TASSELLS SOLICITORS

GUIDE FOR PEOPLE BUYING AND SELLING PROPERTY

INTRODUCTION

We have prepared this as a general guide to conveyancing transactions. It concentrates on the steps which are involved in buying a property, but we hope that the explanations given of the various steps will also assist in understanding how any related sale will work.  We will, of course, give you specific advice as the transaction proceeds, and in particular a full Report on Contract will be provided before exchange of contracts on your purchase.

HOME INFORMATION PACKS (“HIPs”)

If the property has four or more bedrooms and was put on the market after 31 July 2007, or has three bedrooms and was put on the market after 9 September 2007, the seller should be providing a HIP.

Where a HIP is provided some of the information which follows needs to be modified. The rules about HIPs are not static, but at the moment all that is required to be produced is basic title information, an Energy Performance Certificate (“EPC”), a local authority search, and a water and drainage search. In may be that the HIP contains other optional information. Where there is a HIP, we will not be applying for a local search or a water and drainage search, and some of the other steps referred to below may be modified. The overall structure and the main features of importance in a conveyancing transaction are unaffected by the introduction of HIPs.

We will be advising you further about these matters as applicable.

THE PROPERTY

Physical Condition of the Property

The property is being sold to you in its current state of repair and structural condition. The Seller is not generally liable to you for defects so we must advise that you commission a full structural survey before exchange of contracts. The survey or valuation by your Lender (unless otherwise specifically stated) is for their benefit and to satisfy their valuation requirements. It may not detail matters which would affect your enjoyment or use of the property, or be as comprehensive as a full structural survey and you may not be able to rely on the accuracy of the Lender’s survey or valuation.

Title to the Property

We will, in due course, report to you on the title and assuming that the land is registered at H.M. Land Registry and is not an unregistered title we will send to you with our final report a copy of the registers of the title together with a plan of the property which indicates the extent, area and location of the property ‘on the ground’ and we shall ask that you sign a copy of the plan and return it to us as confirmation that you agree the area of the title to be purchased by you.

Please note, however, that except in cases where the title deeds make specific provision, the Land Registry documentation will not normally define whether a hedge, wall or ditch is included within the boundaries of a property. If you have a specific query about boundaries which is not dealt with in the Seller’s Property Information form, please let us know.

Local Authority Search

We will carry out a search relating to the property with the Local Authority. Please note that the search only provides protection up to the result date. There is no guarantee that other matters will not be registered by the Council between the result date of the search and completion. The type of entries commonly disclosed are:

whether the road on which the property fronts is a public highway maintainable at public expense;

If the property is located in a Conservation Area. This may result in more stringent criteria being adopted when planning applications are dealt with;

planning matters specifically relating to the property.

IMPORTANT

The search relates exclusively to the property you are buying and does not cover any other property or land. The replies from the Local Authority will not indicate development plans for any neighbouring property. If you have any concern about what may happen on neighbouring land you must tell us so that we can advise what steps can be taken to investigate further.

The Property Information Form completed by the Seller should disclose details of any notices received by the Seller from the local authority regarding applications affecting adjoining or surrounding property, but as the information not be reliable or forthcoming, we ask you to tell us about any other property where you would like to know the planning position or history.

Drainage Search

This search is made with the local Water Company and usually reveals the location of soakaways, surface water and foul drains and sewers and may indicate other matters recorded by the Water Company.

Environmental Search

Part llA of the Environmental Protection Act 1990 came into force in April 2000 and creates a potential liability for the homeowner if their property has been built on contaminated land.

We now carry out as a matter of course an Environmental Search for your protection and information. The present cost is £34.08 inclusive of V.A.T. for residential properties.  The Homecheck Professional Environmental Report helps identify known environmental risks which may affect the value of the property which you intend to buy.

Homecheck also offer Homecheck Land Insurance which provides up to £1 million cover against the legal costs of finding the original polluter and where they cannot be found, for the costs of the clean up. We can obtain a quotation to cover this although you may wish to take advantage of an inbuilt Environmental Search and Insurance for £72.20. All fees include VAT and Insurance Premium Tax at the current rate.

Other Searches

In addition to the Local Authority Search, in appropriate cases, we will carry out the following searches before completion:

Land Registry Search (registered land). We carry out this search following exchange of contracts and prior to completion. This effectively protects the position as far as registration of your purchase/mortgage is concerned as no further entries can appear on the search or be lodged against the title as the search gives you protection to allow the registration to be concluded.

Bankruptcy Search. 

This search is carried out against your full names to protect your lender. If the search reveals any entries against either your full name or even your surname only then it is necessary for you to certify that an entry does not relate to you. Where the entry is revealed against your full names it is necessary for you to swear a statutory declaration in the presence of an independent solicitor and the cost of the preparation of the Statutory Declaration is £30.00 plus V.A.T and you will also be responsible for the oath fees payable to the independent solicitor which should not exceed £5.00

Map Index Search (unregistered land).

