STAGES OF A TYPICAL CONVEYANCING TRANSACTION
Stage 1: Instructions
After an offer has been accepted, the selling estate agent will send out a Memorandum of Sale, setting out details of the parties, the property, and the sale price etc. If you have already instructed us, the Memorandum of Sale will be sent to us as well as to all other parties and agents.
When you contact us, we will send you a specific estimate by email of the conveyancing charges and disbursements. If these are agreed, we will then send you a formal letter of engagement and our terms of business, which record the basis upon which we will act for you. You will need to sign and date this letter and return it to us, as confirmation that you are happy to proceed on the terms outlined.
As part of our professional due diligence and to comply with money laundering rules, we are required to identify every client for whom we act and where they live. This involves our inspection of an original passport or photocard driving licence for each prospective client, and our inspection of a recent council tax, utility bill or bank statement showing the client’s permanent home address. Certified copies of these documents are acceptable, provided that they have been certified as genuine by an appropriate person (e.g. another solicitor).
Other checks on prospective clients are also undertaken to ensure compliance with money laundering rules.
Subject to these points, the solicitor acting for the seller will then prepare a legal information pack which will include a draft contract, a fixtures, fittings and contents form, a property information form, and the legal title to the property. This is then sent to the solicitor for the buyer.
Stage 2: Applying for a mortgage
If a buyer needs a mortgage, he/she will need to make a formal mortgage application. It is important to do this as soon as possible to avoid any delays. The mortgage lender will arrange a valuation on the property to ensure the property is worth the agreed sale price and will then send out a copy of the formal offer.
Stage 3: Searches and enquiries
The solicitor acting for the buyer will then apply for searches, such as:
• Local search: This will look at all information held by the local authority involving the property. This could include planning applications and building regulations documentation relating to any changes or alterations of the property.
• Water and drainage search: This is submitted to the local water and sewerage company and confirms amongst other things whether the property is connected to a mains water supply and to public drains for foul and surface water drainage.
• Environmental search: This establishes amongst other things whether the property is built on or near contaminated land or water, or on an old landfill site.
• Chancel search: this is to identify whether the property is located within the glebe of a mediaeval church. In certain (now very limited) circumstances this can give rise to a liability on property owners to maintain the chancel of the church.
Sometimes the results of these searches can take a long time to arrive (especially the local search – some local authorities take more than 6 weeks to reply). This is often a significant cause of delay in conveyancing transactions.
The buyer’s solicitor will also raise enquiries relating to the property, to ensure the buyer has all the relevant information needed. These enquiries are very detailed, and they may take the seller some time to reply, especially if the seller is not familiar with the property (e.g. when the property is being sold by an executor who is unfamiliar with it).
It is important to note that the buyer’s solicitor will not advise on the physical condition of the property, so it is important for buyers to arrange their own survey of the property and any specialist reports such as electrical, heating system and damp reports which might be needed.
Stage 4: Pre exchange
When the buyer’s solicitor has received the results for the various searches, replies to the enquiries raised (and replies to any subsequent queries raised about the initial replies), and confirmation of any mortgage offer, they will send a written report on the property, and on the mortgage terms, to the buyer. It is important that buyers read the reports carefully, so they are aware of all the factors which affect the property they are buying. If any of the replies are unsatisfactory and the matter cannot be addressed by other means (e.g. by the buyer getting an insurance policy against the risk in question for the benefit of the seller, or by the parties renegotiating the sale price), the buyer is entitled to withdraw from the transaction and the seller would have no redress.
If the buyer wishes to proceed, the buyer’s solicitor will arrange for the buyer to sign the contract and any mortgage deed. The buyer then pays the deposit and other costs to their solicitor in readiness for exchange and completion. The seller will then sign a separate but identical contract to that held by the buyer’s solicitor.
Stage 5: Exchange of contracts and completion
For a freehold purchase, on average, it takes about 8-10 weeks to reach this point, but it is about 10-12 weeks for a leasehold purchase. Once the contract has been signed by both parties, the solicitors will then ‘Exchange Contracts’ (usually by telephone, followed up in writing) and the transaction becomes legally binding.
Prior to completion a statement of balances and invoices will be sent by the solicitors to their respective clients for approval. The purchase monies are then transferred to the buyer’s solicitor’s client account in readiness for completion
Completion can sometimes be on the same day as exchange, however if a mortgage is involved, there will usually be a delay of up to a week between exchange and completion. When the seller’s solicitor has confirmed receipt of the full purchase price from the buyer’s solicitors, the keys to the property will be released to the buyer, often by the selling estate agent.
Stage 6: Post Completion
After completion when instructed to do so the buyer’s solicitor will complete a stamp duty land tax return and where applicable make the payment of stamp duty to HMRC with funds provided by the buyer.
The buyer’s solicitor will also register the change in the ownership of the property at the Land Registry. This can take the Land Registry several months to complete. Any new mortgage will also be registered against the title to the property.
The seller’s solicitor will use the sale proceeds to redeem any mortgage held by the seller secured on the property, pay the estate agents and other costs (where instructed to do so by the seller) and remit the net sale proceeds to the seller’s nominated account.