You’ve just had an offer accepted on your first home. You are understandably very excited but possibly rather confused about the process. Here we will explain just what happens from you making the offer, to moving in.
You’ve probably heard the expression “conveyancing”, but may not fully understand what it is. Simply put, conveyancing is the transfer of ownership of property. It’s the legal work that happens before you can collect your keys.
If there is no mortgage involved, in theory anybody can carry out their own conveyancing, but in practice since most of us are not sufficiently well versed with procedures, it is usually left to either a solicitor or a conveyancer. Throughout this article, we’ll assume you are using a solicitor.
Memorandum of sale.
Once you have appointed a solicitor and made your mortgage application, the estate agent will send out a “memorandum of sale” to you, the seller and both solicitors. This is a simple document which advises all parties of the identity and contact details of the other parties. It contains the price which has been offered, together with details of anything that might be included in the sale and any other special conditions. This enables the process to start.
Upon receipt of the memorandum of sale, your solicitor will write to the seller’s solicitor and ask for a draft contract and a copy of the property’s “Title”.
The contract for sale is exactly what the name suggests and details the property, the names of the parties involved, the purchase price together with anything else listed in the memorandum of sale.
The Title is a document nowadays registered with The Land Registry which identifies the exact location of the property, any land which is included with the property and details of boundaries, hedges, fences etc.
It also registers any “charges” which may exist on the property. For example, if there is a mortgage, this is noted on the Title.
In the case of properties which have not been sold since 1990, a Title won’t necessarily have been registered with the Land Registry and there will be a slight delay in proceedings whilst it is registered. This isn’t anything to be terribly concerned about. Just bear in mind there may be a delay caused by this, although this can take place at the same time as the other legal work is being carried out.
The seller will complete property information and fixtures and fittings forms which list exactly what is included and what is specifically excluded from the sale. For example, a shed might be removed, but the washing machine and curtains are staying. These forms go into extraordinary detail, so that there is no room for misinterpretation.
In the case of a leasehold property, questions are asked concerning the lease, insurance, ground-rent, management of the development, etc.
These are then sent to your solicitor, so that he may ensure that relevant information may be written into the contract where appropriate and verified where necessary.
The seller’s solicitor will also provide a variety of other documentation, dependent upon circumstances. For example, details of any new double-glazing, extensions, boiler changes etc.
The questionnaire might raise questions and these are clarified through a series of “enquiries” made by your solicitor and sent to the seller’s solicitor for clarification by the seller.
The nature of these enquiries will depend upon the information and documents provided by the seller. For example, if the seller has stated that new double-glazing has been fitted, then he will need to provide a “Fensa” certificate which demonstrates that the windows have been fitted to comply with building regulations, that they have been registered with the local authority and that suitably energy efficient materials have been used. If such certification has not been forthcoming, then an enquiry will be raised concerning it.
There are similar requirements for electrical works, heating installation, extensions, loft-conversions, conservatories etc.
It is at this stage that any boundary confusion might be highlighted. It’s obviously in your interests to establish that the fences and hedges are in the right places and that the garden you are expecting to buy legally forms part of the property.
Your solicitor will also conduct a series of “searches”. These are carried out to discover things which you won’t be able to determine from a viewing and things of which even the seller may be unaware. Some will be conducted for all transactions and some in accordance with your building society’s wishes.
Local authority searches.
A search of the local land charges register will uncover whether or not the property is a listed building or in a conservation area, which may affect your ability to extend, alter windows, redecorate externally etc.
It will also inform you about any smoke control zones, which might affect your ability to use solid fuel or have bonfires etc.
It will also let you know if any of the trees within the garden are the subject of a tree preservation order (TPO) This might affect your ability to trim or remove trees for improving a garden or extending the property.
A separate local search will identify whether the property is subject to a compulsory purchase order or a proposed TPO. It will highlight proposed road developments and a variety of other issues which might affect your desire to continue with a purchase.
Other local authority searches are possibly made, depending upon circumstances, and would highlight issues such as public footpaths, common land, noise abatement notices, proposed developments in the area etc.
A formal check of the property’s Title will take place. This ensures that the person offering the property for sale is indeed the legal owner and entitled to sell it to you.
This may or may not form part of an environmental search and details may also be obtained from Land Registry. However the risk is assessed, it’s an important search.
Water Authority Search.
This establishes how water is delivered and how waste water is removed. It also details waste pipes from other properties which run across a property and which might affect your ability to extend or develop in future.
Chancel Repair search.
As a result of archaic liabilities, some properties have onerous responsibilities to a local church for its repair. And these churches aren’t necessarily adjacent the property, or indeed even nearby. There have been cases where this has come to light many years after a purchase has taken place and the importance of these searches cannot be over-emphasised. However, indemnity insurance is available at a modest premium and this shouldn’t cause any real concern.
These uncover things such as contaminated land, flooding predictions, Radon gas hazards, ground stability issues and similar related problems.
Are you buying with a mortgage?
