this with you and provide you with legal advice in this
respect.
C
Nicholls
Solicitors
71
Fore Street
Bodmin
Cornwall
PL31
2JB
Tel. 01208 76969
Fax. 01208 73796
email: cnicholls@cnicholls.co.uk