Buying and selling property

When you are buying and selling property, the legal process where the title or ownership of property transfers from a seller to a buyer is known as conveyancing.

When buying and selling property (moreso when buying) one of the first things you should consider is the tenancy of the property.

Tenancy: freehold or leasehold?

If you are buying a freehold property, after completion you own the property outright, including the land it is built upon. You become the “freeholder”. With leasehold, you don’t own the property at all. Instead, when you “buy” a leasehold property you pay a “lease premium” to have the lease assigned to you. You often have to pay an annual ground rent to the freeholder or to a management company. When the lease ends, ownership of the property reverts to the freeholder.

Freehold conveyancing is usually straightforward and your solicitor will be able to set out a reasonable approximate timescale for completion, although this obviously depends on any chains involved, issues with lenders and so on. Leasehold conveyancing can be more complicated as there are more parties involved.

Buying a property

If you instruct us, we will provide you with our client care pack. This provides information including who will deal with your case, our terms of business, and the anticipated costs involved. Once our terms of business are signed, we will contact the seller’s solicitor and inform them that we are acting for you. We’ll ask for the draft contract, title information and forms related to the property.

We will inspect the draft contract and documentation and go through it with you. This would be the time to check the tenure of the property is what you think it is. In the case of purchasing leasehold, check the lease length, any covenants, service charge and rent provisions. We will ensure you are happy and will raise any enquiries with the seller’s solicitor.

Property searches

Next, we arrange property searches. These are searches of local records that can reveal information about the property and surrounding area that you might not be aware of. That beautiful field you hope to overlook with herds of wildebeest galloping across the horizon might have planning permission for a recycling centre or sewage facility, or there might be a nearby church with a dodgy roof that you have to contribute funds towards.

It is essential to arm yourself with as much information about the property and area as possible before committing to a purchase. Searches are your “due diligence”. There’s a whole catalogue of searches that you can do, but if you are buying with a lender they will require certain ones as a minimum. We can instruct either third party providers or the local authority to carry out searches. Third parties are often cheaper but the lender may not accept their reports. You should discuss this with your conveyancer.

Property valuation and survey

We will go through the terms of your mortgage offer. Your lender needs a valuation done on the property because they need to know that there is enough security for the mortgage. Sometimes they can do this using valuation tools and resources they have in-house, but on other occasions a surveyor will attend the property. Sometimes you have to pay for it but sometimes it’s just part of your mortgage deal.

For a more granular report, you could instruct a surveyor registered with the Royal Institute of Chartered Surveyors (RICS). They will carry out a full structural survey of the property. Some lenders allow you to ‘upgrade’ their basic valuation to this. With this kind of survey, you will get reassurance that the house is sound, but it may reveal work needed on the property. You can use this to negotiate with the seller. Only about a fifth of purchasers obtain a full structural survey, but the cost of not doing the survey can be many times more than doing one.

Exchanging contracts

Once negotiations over the contract have been finalised, you and the and seller sign an identical copy of it. These contracts will be exchanged by the solicitors involved, making the contract legally binding. You will have negotiated a completion date which will be shortly after exchange. We’ll register an interest in the property at the Land Registry. Normally your deposit is transferred to the seller’s solicitor at this point. If you pull out after exchange, you lose this deposit and could be sued for breach of contract.

Completion

At completion, we will pay off the balance of your mortgage with the monies from your buyer, and will transfer the balance of your purchase funds to the seller’s solicitor. We will settle the Stamp Duty Land Tax due and register you with the Land Registry as the owner.


Sale process

If we are acting for you in a sale, we will provide you with our Terms of Business containing details of your solicitor and our charges. Once you receive a formal offer for your property you’ll need to complete various forms. These forms are necessary for you to provide information to the buyer about the property. The information you must provide is wide ranging: from documenting neighbours from hell to detailing fixtures and fittings to identifying where the keys will be available for collection upon completion. You must complete the forms truthfully; if you mislead the buyer, they could sue you.

We will draw up the draft contract and send it along with the completed information forms to the buyer’s solicitor, who will raise queries on it. The completion date and any fixtures and fittings details can be agreed. Negotiations relating to the buyer’s survey can be resolved.

Exchanging contracts

Once everyone is happy, contracts can be exchanged. This enters you into a legally binding agreement with the buyer. The buyer will transfer their deposit into our bank account. You will still own the property until the completion date.

Completion

On the completion date we will receive the balance of the money owed from the buyer’s solicitor. We will use this to pay off any lending on the property and to pay the estate agents. If you are also buying we will use the remaining funds towards that. If not, we will pay them out to you.


Buying and selling

If you are moving home, you are likely to be buying and selling property, which poses its own logistical challenges. A chain might be involved, for instance, with potential for delays.

Transaction chain

A chain is set of linked property transactions that all depend on each other in order for any of them to complete. For instance, if the seller of the property you are buying needs to find a new property of their own, they won’t complete on a sale to you until they have made these arrangements. Similarly, your buyer may need to find a buyer for their own property before they can buy yours.

These chains can go on and on and if any of the transactions in the chain fall through, often none of the transactions can complete. Your property solicitor will negotiate with you and your buyer or seller’s solicitors in order to come to a completion date that is agreeable for everyone.

Do I actually need a solicitor?

Lenders will not deal with individuals, so if there is a mortgage you must instruct a solicitor.