Purchasing a Residential Property
Conveyancing is the technical name given to the legal processes and procedures which solicitors and conveyancers adopt to effect the transfer and mortgage of land and property and the creation and transfer of leases of land.
Although the processes can be complicated and time-consuming, it is our aim to provide you with a cost-effective and efficient service. and to report to you on various aspects of the transaction in plain English. Even the most “straightforward” transaction contains technical aspects, which require understanding, experience and consideration and therefore we have prepared further guidance notes for our clients.
The Proceeds of Crime Act 2002 and other Regulations dealing with money laundering require us to undertake various checking procedures in relation to identity and the sources and use of funds and assets involved in transactions.
The Conveyancing Quality Protocol
We are members of the Conveyancing Quality Scheme (CQS) and intend to follow the scheme Protocol unless you ask us not to. It is the intention of the Protocol to make the transaction work more speedily and be as transparent as possible. From time to time the Protocol requires information to be shared with others particularly in respect of timing and any delay; this is to assist in the efficient management of each transaction or chain of transactions. We need your consent to share information on progress with other firms involved in the transaction. This will not extend to any information you tell us you regard as private
Our experience suggests that it is helpful to draw attention at the beginning of the transaction to the following areas: –
The market is large and a wide variety of products and offers may appear attractive to you. Some will bind in other insurance products and you should evaluate all terms and conditions carefully. Many Banks and Building Societies involved in the mortgage market are not independent but linked or tied to Insurance Companies. At this stage, it is important for you to consider taking independent financial advice, which will take account of all your personal circumstances, before making any commitments
On exchange of contracts it is usual for a buyer to pay the sellers solicitors 10% of the purchase price (less any preliminary deposit paid to Estate Agents). The balance of the purchase monies is paid on the completion date. If the cash deposit is not available please let us know as soon as possible. We may be able to: –
- arrange with the seller’s solicitors that you pay a reduced deposit; or
- use all or part of the deposit being received on a related sale towards the deposit on your own purchase; or
- arrange bridging finance.
The funds must be paid to us in any of the following ways: –
- By transfer from your bank account into the Firm’s client account
- A Banker’s Draft
- By your cheque drawn on a Building Society Savings Account
- By your personal cheque
We cannot accept cash or payments from third parties.
All cheques/Banker’s Drafts must be made payable to this Firm. Please note that a personal cheque will take up to five working days for clearance, and a Building Society cheque or banker’s draft requires three working days clearance. If you wish to make a bank telegraphic transfer of funds, we will give you, on request, details of the Firm’s client account – but we will need funds to be credited to our account at least one day before completion.
Please note that if we are not placed in funds in good time, the completion of the transaction may be delayed and you may incur interest charges at penalty rates.
The Lender’s mortgage advance monies will be released to us direct either by cheque or by telegraphic transfer through the CHAPS or BACS banking systems.
Survey and Searches
The general law provides that for the buyer of a property, the maxim applied is “CAVEAT EMPTOR” or “BUYER BEWARE!”
- Generally, therefore, the seller will not give any warranty about the condition, fabric or structure of the property, nor will the seller be liable to you if there are defects in the property. The cost of remedying defects will be the buyer’s not the seller’s and we stress how important it is that you satisfy yourself as to the state and condition of the property you are buying. We advise in virtually every case that a private structural survey is carried out by a professionally qualified surveyor or other experts.
- Please ask your surveyor to contact us before the survey is carried out so that we can pass on any relevant information we may have, for example in relation to building works known to us or a lease.
It is also helpful to us to see the surveyor’s report as such reports often highlight points which arise from a critical inspection of the physical aspects of the property.
- If you obtain mortgage finance, the lender may arrange for the property to be inspected (normally after your status as a borrower has been approved). Generally, the purpose of the lender’s survey is only to establish that the property is adequate security for the amount of the proposed loan.
In many cases, the price at which the lender values the property for security purposes is less than the price agreed between buyer and seller.
Many lenders’ surveys call for the borrower to obtain specialist reports, the results of which either require approval by the lender and/or require the work recommended by specialists to be undertaken by the borrower before or after completion. The extent of works required may be so significant that the lender will not make an offer of mortgage, or possibly part of the mortgage advance will be retained until some or all of the work has been carried out to the lender’s satisfaction. The property will be re-inspected and all or part of the retention released.