Where you are relying upon a mortgage, your solicitor will run through the terms and conditions of the mortgage to ensure that you are fully aware of the terms and understand the risks associated with the loan. He will also have to make sure that the property meets your building society’s requirements.
A building society will need to have a valuation for mortgage purposes. In the event that you cannot continue to pay the mortgage, your lender is likely to seek repossession and sell the property to settle the loan and it will need to be certain that the property is worth sufficient to cover the loan and its expenses.
The building society valuation won’t be a full inspection of the property. You would be well advised to instruct a surveyor to conduct an inspection. Whilst this may well cost several hundred pounds, very often it will identify issues that can be used to negotiate a better purchase price. If your surveyor finds a problem, then it is likely that a future buyer’s survey will also highlight the same issue. It makes sense for a seller to rectify the problem or entertain some renegotiation under such circumstances.
Don’t go panicking if a survey comes back with issues. A surveyor will always make things sound worse than they are and very often by getting quotes from specialist builders the problems turn out to be easily dealt with. Your agent ought to be able to assist with this.
Your building society will insist on the property being insured from “exchange” of contract. (for exchange, see later)
Actually signing the contract doesn’t commit you or a seller to anything. It simply means that the respective solicitors are in a position to proceed when everything else has been organised. When signing the contracts you will need to ensure that all the details are correct and that you are happy with the search results.
It’s important also to establish the situation with regard to fixtures and fittings. Is that shed definitely going? Is the washing machine still being left?
Are the proposed dates on the contract those which you were expecting?
Is the price right? Does it reflect any negotiations that may have taken place following your survey?
You need to send a deposit to your solicitor. This is generally 10% of the purchase price. It may be that a lesser sum has been agreed, but you may still be legally responsible for 10% of the purchase price, in the event that you decide not to proceed with the transaction, following exchange of contracts. (see below)
Exchange of contracts.
Upon exchange of contracts, both parties are legally bound to the terms of the contract. A date is agreed when “completion” will take place. Completion date is the date when you can collect the keys and move in.
It is possible to exchange and complete on the same day, but generally a period of between a week and maybe a month is left between. This allows everyone time to make the necessary arrangements for moving.
No matter how many properties are in the “chain” all parties must all agree to go ahead at the same time. If this cannot happen for whatever reason, then exchange will not go ahead, unless someone “breaks the chain”. (see below)
Breaking a chain.
Sometimes someone will make matters easier for the rest of the chain by offering to break the chain. In order to do this, he must be able to proceed with part of the chain without everyone else doing so. For example, he might be in a position to complete on his sale and move in with family or rent a property for a period of time. Or, he might be able to buy a property without first having sold his own.
Between exchange and completion.
Your solicitor will register your interest in the property and the property deeds are frozen for 30 working days to allow you to settle with the seller (payments will be made by the solicitors) and for your solicitor to lodge an application with Land Registry to transfer the deeds into your name.
Usually at mid-day, although not always, the solicitor’s confirm that funds have been received and you can collect keys and move in.
Your solicitor pays Stamp Duty Land Tax on your behalf.
Your building society will be sent a copy of the title deeds.
If you have purchased a leasehold property, the freeholder will be informed.
You will receive copy documentation as appropriate and your solicitor’s account.
We know of someone recently who sold his house without having bought somewhere into which he could move. Two weeks later, he found a vacant property and made an offer which was accepted. He completed the purchase just 9 days later.
This was quite an extreme example and you shouldn’t expect this sort of speed. Generally speaking, with other properties in the chain, expect to take around 12 weeks from your offer being accepted, to the sale completing.
The number of properties in the chain, the complexity of the deal, the age of the properties involved, the condition of the properties and the time of year all play their part in varying this time-scale. Your agent may be able to give you some sort of indication, once he has checked out the chain.
There are issues such as extending the length of a lease which may hold matters up, but your agent will be able to clarify matters where there is something slightly unusual involved.
These can vary depending upon a number of factors.
Are you using a “bucket-shop” online conveyancing company? If you are, you may expect to pay less, but you are likely to get a service which reflects this. Online agents often recommend these companies.
You would be well advised to use a solicitor or conveyancer who has been recommended. An agent may well know of a solicitor who is relatively quiet at the moment. Similarly, your agent may well be able to let you know if a particular solicitor, whilst good, is particularly busy and may result in a slower transaction. This may well be slightly more expensive than the online solution, but more buyers regret using a cheap solicitor than regret using a local, more expensive alternative. And a local solicitor is far more likely to be familiar with local issues which might take a remote solicitor longer to deal with.
Are you having a survey carried out? And if so, are you having a home-buyer’s report or a full structural survey? If you are buying a relatively new property with an NHBC guarantee (or equivalent) in place, then you are less likely to want a full structural survey than if you are buying a 16th century cottage.
A home-buyer’s report may be a matter of a few hundred pounds, whereas a full structural survey can be well over a thousand.
