The Guide to Conveyancing

You will have made or received an offer, and secured a mortgage in principle from your bank or building society. They will all say that from now on the going is easy and just takes a few weeks while the ?lawyers? tie up loose ends. It may not be that simple. This booklet aims to explain the work your conveyancer will be doing for you and help you phrase your questions and ask them at the appropriate time.

The Two Stages

There are two stages to any conveyancing transaction:

• Exchange of contracts;
• Completion.

Why?

Before the invention of telephones, clerks would be sent off, after the parties had agreed to buy and sell (exchange of contracts ), to investigate title to the property by examining documents and making sure that the Duke of Rutland really had bought from the Earl of Milton Keynes 15 years earlier. Traveling by hansom cab they needed at least a month to ensure that the deeds were all in order. Only then could the next stage (completion ) take place.

Why does it take so long?

The two-stage process is retained because it separates the uncertainty which always exists before both sides are committed to a contract from the practical matters of handing over the money and physically moving house. In this way as few costs as possible are incurred before exchange of contracts.

Registered and Unregistered Land

Where land is ?unregistered,? only the seller (if there is no mortgage-otherwise your Bank/Building Society) will hold the deeds. Each time the land is sold, ownership must be confirmed by studying all documents affecting the land for at least the past 15 years. It may be necessary to check back through deeds for a much longer time. This can be a complex and time-consuming task involving considerable knowledge of property law. It may therefore involve extra cost, but your conveyancer should alert you to this early on. It is increasingly rare nowadays to come across unregistered property and usually when it is encountered it must be converted into a ?registered? title immediately after completion. On a first registration of the title the Land Register investigates and records the details of a person?s title to land on a Register of the title. This Register will also include a note of all rights, or claim to rights, held by other people. After a title has been registered subsequent buyers need only refer to the Register to check it (i.e. there will be no laborious checking of title deeds). The once and for all registration of a title also carries state guarantee that the Register is correct, backed up by a compensation scheme. With unregistered property a sale and purchase is called a ?conveyance,? whereas with registered land it is known as a ?transfer.?

Before you commit yourself

You cannot have a contract to buy land unless it is in writing or there is some written evidence of it. This rule gives the buyer time to make the necessary investigations and arrange finance before becoming legally committed and gives the seller time to find somewhere else to live. The phrase ?subject to contract,? is used to ensure that buyer and seller are not committed to a contract too early. It also, incidentally, enables ?gazumping? i.e. where the seller accepts an increased offer from another buyer.

Before committing yourself to a contract there are three main points to consider:

• Mortgage
• Survey
• Conveyancer?s report

1. Mortgage

You will receive a written offer of a mortgage which in theory the Bank/Building Society can later withdraw. Before accepting it you should make sure it allows you enough money and is not subject to any conditions that you are not able to satisfy. Banks/Building Societies may say they will withhold some or all of the money until specified works are completed, i.e. damp proofing, re-wiring, timber treating, etc. You must discuss any such retention with your conveyancer as soon as possible. It may be possible to sort the problem out before completion or could involve renegotiating the price or arranging a bridging loan until the specified works are finished. You must accept the mortgage offer (within the time limit-if any- given by the Bank/Building Society), by signing one copy and sending it back to them before they will instruct their conveyancers. Generally they will ask your conveyancer to act for them. It will cost more it two different conveyancers are used because there will be some duplication of work.

2. Survey

You will have seen the property most recently and your inspection of it is very important. If necessary, go back again and look out for anything out of the ordinary. In particular check:

1. Wiring: old round plugs and switches generally indicate that rewiring is needed;
2. Damp: look for blistering wallpaper just above the skirting boards; it could mean there is rising damp;
3. Wood: look at the window and door frames and with a thumbnail see how soft the wood is. If it gives they might need replacing;
4. Roof: have a good look from the outside. If it sags or there are several loose tiles you will need to know more;
5. Brickwork: flaking bricks are going to let in water more easily. Check for re pointing. Climbing ivy can be very attractive but also very destructive.

If any of these problems come to light you will definitely need a full structural survey. With older property you will sometimes also need to have a specialist firm inspect the walls and timbers for possible damp, woodworm, dry rot, etc.