You should be entitled to see a copy of the survey report prepared for the Lender, and you may then consider that a full structural survey is not required. We do urge you, however, to consider your decision carefully, taking into account the age, location and type of property you intend to purchase. Without the result of a full structural survey you may be in difficulty if you wish to renegotiate the price and, as stated earlier, once you have purchased the property and defects are then found, you will have little recourse to the seller and you may find problems arising when you want to sell. It is unlikely that the central heating system, drains or wiring will be tested in a simple survey, and you may need further advice about this.
There may be guarantees for work carried out to the property. We may be able to arrange for the transfer of the benefit of the guarantee to you by the seller. However, unless you instruct us to, we do not make any investigation into the nature of the guarantee, its effectiveness or otherwise, or the company or person who gave the guarantee, who may no longer be trading. Please raise this with your surveyor. Some companies charge a registration fee for updating their records.
In order to protect both you and your Lender, our policy is to check the bank account details of your seller’s conveyancer using Lawyer Checker at a cost of £10 plus VAT. This expense is part of our general expenses as indicated in our fee estimate. Unfortunately, criminals aren’t just stealing the identities of individuals, there are a number of cases where criminals are stealing the identity of legitimate legal firms in order to steal house purchase funds and we want to protect you from this threat. Lawyer Checker allows us to check the account number of the seller’s conveyancer’s firm against a database of previous conveyancing transactions. The results provided by the service will help us to better assess the risk associated with sending your money but provides no guarantee. Unless you specifically authorise us not to do this check, we will carry it out and include the cost in our bill.
The term “property searches” covers a number of different searches offered by Local Government, Government Agencies, Utilities and commercial organisations. The aim of any search is to provide you with information about any potential restrictions, benefits and conditions which may affect the property and ultimately your use and enjoyment of it. However, the searches we carry out are not exhaustive.
There are over 60 different searches available, although many are specialist searches which are relevant only to a small minority of properties. They cover everything from financial charges to environmental and flood information. We refer below to a selection of different searches which are typical for a property transaction.
Local Authority Search
As you would expect, local councils maintain a large amount of data relating to properties in their area and searches of the records provide fundamental information. However, a search made at the Local Authority reports only on matters relating to the subject property. It does not tell you anything about neighbouring properties or what may be proposed for adjoining land or land use policies. Each individual property requires an individual search. We, therefore, commission a ‘Plansearch’ report. (See below)
When a “charge” is created against a property or piece of land, it is recorded in the Council’s Local Land Charges Register. The register contains details of matters, which upon completion of a sale will be binding and enforceable against you, the new owner.
The register is divided into 12 parts and all “matters” on the Register are referred to as “charges”. Please note that the term “charge “ is generic and relates to non-financial as well as financial matters.
Some Local Land charge examples are:
Conservation Area and Tree Preservation Order – these orders help preserve the appearance of the general area but they may restrict an owner’s ability to carry out work without the specific permission of the local council. All trees within a Conservation Area are protected whether or not they are covered by a specific Tree Preservation Order – they cannot be lopped, topped, cut down or damaged without the consent of the Council.
Smoke Control Order – arising out of the fogs of the 1950’s, properties in Smoke Control Areas can only burn smokeless fuel and are affected by other restrictions. Most of London is covered by a Smoke Control Order.
Planning Permissions – you need planning permission from the Council for a variety of home improvement works. If a house has been extended or even has a conservatory, it is important to check that the relevant permissions, Building Regulation consents and Completion Certificates (where required) have been obtained.
Financial Charges – relates to work carried out on the property or land by the Local Authority or appointed/approved body. The Council may need to carry out works to make a property secure or for health and safety reasons e.g. in the case of a dangerous structure. In some instances, the Council is able to recover the money spent from the property owner. Prudent buyers will want to ensure that any outstanding financial charges are paid before they complete on the property. If these are not paid, the new owner takes over the debt. These charges do not cover “personal” debts such as non-payment of council tax.
Listed Building Notification – most buildings built before 1840 will be listed, but some more recent buildings may be listed by virtue of their “special value”. In effect, the listing means that they appear on a list of Historic Buildings held by English Heritage. It is unlawful for any person to carry out any works often internally and externally without the permission of the Council.
The scope of the search in relation to roads covers proposals for roads within a 200-metre radius. We also recommend you personally visit (or search on-line) the Planning Department of the Local Authority to enquire whether there are any Planning Applications pending/granted/refused in relation to surrounding properties, or whether there are any road or other transport proposals in the planning stage, details of which have yet to be made known generally.
