The Conveyancing Process
The conveyancing process is not a strictly regimented one. Different solicitors will have their own way and order of approaching things, as well as an entirely different pace of work. It usually takes around two months from the day you agree the sale to the exchange of contracts, though there are no guarantees that it won’t be significantly more or less. The main activities that contribute to the conveyancing work are as follows:
Receipt of Draft Contracts:
To many observers, this is seen as the official start of the conveyancing process, but for this to happen you generally need to have appointed a solicitor. The contract is a legal document that sets out the terms of the sale process. It is drawn up by the seller’s solicitor using information from the deeds of the property. The contract will contain details of the property and items that are to be included in the sale, the buyers and sellers, how much it will be sold for, and the date on which the transaction will take place. However, it is not a standard contract and is likely to change or clarify in detail quite considerably over the course of the coming weeks, as a result of contract tennis between the two solicitors involved. The contract has two parts: Particulars of Sale and Conditions of Sale. The Particulars describe the property and details of the lease or freehold. The Conditions have information about the proposed completion date and any deposit required when contracts are exchanged.
Whilst waiting for the draft contract, your solicitor sends a list of pre-contract enquiries to the seller’s solicitor, in order to uncover some basic information about the property. This enquiry will ask a standard set of questions, which amongst other things should include:
- What is to be included in the sale? Clarify what contents the vendor will be taking with them and what is being left behind.
- What are the boundaries of the property? Who owns and is responsible for any perimeter hedges or fences?
- Whether or not the property is connected to all the appropriate utilities.
In the case of a leasehold:
- Who is the managing agent?
- Who is the freeholder?
- Is the current owner up to date with service charge bills and ground rent?
After receiving the draft contract, your solicitor will check the documentation and raise any specific queries that arise from their study of the paperwork.
Property Information Form:
Your solicitor may send you a property information form. This has summary information about many of the things that will go into the draft contract – boundaries, fixtures, fitting etc. You should make sure that this is accurate and quickly let your solicitor know if it is not.
Land Charge and Registry Searches:
This involves obtaining the title deed for the property, along with the Land Registry certificate. Careful scrutiny by your solicitor will hopefully confirm that the seller actually owns the property, has good title (i.e. is free to sell it) and that the sale includes any covenants associated with a property or its land.
A local authority search is a check with the local authorities to establish if any new developments are planned in the vicinity of the property you are buying and to check the water drainage systems and other social infrastructure. This can highlight any public works such as a new motorway, waterworks or alterations to road systems, as well as anything else that is has had permission to take place immediately adjacent to the property. The local search will also tell you whether there are any planning restrictions that may affect your intentions to renovate or extend the property. Depending on the area you live in, you may have to undergo various other searches, such as a coal-mining search or a search from a local railway network.
The search won’t tell you everything, however. It only covers those areas immediately next to the property and not everything in the surrounding area. If you want total peace of mind, then you should visit the planning department of your local town hall and make sure that the search has not overlooked anything.
The local searches can take anything from two or three weeks right up to ten weeks to complete, depending on the time of year, work backlog and overall efficiency of the local authority you are dealing with. To speed this process up, another option is to plumb for a personal search. This is a manual search by a conveyancer or some other specialist, who manually undertakes the same activities as in a local search. These can be completed in a matter of days rather than weeks or months, though they do end up being up to fifty pounds more expensive.
Draft Contracts Approved:
Once both parties are satisfied that all the details of the draft contract are accurate, and your solicitor has made sure that there is nothing that should reasonably either preclude the seller from buying, or warrant your withdrawal from the sale, then the draft contract is approved and sent to both parties for signature.
Formal Mortgage Offer:
This is a required step before you can really pursue the sale any further.
Arrange for Completion:
Although many people arrange for a simultaneous exchange and completion, whereby contracts are exchanged and keys picked up on the same day, this is not always possible. If the buyer and seller are part of a longer chain, then it can be quite difficult to arrange a completion date that is going to suit all parties. Your solicitor should co-ordinate this with the estate agent and the seller’s solicitor. Once this has been done, you are all set to exchange contracts and complete the sale.
Exchange and Completion
Until you exchange contracts, both you and the vendor can walk away without any contractual liability.
The contract is a legally binding document that commits all parties to the deal. There’s no backing out once the exchange has taken place, unless you have a desire to be potentially liable for significant financial penalties.