You can walk into any building society or bank and make an appointment to discuss a mortgage. Most of these institutions will offer a relatively limited range of solutions based upon their own products.
Very many buyers elect to make an appointment with an independent mortgage advisor. These advisors will usually charge a fee varying from less than £300 to as much as £1000. There are, however, a number of advisors who offer their advice free of charge, receiving their fee from the lender instead.
As stated earlier, a building society will insist on a property being insured from exchange of contracts. Some may encourage you to insure the buildings with them. In the case of a leasehold property, the building will be insured already through the management company.
Life insurance will be offered by your provider or your advisor. In the event that you or another person responsible for the mortgage payments were to die, then how would future payments be made? Life insurance is designed to pay out in the event of death and is normally designed so that the loan may be repaid in full.
Income protection and critical illness cover may also be offered to you. Whether you decide to arrange this will depend upon your own circumstances.
Contents insurance is often but not always arranged with buildings cover. This isn’t generally too expensive, but needs to be factored in.
As a first time buyer, you may not be using a removal firm to assist in transporting your furniture and belongings.
They are, however, often worth considering. The cost will depend upon the distances involved from where your belongings are currently to the new home, the quantity of belongings and furniture and the complexity of their involvement.
Do you want them to box everything up for you and hang all your clothes back up when you arrive, or do you intend to borrow boxes from them, pack it all up yourself and simply get them to move the boxes and furniture for you?
There are occasions when removal firms are busy and if you are intending to use one, you would be well advised to speak with them early in the process to establish prices and, more importantly, their availability.
Do you currently rent a property?
It’s possible for you to be so wrapped up in the excitement of buying a home that you have possibly overlooked your current tenancy obligations. It’s worth clarifying things sooner rather than later.
Dig out the tenancy agreement and take a look at the “Term”. You may not be able to leave before the expiry of the fixed term without negotiating with your landlord. You may have a break clause which will enable you to do so, but you really need to be certain of your circumstances.
If you are out of your fixed term, then you will probably need to give your landlord a minimum of 1 month’s notice, probably to expire the day before your rent is due. It may well be that you need to give more than 1 month. Your letting agent will be able to advise you.
Best practice would be to liaise with your landlord or agent and explain the situation. Offer to be flexible when it comes to viewings for a new tenant and try and be as reasonable as you can.
It may be that you will need to be in a position to pay both rent and the mortgage for a limited period. Make sure that you are able to afford this, since failing to pay rent will cause you problems and not paying your mortgage on time will not go down well with your building society.
Make sure that the agent handling your purchase is also aware. You won’t be disadvantaged by this, since the fact that you aren’t selling another property puts you in quite a strong position. Everyone will need to know, however, so that any notice period may be taken into account when planning exchange and completion dates.
The best agents have a dedicated sales progression team.
Their job is to keep in touch with all parties on a regular basis and to chivvy things along. It might be that the seller doesn’t fully appreciate the need to complete the property questionnaire fully and quickly and a reminder might be necessary. His solicitor has other matters with which to deal and is under no pressure to hurry this along.
Once the solicitors have the information, it might be that they need reminding and they might need encouragement to deal with matters in a timely manner. They will be dealing with many transactions other than yours and it is often those who shout loudest and most often who are dealt with most quickly.
The surveyor needs to have an appointment put in his diary and arrangements might have to be made for access to the property. It may well be that he needs to visit an agent’s offices to collect keys. Someone needs to control all of this.
If an agent doesn’t have a sales progressing system, then a sale might fall apart at almost any time for virtually any reason. It can be a stressful time for all parties and sometimes a buyer or seller will simply snap and pull-out. This is often as a result of what is perceived to be a lack of communication or support and concern by someone involved in the process. A sales progressor helps by making sure that there is adequate feedback and information about everything that is going on.
Sometimes a surveyor will state that a sum of money needs to be spent on the property. Maybe it’s a flat roof with a problem, a missing damp-proof course or something similar. Instead of allowing the deal to fall apart, the sales progressor will speak with you and the seller, establish the likely costs and come to some sort of agreement. Maybe the seller agrees to the cost being deducted. Maybe they share the costs with you.
Sometimes a property is “down-valued” at the point of the mortgage valuation. You might have agreed to pay a certain amount for a property, but your building society’s valuer has decided that it isn’t worth that much. It may be that the progressor is able to demonstrate that the property is indeed worth that much, by providing proof of comparable sales. Or it may be that the progressor is able to negotiate a reduction in price. Or it may be a combination of things; the price may come down slightly, but you might agree to paying a slightly higher sum in cash to keep the dream home purchase a reality. Whatever the eventual outcome, the progressor is there to try and keep the deal together.
Find out who will be dealing with this for you and make sure that you’ve provided all your contact details, so that they can contact you as easily as possible to keep you informed. Take their calls, return their emails and respond to requests as quickly and as fully as you can.
If there is anything that isn’t covered here or something has raised another question in your mind, please pick up the phone and call us today on 01256 811220 for free, impartial and sensible advice.