- The search only relates to the individual property address searched against
- The search does not report on other neighbouring or adjoining properties
- The search does not report on speculative proposals that have not been formally commenced
- The search does not reveal other neighbourhood issues and is not a general report on the surrounding roads and area.
- that the information given on a search is valid only at the date of the certificate and gives no ongoing protection. In a long-running transaction, it may be necessary to make another search before the matter finally proceeds to an exchange of contracts. Most lenders insist that the Local Authority Search result is not more than 2/3 months old at the date of exchange or more than 6 months old at completion. In the case of new build property when the projected completion date is many months away, this may mean making 2 or 3 searches during the transaction.
We are sometimes asked to carry out a personal local authority search. There are a number of commercial organisations who offer to carry out a search of all publically held local authority records. Whilst those companies can inspect the local land charges registers, only a Council or Local Authority can legally issue and certify an Official Search Certificate. Please note that some lenders will not accept a personal search, or will also require search insurance, or have strict rules about who may carry out such a search.
- There is an additional cost of usually between £150-£250, plus VAT, and search insurance premium, if required, and
- Personal searchers are not usually given access to all the information, which would be revealed on a postal search. The result of a personal search may therefore be inaccurate or incomplete. In addition, Local Authorities will only accept liability for the result of the searches they produce and not for a personal search.
This search provides:
- details of applications made for planning permission for development and alterations over the last five years (which is the normal life span of most applications) relating to the subject property and close by and
- a summary of the Local Authority’s policies for future development and land use within a 500m radius of the property, and
- Floodplain information, using the Environment Agency’s assessment to identify whether the property or the surrounding area in within either a natural river floodplain or a coastal floodplain.
- Details of local amenities and other statistical information.
Many homeowners do not realise that in buying a new home, they also acquire a responsibility for the repair/maintenance of drainage pipe work that runs under, over, through or close to the property. This search is carried out to establish the whereabouts of the public drainage runs and therefore the point at which the homeowner’s responsibility ends.
The following brief guide is intended to be helpful but is not a statement of the current law: There are three main terms used to describe underground drainage pipes. The description will usually determine who is responsible for the repair and maintenance of the pipe in question.
A drain is a pipe that carries waste-water (foul or surface water) from only one property. Such a drain is the sole responsibility of the owner(s) of that property for its full length up to the point where the pipe connects to another pipe. At this point the drain becomes a sewer.
There are two types of sewer:
Private Sewer – a private sewer is any pipe which takes waste-water from more than one property, but which is not a public sewer. A private sewer is usually the joint responsibility of each of those properties that drain into it.
This responsibility continues up to the point where the private sewer (including the connection) joins a public sewer, after which the responsibility then changes to the Sewerage Undertaker. Please be aware that this may mean in practice that one property owner may be responsible for the repair and maintenance of drainage pipes that are beneath land owned by someone else, such as a neighbour or even the local authority. Unfortunately, it is often difficult to obtain accurate information from drainage plans showing drains and private sewer routes and we advise you to consult with your surveyor to establish the accurate position, which may be apparent from the position ‘on the ground’.
Public Sewer – a public sewer is a pipe that is the responsibility of the Sewerage Undertaker for the area. The waste-water from every property connected to mains drainage will eventually flow into a public sewer before reaching its final treatment point. Most public sewers run beneath the roadway and not private property.
There are increasing health concerns associated with living near or on landfill sites. There are over 250,000 landfill sites, which have been identified, and a further 400,000 past industrial sites that no longer exist and may have contaminated the ground. Some of these sites have already been built upon to provide new housing. The Local Authority Search will not necessarily reveal any registered landfill site or waste disposal dump in the area. It is unlikely to point out the risks of contaminated land, brownfield sites, toxic emissions, flooding, radon gas or radioactivity. For these reasons, we make a specialist environmental search. We will send you a copy of the search result so that you may take the appropriate specialist advice.
However, the report can only be authoritative and relied upon in respect of the registers which it searches. That may not include all available information or indeed all available records. Reports are available from a number of sources and we review from time to time the supplier of such reports. An environmental surveyor may also be needed to interpret the results of a search where a “referred” result is given. We are not experts in such matters and are not able to interpret the result of searches or advise upon appropriate action that you might take. Notwithstanding this, we believe that the search reports do contain a good deal of historic and other information which may well be of interest to you across a wide range of matters as distinct from those which may affect value, saleability or require action on your part as the owner of the property.