When both solicitors are satisfied their work on the contract is complete, they will ask their respective clients to sign the document and send a copy to the other solicitor for signature by the other party involved in the sale. This is the exchange of contracts – the moment you have all been waiting for.
It is unlikely you will be able to exchange contract until all the following have taken place:
- The survey or valuation report has been completed and accepted by both you and the lender.
- You have had a formal written mortgage offer from your lender.
- All the conveyancing work is satisfactorily complete.
- You have agreed a completion date for the sale, which is included in the contract.
- You have settled any outstanding issues with the vendor, such as obligations for the completion of work on the property and have made appropriate written agreements.
At the point of exchange, you normally have to provide funds for the deposit, assuming there is one, as well as any outstanding fees for the work your solicitor has carried out.
The completion date may be anything from the same day as the exchange to several months later, depending on the circumstances of the sale. There are still things to do right up to completion and beyond:
- Complete the purchase transaction
- On the completion date agreed in the contract, subject to the seller receiving funds, transfer of ownership will take place. This is known as completion.
- Transmit the purchase monies
- The mortgage company will send the remainder of the purchase funds ready for transfer at the request of the solicitor. This is usually carried out by some electronic means (for which you will of course be charged). This instant electronic transfer that hurtles round the phone lines in the blink of an eye can take several hours to happen, so there is sometimes a bit of a delay on the day of completion. You may be able to get the keys before the money arrives, but it is unlikely as the seller’s solicitor will almost certainly advise their client not to allow you to take possession of their home until money has changed hands. This can lead to some irritated heels being kicked as you wait outside your new home waiting for a phone call. Eventually, the money transfer will take place, the solicitor and estate agent will take their fees and you will take possession of what – hopefully – will be the start of a very cosy new abode.
- Tying up loose ends
- Even once you are in, there are still a few things to be done. Your solicitor will need to check the title deeds once more and arrange for them to be registered in your name. In the case of a leasehold property, they need to make sure that your name is on the lease. They also need to get the transfer stamped to officially approve the sale and the despatch the title deeds to the lender.
Solicitors don’t go through years of training to earn a pittance. It costs a lot to hire a solicitor to do almost any sort of work for you and conveyancing is no exception. The costs of conveyancing work can be broken down into solicitor’s fees and disbursements:
A solicitor will charge you a basic fee for undertaking the conveyancing work associated with the purchase of your property. This covers their time spent on taking your instruction, advising you, working on the contract refinements, liasing with the other party’s solicitor, explaining the contract to you, obtaining your signature, exchanging contracts, investigating the title deeds, and basically dealing with all other related matters.
Make sure that you fix the fee before they start work, if possible. This should be in the form of a written quotation and not an estimate. This should avoid a huge bill if there are unexpected complications. Some solicitors will link the level of the fee to the value of your home, which seems to be a common phenomenon in property transactions. Others will have a catch-all price which is set regardless of the property value. Conveyancing work on a leasehold property may be more expensive due to the additional work that is incurred as a result of dealing with the lease.
Disbursements are expenses that the solicitor incurs on your behalf in association with the work they are performing for you.
These “disbursements” include:
- Local authority search fee
- Water authority search fee
- Land charges search fee
- Land registry fees
You will also have to pay stamp duty, which is set at a level fixed by the government, depending on the value of the property you are buying. For more information on Stamp Duty rates search online.
When You Pay:
Apart from the search fees, which are often (but not always) paid as you go along, you pay the main costs of the solicitor at the same time that you forward them the deposit. This means that you could easily end up with a bill of tens of thousands of pounds, when your deposit, stamp duty, conveyancing fees and disbursement costs are added together. Painful.