3. Conveyancing Matters: Our job in a Nutshell

Things will probably happen in this order: Your conveyancer will:

1. Send for the draft contract and other papers from the seller?s conveyancers;
2. Make ?local searches? and enquiries;
3. Make preliminary enquiries regarding the property, and the draft papers sent back by the seller?s conveyancers;
4. Receive and study the seller?s replies to those enquiries;
5. Seek and obtain instructions from your Bank/Building Society;
6. Receive and study the results of the local searches and enquiries;
7. Make other searches and enquiries where appropriate;
8. Report back to you with the draft contract for you to sign;
9. Discuss your surveyor?s report with you if necessary;
10. Obtain the deposit from you;
11. Exchange contracts.

Searches, Inspections and Enquiries

Your conveyancer will send off an application for a search of the local land charges register and enquiries of the local authority. The local land charges will reveal obligations of a public nature which are enforceable against home owners, such as tree preservation orders, compulsory purchase orders, listed building orders, smoke control and noise level orders. The enquiries give the buyer a more general view of what is going on in the area including details of such matters as roads, drains, sewers, planning, etc. Your conveyancer will explain the result of the search to you. A local search usually takes about two to four weeks to come back. If necessary, however, it can be done quickly in person but this will be more expensive.

Other important details affecting the property may be known to a wide variety or organizations and your conveyancer will have to ask them relevant questions to make sure you u know as much as possible about the place you buy. These searches may include:

1. Commons and village greens, if the property is on or next to one;
2. Railway and Underground lines, if the property is close to one;
3. Subsidence: Coal Board or other mines if the property is in an area where there is or has been mining;
4. Water authority, if it is next to a river or lake or might be subject to flooding;
5. Electricity, Gas Boards, etc., if they have equipment on the land;
6. Public Index map, to see if the land is registrable at the Land Registry

Remember-your conveyancer is unlikely to see the property so make sure you mention anything odd or different as soon as possible. Common points to raise at this stage are listed below-if in doubt go back and have another look.

Other occupants. The Bank/Building Society will want to know whether there will be people living with you. By the same token you will have to make sure that anyone who has an interest in the house you have seen will leave before you buy it. You must get the names, therefore, of all grannies, friends, cohabitants, lodgers, etc.

• The shared driveway, alley, rear access. Who organizes and pays for its upkeep?
• The maintenance and costs of shared guttering, etc.
• Public rights of access over the land, or a neighbour?s right to use a path, etc.
• Boundaries. If they seem in poor condition find out who looks after them if possible because to clear this up now might save a lot of trouble later.

Draft Contract

It usually takes a week for the draft contract to arrive from the seller?s conveyancers. They will have prepared it from the seller?s title deeds if the land is unregistered, or from an official copy of the Register of the seller?s title obtained from the Land Registry, if the land is registered. The contract will be a ?draft? until both sides have agreed it. Copies of any restrictive convenants affecting the land will be sent with the draft contract. These are negative promises, such as not to sell intoxicating liquor on the land. A copy plan may also be included and may give details about the ownership of boundaries. If a ?T? mark appears on the inside of a boundary, that boundary is included in the property. Where the land is registered, all these details will be shown on the official copy of the Register and filed plan which the seller?s conveyancers send to the buyer?s conveyancers along with the draft contract. Land Registry filed plans show general boundaries only, unless they are noted as fixed boundaries. This means that the Land Registry plan cannot be used as evidence in court if there is a boundary dispute.

The draft contract will also state the agreed date for completion and set an interest rate payable in the event of delay. This will commonly be around 4 per cent. Above the base rate of a named high street bank.

Getting Ready for Exchange

Before exchanging contracts you should be satisfied with:

1. the replies to the local searches and preliminary enquiries;
2. your mortgage offer
3. your surveyor?s report;
4. your own inspection of the property;
5. the buildings insurance arrangements made for your new property probably by your Bank/Building Society.

Deposit

Normally 10 per cent. of the purchase price is required but the seller may agree to a smaller amount. It is helpful to raise this point as early as possible as it will have to be provided for in the contract.

If you are getting a high percentage mortgage make sure that bridging finance is arranged in good time to cover the time between exchange of contracts and completion. The mortgage money will only become available on completion.

A deposit guarantee scheme is now available in which your conveyancer buys a guarantee which is handed over to the seller. The buyer pays a premium which may in fact be less than the interest on an equivalent bank loan.