Land Registry Search
If the property is registered at the Land Registry, we will make a search of all the Registers to check that no adverse entries have arisen. The search result will expire after 21 days and may need to be renewed.
Unregistered Land Searches – Land Charges Register
Similar searches will be made. Again, these have an expiry date and may need to be renewed.
Every lender requires us to carry out a search for bankruptcy against the borrowers. If you have any reason to suspect that an action for bankruptcy has been or is about to be brought against you, you MUST tell us immediately. An entry against you in the register will prevent us from completing your purchase until or unless it is removed/resolved. There are many names, which are popular, e.g. John Smith, and a search may produce many entries against a name, none of which relate to you.
We are under an obligation to Lenders to fully investigate any entries revealed to ensure that none of the entries relate to you. If our search reveals entries, you will be asked to check all the entries and provide evidence that none of the entries relate to you.
If any of the entries do relate to you, you MUST tell us immediately. If we are unable to certify that none of the entries relate to you, we have to report this to your lender who as a consequence may withdraw their mortgage offer.
If, after completion, it does become apparent that one or more of the entries do relate to you, then your Lender will have both criminal and civil remedies against you. If you have at any time changed your name by Deed Poll or otherwise, you are required to let us know.
Coal and Tin/Clay/Brine Mining – past or current mining activity can affect property and in coal mining areas a mining search is essential. A house may have been built over or near to old coal mineshafts and opencast mining can have an environmental impact. The Coal Authority holds and maintains the national coal mining database and its Mining Reports Service provides a property specific service for any property in England, Wales and Scotland. A mining report enables you to determine whether a property has been subject to a coal mining related subsidence damage notice or claim since 1984. It also proves information on past, current and proposed underground coal mining activity along with details of any recorded old coal mineshafts and licences for future mining. Whilst coal mining may affect a property due to subsidence, owners of property damaged by coal mining may be entitled to remedies including repair and depreciation compensation payments under the 1991 Coal Mining Subsidence Act.
The Coal Authority also provides a Ground Stability Report and information about whether the property is at risk from natural subsidence hazards.
China Clay – this search will reveal whether the property is likely to be affected by clay deposits.
Limestone Mining – a limestone mining search will reveal whether the property is likely to be affected by subsidence
British Waterways – this search should be made if you are considering purchasing a property in close proximity to a river, stream, and canal and particularly of any of those mentioned pass through the property boundary. The results will reveal the riverbank ownership, drainage rights, fishing rights and licences – such as those relating to taking or diverting of water.
London Underground – they carry out railway searches for properties affected by existing and proposed Tube services or by proposed transit, tram and rail schemes. They can also provide advice is a property is affected by schemes for which Transport for London (TFL) is seeking compulsory purchase powers.
Williamson Tunnel – a series of “tunnels” located to the east of Liverpool City centre in an area known as Edge Hill.
Port of London Authority – regarding mooring licences relating to the Port of London and the River Thames.
The Highways Agency – this search will reveal if there are any trunk road/motorway proposals that could physically affect the property.
Chancel repair – this search will reveal whether a property is liable to pay a contribution towards the repairs of the local parish church. The rights of Church tithes date back to 1189 and they affect some 5200 pre-Reformation churches across England and Wales. A transitional order made under the Land Registration Act 2002 preserved the status of these repairs until 2013. After that time, the liability is only binding on successive owners or registered land if it has been protected by an entry in the Register kept by the Land Registry. Owners of unregistered land will not be protected as a register entry is not possible.
Common Land and Village Green – a Commons Registration search will reveal whether land adjoining or adjacent to the property being purchased is affected by any of the provisions of the Commons Registration Act. This may provide the owners with rights of access to their property and it may also mean that other third parties have access or other rights.
Under the Standard Conditions of Sale, the risk for insurance passes from seller to buyer on exchange of contracts or on completion depending on the terms of the sale contract. We shall advise you on this. The buildings insurance must be adequate to cover the fabric of the property and reinstatement costs. If you have a mortgage, the lender will normally arrange insurance, but you must check with the lender to satisfy yourself both as to the sum insured and the risks covered. You may wish to effect separate insurance from your lender.
We draw to your attention that standard buildings insurance policies have certain exclusions. The policy terms and conditions should be carefully examined so that you are fully aware of any limits to cover. You should note the Insurer could disclaim liability if you do not comply with the terms and conditions of the policy, or fail to give an accurate signed proposal with full disclosure on all relevant matters.
