The home buying process is a long and arduous task at the best of times and perhaps the most complex part is the legal aspect. All the various searches, looking for Chancel Liability or areas of flood risk to discussions on flying freeholds and other complicated legal jargon are enough to give you sleepless nights. Luckily there is an area of the legal profession which specifically deals with these aspects for you: Conveyancing. In this article we will cover some of the main duties that a conveyancer will carry out for you and explain some of the terminology for you.
The first and perhaps most important step is to retain a good conveyancer. Make sure you ask prospective conveyancers some questions to help you to decide which one to work with. Online conveyancers can be cheaper but may not always be right for you and your circumstances so make sure you do your homework first.
It is a legal requirement that your conveyancer carries out anti-money laundering checks. This will include providing identification such as a passport or driving licence and proof of address. Your conveyancer will also need to confirm the source of funds for the purchase. This will be proof of your mortgage as well as proof of where the deposit funds come from.
Property Information Forms
One of the first things your conveyancer will ask you to do is fill out a property information form (TA6). This is a very detailed questionnaire relating to all aspects of the property from boundaries, to planning applications to details of new windows, extensions as well as things like neighbour disputes and council tax band. A more detailed list of what is included is given on the Co-Op legal services website. If you don’t understand any aspect of the form, then make sure you talk to your conveyancer for help. It is vitally important that this form is filled in correctly as it forms an integral part of the legal process. There will also be a fittings and contents form (TA10) in which you state what is included in the sale. These are the two main forms that are needed in almost every transaction but there are more depending on the complexities of the deal. The Law Society has a list of the Transaction (TA) forms that could be required. Make sure you talk to your conveyancer about all relevant forms.
Leasehold vs Freehold
This is a very important aspect in any property transaction as they are fundamentally different types of ownership and it could make the difference between you wanting to buy the property or not.
Freehold: This means you own the property and the land it stands on in your own right and you are responsible for the maintenance and upkeep of the building and the land.
Leasehold: This means that you have a lease from a freeholder to use the property for a number of years. You never actually own the property and typically have to pay fees to the freeholder such as maintenance fees and ground rent. The freeholder, however, is responsible for maintaining the structure of the property such as external walls and the roof. There is a specific information pack for Leaseholds (TA7) which explains the management details and the legal contract between the leaseholder and the freeholder.
The contract is essentially the agreement between the seller and the purchaser of a property. These are generated by the seller’s conveyancer and sent to the buyer’s conveyancer. The contracts themselves tend to be relatively standard and will cover things like the parties involved, sale price, deposit, completion date, property details and any fixtures and fittings which the buyer is paying extra for as part of the sale. Remember that once you have signed and exchanged the contracts you are legally bound to continue with the transaction or be subject to a financial penalty. You won’t necessarily exchange contracts once you have signed them. Typically, your conveyancer will ask you to keep the date blank when you sign. The contract is only legally binding once it has been exchanged. Up until that point you can pull out of the deal with no penalty other than having paid for certain activities like surveys and searches.
Based on the information the purchaser’s solicitor receives from the seller, they will start to make legal enquiries. This is simply gaining more information, clarification and supporting documentation about certain items in the documents supplied. This could be clarification and documentation regarding an extension. Essentially the purchaser’s conveyancer is ensuring that they have all the relevant details and documents to satisfy themselves that the property is mortgageable and sellable.
Local Authority Searches
There are generally two parts to a local authority search and these are LLC1 and CON29.
LLC1 will give you information like:
· If the property is a listed building
· If the property is in a local conservation area
· If the trees on the property are subject to a preservation order
· If you are in a smoke controlled area.
· Financial charges registered against the property
· Conditional planning permissions
The CON29 search is more about changes or potential problems to the property/land. Things like:
· Compulsory Purchase Orders.
· Proposed Tree Preservation Orders.
· Property planning history
· Informal notices under planning and highways laws not found on registers.
· Road and rail proposals or schemes as well as who maintains the road the property is on
· Proposed enforcement action or breach of conditions notices.
A local search is for the specific property only; it will not provide any information upon any nearby properties outside of its boundaries. If you have concerns about neighbouring property you can raise these separately with your conveyancer and they can advise what additional searches will be required. Some mortgage lenders require these additional searches such as noise abatement orders or pollution notices so please ensure you check carefully.
Water Drainage Search (CON29DW)
This is a search done with the local water company that is responsible for your property and asks for details about the drainage and water connections to the property. The solicitor looks at, for example, how close the sewers are and whether there is a pipe running through the property boundary, something that could have consequences if there is a problem in the future.
You’ll also get details of whether you have a public or private water supply and how this is normally billed.
This takes a closer look at any potential historic problems that may present themselves relating to your property. For example, if your house was built on old landfill, you will want to know because of potential contamination. If there is a potential for landslip or flooding, perhaps if you are close to a river or the coast (other areas are susceptible to flooding too), it could impact on your property at a later date and influence whether you can get your property insured for the risk.
Most properties only require the above three searches but, in some circumstances, your solicitor may advise additional ones. These can include:
· Commons registration: This applies if you are buying a property with common land or in a rural area.
· Mining search: If there is a history of mining in the area, this search looks at whether there are any restrictions in your land use.
· Land charges: This is undertaken if you are buying unregistered land and makes sure the owner is not the subject, for example, of a bankruptcy proceeding.
· Chancel repair liability: Some properties are liable for contributing to the repairs of the local church, particularly in rural areas.
When you are selling a house, the conveyancers need to decide on completion dates ahead of time and request the mortgage company to give them the currently owed amount on any mortgage. As this is done ahead of the completion, there will still be interest to pay and also maybe some payments will go out. The conveyancer will have to calculate the completion figure which is the amount the lender needs to satisfy the mortgage. Using this, the conveyancer will prepare a financial statement for the transaction for both parties. This will cover every relevant cost from mortgage redemption to solicitors’ fees to stamp duty and other disbursements. They will require you to pay all fees and disbursements before completion.
At this point both parties’ solicitors have a signed copy of the contracts, the seller’s solicitor also has a signed transfer of title deed document (TR1), the buyer’s solicitors is in possession of cleared deposit funds and a completion date is agreed. The solicitors will then verbally agree exchange of contracts and at this point the sale is legally binding.
Quite often these days, contract exchange and completion happen on the same day. Completion is when all the legal aspects have been signed off, all the financial matters have been completed, the conveyancers and estate agents have been paid, the mortgage lender has their money and the seller has any residual money from the transaction. At this point, the property belongs to the purchaser and the seller will have to have vacated the premises to allow empty possession. The ownership of the property is now transferred to the purchaser.
Once completion is done there are still a couple of things for your conveyancer to do: Register the purchase and mortgage with the land registry, send title deeds to the mortgage lender and any other relevant documents to the buyer.
Although the legal process is fairly complicated, using a good conveyancer will certainly take the sting out of this part of the transaction.