The Conveyancing Process
1. Introduction
This guide is intended to explain some of the terms used in conveyancing matters, the steps which are usually taken (and the reasons for taking them), and the factors which affect when such steps are to be taken.
This explanation cannot cover all the points, which might arise. We would be happy to discuss with you any other enquiries you may have.
2. What is "Conveyancing"?
Conveyancing is the word used to describe transferring ownership of land from one person to another, and the solicitors for the seller and buyer are each obliged to safeguard their client's interests.
Transferring the ownership of land is not like transferring the ownership of, say, a car. Land remains where it is forever, and in the course of time new rights and obligations may be created in relation to the land. Often such rights are not evident on an inspection of the property. For example, a neighbour may have the right to enter the property and dig up the drains in order to clear his drains. Also, the public as a whole may have a right over the land, for example a public footpath across the property. The local council might have acquired the right to compulsorily purchase the land, or the highway authority may be considering building a road that would affect the environment of the house you are thinking of buying.
There is also the question of whether the seller really owns the land, and whether he is free to sell it. If he has inherited the property, it may be that the correct steps have not yet been taken to transfer legal ownership to him.
The matters mentioned above are only a few of the "snags" which might arise, and it is the duty of your solicitor to discover if such snags exist and advise you about them.
3. What Happens in a Conveyancing Transaction?
There are three main stages and each is explained briefly. These stages are:-
i Pre Contract
The work carried out after the agreement is reached in principle to buy/sell, but before the seller and buyer are legally bound to proceed with the matter.
ii Between Contract and Completion
The stage between "exchange of contracts" (when the parties become contractually committed) and "completion" (when the money changes hands in return for the keys and transfer of ownership, this being the day the buyer is entitled to move in).
iii After Completion
After "completion", when the formal aspects of the transaction are completed. This involves sending documents to the Inland Revenue for the payment of stamp duty, and sending documents to the Land Registry for "registration of title".
4. Pre Contract
a. The Buyer
You have found the property you want and the seller has accepted your offer. We carry out "local searches" and "preliminary enquiries". We then summarise for you the information obtained about the property and advise you as to the meaning of the provisions in the draft sale contract. We also ensure that you do not commit yourself to the purchase by exchanging contracts before it is guaranteed that you have available all the money needed to pay for the property at "completion". We shall contact your lenders, and your buyer's solicitors (if you have a related sale). Once all these elements have come together we shall ask you to sign the contract and pay the agreed deposit to us, so that contracts can be exchanged.
b. The Seller
After you have found a buyer and agreed a sale price, we have to send a draft sale contract to the buyer's solicitors. To do this we have to obtain the Deeds of the property. It can be a good idea to instruct us as soon as you have decided to sell the property. The Building Societies usually make a charge (approximately £25 to £50) for producing the deeds for us, which is added to your mortgage account, which is paid when the mortgage is paid off. This is so we can obtain the Deeds and put together a package of the documents and information that will be required by the buyer's solicitors, so that no time is wasted once a buyer is found. We have to obtain the Deeds to check the nature of your ownership and the existence of any rights or burdens, which must be revealed to the buyer. We ask you to complete a "Fixtures Fittings and Contents" form and "Sellers Property Information" form. These forms contain simple questions about your property. When we have the Deeds, we shall prepare a draft contract and send it to the buyer's solicitors. The buyer's solicitors may send us "preliminary enquiries" so as to discover from your own knowledge of the property whether any possible disadvantages affect the property.
Once the buyer's solicitor is satisfied, he would approve the contract and we would ask you to sign the contract. Contracts would then be "exchanged" and the deposit received, and at that stage a date would be fixed for completion.
5. Between Contract and Completion
During this period the buyer's solicitors will check the title of the property and prepare the document to transfer ownership to the buyer. The mortgage is prepared and its effect is explained to the buyer before he signs it. An obligation to repay thousands of pounds at a rate of (perhaps) hundreds a month should not be entered into lightly. In some cases the "transfer" need only be signed by the seller. In other cases it must be signed by the buyer too, for example where there are joint buyers. We would advise you on this point. As the date for completion is approached, the financial details would be calculated and the buyer would be asked to provide the balance of the purchase price. At completion, the money is passed to the seller's solicitor in return for the Deeds and signed transfer document. At that point you would be entitled to occupy the house and to take possession of the keys.
6. After Completion
As seller's solicitors, we would account to you (the seller) for the balance of the sale price after paying off any mortgage, estate agents and ourselves. If we are acting for you as a buyer, more work has to be done. We send the transfer to the Inland Revenue for its details to be entered in their records and any necessary "stamp duty" to be paid. If the purchase price is over £60,000, stamp duty must be paid by the buyer at the current rate. This is a government tax and should not be confused with our fees. The Inland Revenue returns the document and we then deliver to the Land Registry the transfer with an application to register the title, and a cheque for the Land Registry fee. On the return of the title document we lodge the Deeds with the lenders. If there is no mortgage, we deal with the Deeds as you wish. We would be happy to look after them for you free of any charge.
Extra Information
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