Please note that most Lenders have strict requirements on what is acceptable in the context of insurance policy terms and conditions, which they do not arrange. For example, the policy must:
- Be index-linked
- Cover at least the amount specified in the mortgage offer, or if the property is part of a larger property i.e. a flat, the total sum insured for the building must be not less than the total number of flats multiplied by the amount stated in the mortgage offer.
- Have an acceptable excess
- Cover these risks: fire, lightening, aircraft, explosion, earthquake, storm, flood, escape of water/oil, riot, malicious damage, theft/attempted theft, falling trees, branches and aerials, subsidence, heave, landslip, collision, accidental breakage of glass/sanitary ware/underground services.
- Cover Public Liability to third parties.
If there is a history of subsidence or exclusion for subsidence cover, this must be considered separately.
Contents – you will need to arrange separate cover for your personal belongings as well as fixtures fittings and furniture that come within a contents policy.
Empty property – please note that standard insurance provisions may not apply to unoccupied property or property that is left vacant beyond a given period.
If the property is leasehold the landlord may insure the property under a block policy. In this case, you may still have to arrange your own contents insurance.
We remind you that if you are not purchasing with the assistance of a mortgage you must arrange both buildings and contents insurance yourself.
If you intend to buy property jointly with one or more others, you need to know that there are various ways in which you can hold the property in combination with others. We explain the options for partnership and for spouses/civil partners and others in more detail in a separate note.
It is very important for you to tell us if any other person over the age of 17 years will be living with you, or will make a contribution to the purchase price or to the mortgage payments. We can advise you on the consequences of such contribution, and if required, record the legal position.
If you are purchasing with a mortgage, such a person is required, after receiving independent advice from a solicitor not associated with this firm, to sign a document, which consents to the mortgage, and enables the mortgage to proceed.
Planning – Alterations, Building Work and Extensions
The seller or previous owners may have carried out development by alterations or extensions to the property which required Local Authority planning permission and/or Building Regulation consent and these approvals may not have been obtained.
If you or your surveyor believe that work/change of use has occurred at the property, or you wish to use the property or any part of it for anything other than your own personal use and occupation, you must tell us so that we can investigate the planning position.
This is very important as even where works were carried out some years ago, it may be possible for the Local Authority to take action to require –
- the new building(s) to be taken down altered or supplemented by other work, and/or
- the property returned to a previous authorised use
We can provide you with copies of any planning permission and/or building regulation approval documentation received by us. You should review these with your Surveyor or take other advice to verify that the works carried out complies with the approvals granted.
We do not accept responsibility for the absence/incomplete/wrong implementation of any permissions or breaches of the terms of such approvals.
Council Tax Banding
Some improvements to the domestic property can increase the value above one threshold and move it into a higher Council Tax band. So that property owners were not dissuaded from improving their property, it was decided when Council Tax was introduced in 1993, that the council tax band on a dwelling would not be increased until there was a change of ownership of the property. It is therefore important that we are advised of any such improvements so that we may contact the local Council Tax Listing Officer to try and find out whether the listing will be reviewed after the sale or not. We will not be able to ascertain whether the review will change the banding. As there have been no general revaluations, the system is now vulnerable to changes.
Matters after Completion
The legal processes and procedures do not end on the day of completion. For a period of 9 months we deal with various matters relating primarily to Stamp Duty Land Tax and Land Registration. Examples of the types of non-routine items that can arise are: –
- Lender’s queries
- Land Registry requisitions
- Returned Insurance premiums
- Refunds of mortgage instalments and cancellation of direct debits.
- Invalidly signed documents
- Notice problems
- Inland Revenue Stamp Duty Land Tax returns and enquiries
- Lender delays in producing discharge documents
Therefore, we normally retain at completion a sum of between £200 and £300 to cover the cost of any work carried out on your behalf after our bill is rendered, and to pay any expenses. This item will be shown on our Cash Statement. The balance of this retention will be paid on clearance of our ledger account balance, once all matters are finalised. This usually occurs in two stages. The first after 4-6 weeks from completion when subject to completion for payment of Stamp duty land tax the land registration will usually be complete. The second period is after 9 months when the Revenue period for raising a formal inquiry in respect of Stamp duty land tax expires. Please note that if an inquiry arises or any additional stamp duty land tax is assessed this will involve you in additional costs and these matters are not covered by our estimates for the transaction or by our cash statement or final invoice.