In some parts of the country the deposit is held by the seller?s conveyancers as ?stakeholders? until completion. This means that they cannot release the deposit to the seller without the buyer?s permission. Alternatively, the seller?s conveyancers can hold the deposit as ?agents? and can pay it over to the seller who in turn can use it to pay his deposit on another property.

Remember to tell your conveyancer how much of a deposit is held by the estate agents (if any) as this will be brought into account when contracts are exchanged.

Contract Races

For a number of reasons the seller of a property may decide to ?accept? two or more offers on the property and sell to whoever exchanges contract first with him. Most conveyancers dislike this practice because it will always be unfair to one of the buyers, causing them to lose the money spent on surveys, searches, etc.

The Law Society insist that solicitors acting for the seller in a contract race must tell the conveyancers of all prospective purchases that there is a race. If the seller will not allow their solicitor to disclose this the solicitor must refuse to act at all.

Between Exchange and Completion

The completion date is not finally agreed until just before exchange. It is usually four weeks after exchange but can be any date the buyer and seller agree on. It has to be a working day. Most people prefer a Friday to give them the week - end to sort things out but because of this the bank money transfer systems sometimes get overloaded and this can cause delays. Particularly difficult are the last working days before holidays and if you are able to, it would be sensible to choose a quiet day earlier in the week.

As a rule completion should be at least 10 days after exchange. In this time your conveyancer will:

1. investigate title;
2. raise ?requisitions? or further enquiries based on the investigation;
3. make a Land Charges search or official search;
4. report to the Bank/Building Society that the property is an adequate security for their needs;
5. finalise the amount required to pay off any existing loans (if you are selling);
6. make arrangements to ensure the new mortgage advance arrives on time.

Synchronisation; the inevitable chain

The first time or cash buyer will generally be at the end of a chain, every link representing a sale and purchase by each home owner in turn. The bottom link will generally only be able to move quickly if the rest of the chain permits. This can be very frustrating.

If you are selling and buying you aim to move out (and in) on the same day. Your conveyancer?s job is to achieve this and miraculously it is usually possible.

Completion

Your conveyancer will need you to finalise some documentation to enable completion to go ahead. You must:

1. sign the mortgage documents;
2. make sure a deed of release is signed by all the occupants of your home;
3. sign the conveyance/transfer.

1. book/confirm your removers-it may be necessary to give them a map with directions;
2. cancel and redirect your existing standing orders for the mortgage, general and water rates, t.v. rental, etc.
3. organise telephone, electricity and gas meters to be read and new supplies to be connected;
4. if you are getting an endowment mortgage make sure that the policy is put in force and send direct to your conveyancer;
5. cancel newspaper, milk and other deliveries;
6. send details of your change of address to everyone- bank, D.V.L.C., insurance companies, club memberships, doctor, health authority, credit cards.

Conveyancing Costs

1. Bank/Building Society?s valuation fee;
2. Your surveyor?s fee;
3. Bank arrangement fee for bridging loan or deposit guarantee premium;
4. Your conveyancer?s fees;
5. Mortgage arrangement fee;
6. Bank/Building Society?s conveyancer?s fee;
7. Stamp duty on your purchase (currently 1 per cent. Of cost of property costing more than ?60,000);
8. Land Registry fee;
9. Search fees;
10. Estate agents? commission (if you are selling);
11. Removal fees;
12. Connection charges for gas, telephone, electricity.

Completion Day

This is the day you can move in. If you are buying and selling you should try to be out of your old home by mid-day. Unfortunately there are frequently delays in the transfers of money especially if there are large numbers of transactions involved, so never count on doing anything by a particular time.

You will probably live much longer if the children, cats, dogs, etc. are left with friends. Make sure you have an easily accessible supply of electric plugs, fuses, light bulbs, and a torch. A tea-making kit is a must. If possible ask the sellers to explain in words of one syllable how the central heating works.

The Aftermath

Your conveyancer?s job does not end with completion. Your transfer deed or conveyance will need to be stamped by the Inland Revenue (and stamp duty paid), and the registration at the Land Registry dealt with. The Land Registry can take several months to complete their part. Once everything is checked your conveyancer will send all the deeds to your Bank/Building Society (if you have a mortgage), but to you personally or wherever you direct if there is no mortgage.