Here is an example of the total costs one lucky couple incurred when they paid their solicitor:
Disbursements Costs Fee VAT
Chancel Search Fee £15.00 £0.00
Land Registry Search Fee £3.00 £0.00
Bankruptcy Search Fee £2.00 £0.00
Drainage & Water Search Fee £26.50 £0.00
Environment Search Fee £60.00 £0.00
Stamp Duty £1,800.00 £0.00
Land Registry Fee £135.00 £0.00
Sub-Totals £2,041.50 £0.00
Total Disbursements Costs (inc. VAT) £ 2,041.50
Legal Costs Fee VAT
Legal Fee £750.00 £150.00
Identification Fee £10.00 £2.00
Telegraphic Transfer Out Fee £40.00 £8.00
Local Authority Search Fee (Not Specified) £78.48 £15.70
Sub-Totals £878.48 £175.70
Total Legal Costs (inc. VAT) £ 1,054.18
Total (inc. stamp duty VAT) £3,095.68
Even when you have agreed the sale, there is still a long way to go before you can move in. The average is one to three months from agreeing the sale to moving in, but it can be longer. Sometimes the seller will insist upon a later date of completion than you would wish for, as a condition of the sale. There is not a lot that you can do about this.
There is a lot that can go wrong before your purchase is completed, not to mention potential disasters that can occur while you’re moving and once you’re in. Although no amount of planning can guarantee a smooth move, it does you no harm and will probably make you feel like you are more in control of the whole process. If everything goes to plan, the process should be as follows:
1. Start planning your move. Manage the whole process from start to finish by planning well in advance.
2. You return to your lender with details of the property. The lender will then assess the property details against their lending criteria and can reject the property before anything goes any further.
3. You have a survey or valuation done. It is quite common for this to be arranged for you by the lender. You will have a choice of different surveys open to you.
4. You notify your solicitor who will start the conveyancing process. There are quite a lot of things that must be done as part of the conveyancing process.
5. Your mortgage offer is finalised. This is a good moment as you know that the lender is satisfied with the outcome of the survey and you can now proceed full steam ahead to exchanging contracts.
6. You exchange contracts, pay the deposit. As soon as all the minor details are finalised, such as whether or not they are taking the portable garden shed with them, your solicitor can then arrange a completion date. You have now effectively bought the home, though you can’t move in yet. If you back out now you will lose your deposit. Make sure you arrange your buildings and contents insurance immediately.
7. Completion and payment of balance. This usually takes place between a week and a month after exchanging contracts. It is possible to have a simultaneous exchange and completion if you are in a real hurry to get moving. When you complete the sale, your solicitor forwards the remaining balance of the purchase price to the seller’s solicitor. You then have the right to take occupancy of the property and are free to move in – something you should have been planning for some time now.
We all know what can happen to the best-laid plans of mice and men. There are many things that can stall your purchase, such as problems with the survey, details in the contract, and delays in getting things done and so on. One distressing thing that crops up from time to time, especially in times of high demand for properties is gazumping.
Exchanging contracts can sometimes have a profound effect on a homebuyer. The sheer relief of crossing perhaps the most significant home buying milestone can lead to a feeling that it’s time to relax, sit back and savour the remaining days in your current home. Not that it will be at all possible, given the mayhem that is likely to be going on around you. It is not going to be very easy to get peace and quiet with packing, cleaning, moving and a million and one other things still to be done.
Amongst those other things that are outstanding are a few financial affairs that you should make sure you get in order:
Some lenders will insist on the presence of a life assurance policy before they will lend you money and endowment mortgages have an element of life assurance built into them. If you share the responsibility for repaying your mortgage with your partner, or have family that are dependent on your income, then it is something that you should be thinking about. You may already have a policy, but you should check to make sure that it is still appropriate. If you arranged it at the time of a previous property purchase, it may no longer provide enough to cover your mortgage if something happens to you.
Building and Contents:
Your new household insurance policy should be arranged on the same day as you exchange contracts. If anything happens to the property you are buying after you exchange but before you complete, you can find yourself liable. Many people do not realise this and fail to get the appropriate insurance. Another reason to sort this out early is to make sure that your possessions are covered in transit. No matter how careful you are, you can guarantee something will get broken or lost during your move. It’s a lottery when it comes to the identity of the item(s) in question, but you’ll be kicking yourself if it is something valuable and you later find it wasn’t covered by your policy.
People get very blasé about money when they have plenty of it. When it dries up for one reason or another, financial affairs take on altogether different appearance. You may not feel that you need to worry about this, and some people probably don’t, but be aware that circumstances can change suddenly and if you are not sure if you could get by, it may be worth considering some of the options open to you.
Here at NEXA we have some great working relationships in place with several excellent solicitors across the city so if you are looking for any advice on who to choose then feel free to speak to me personally.