This search confirms whether any part of the property is unregistered and whether any person has registered a Caution Against First Registration. Such a caution, which is very rare, would prevent us from perfecting the title and we would require that your sellers solicitors arrange it’s removal before completion.

Land Charges Search (unregistered land). 

This search reveals whether there are any restrictive covenants or other adverse matters registered against the current or previous owners of the property.

Company Search – buying from a Company. 

It is important to establish that the Company concerned is fully operational and has not gone into Receivership or failed to comply with their obligations such as lodging their relevant accounts with the Company Registry.

Commons Registration Search 

This is a search to establish whether part of the property has been registered as Common Land and to ensure also that no part of the access to the property is registered as Common Land.

Mining Search

This is a search to establish if there are any coal workings, old or current near the property if it is in a mining area. Similar searches can be made in relation to Tin and Clay.

RIGHTS AFFECTING THE PROPERTY

Once we have had an opportunity of perusing the title we will let you know what rights are expressly granted for the benefit of the property or another property or piece of land in someone else’s possession and also whether there are any rights which benefit the property.

COVENANTS AND OTHER MATTERS AFFECTING THE PROPERTY

‘Covenant’ is a technical word which means a promise to do or not to do something. Prior to 1948 there was no planning legislation and it was quite usual on the sale of land for the seller to impose covenants on the first buyer and their successors in title relating to the use and occupation of the property. This type of covenant is and continues to be common in sales by developers. We will draw your attention in our final report to any covenants which affect the property which you intend to buy and any relevant entries on the Registers of the title.

THE CONTRACT

The contract for purchase will be sent to you with the final report and we just, at this stage, draw your attention to the following points:

Completion date

You will see that this is left blank in the contract. The date for completion will be inserted on exchange of contracts and becomes legally binding on all parties concerned. Whilst we will note any requirements you may have for a completion date it is important to note that there can be many parties in a chain and it is appropriate to address the question of the completion date at the appropriate time. That is to say, as and when results of searches are to hand together with your formal mortgage offer (if applicable) and your sale transaction (if applicable) has reached the same stage, discussions can then take place between all the parties to establish the required completion date suitable for all parties concerned. Please note that expedition fees will apply if the period of time between exchange and completion is less than ten working days. Building Societies and Banks require a minimum number of days between exchange and completion to allow them sufficient time to turnaround your mortgage funds after receiving the Report on Title from us. If your mortgage funds do not arrive in time you would effectively be in breach of contract and be unable to complete on the due date.

Purchase Price and Deposit

If you re-negotiate the price whilst the transaction is in progress it is important that you advise us immediately. It is not sufficient to merely inform the agent and the appropriate alteration must be made to the contract and all legal advisers made aware of the change. Clearly any re-negotiation of the price would affect any mortgage offer issued and you should and we will be required to inform the Lender immediately. As far as the deposit is concerned where you are selling a property we will utilise the incoming deposit on your sale in connection with your purchase. This deposit is usually acceptable to a seller and their solicitors although, in some cases where the deposit is less than 10 per cent of the purchase price the seller or their solicitors may require that you provide the balance from your own resources and these funds must be made available on exchange of contracts.

Under the Standard Conditions of Sale which governs the conditions of the contract all parties are entitled to utilise the incoming deposit provided the sale parties are the same as the purchase parties on the new property being purchased. Where a sole person sells a property and that person and another purchase jointly specific agreement has to be reached with the buyer’s solicitors. It should be noted that notwithstanding the fact that usually less than a ten per cent deposit is paid you remain fully liable for the full ten per cent of the purchase price in the case of default.

Contractual Time for Completion

Generally speaking the purchase must be completed by 2.30 on the completion date. This means that the purchase money must be received by the Seller’s solicitor’s bank by that time and then the Seller must give you vacant possession of the property on completion. In some cases the completion time is re-set for 1 p.m.

Contract Rate of Interest – Late Completion

The rate of interest is set out in the Contract. For every day that you are late in completing you will have to pay, in addition to the price a daily rate of interest at the annual rate specified in the contract. As a guideline assuming an unpaid balance of £100,000 and interest at 10%, if a full 10% deposit has been paid you would pay approximately £27.00 per day. In addition the Seller can also claim damages for breach of contract, including any loss directly arising e.g. hotel accommodation or wasted/increased removal expenses.

Notice to Complete

If you do not complete on the contractual completion date, the Seller may serve on you a document called a Notice to Complete.  This notice requires you to complete within a further ten working days. If you do not complete within that further period the Seller may keep the deposit and re-sell the property to another party and claim damages from you.

Remedies for Breach of Contract

These are dealt with in the Standard Conditions of Sale which are used nationally. In particular if there has been any material error in replies to enquiries you may be entitled to claim damages from the Seller. You may only be entitled to revoke (withdraw from) the contract where the error results from fraud or recklessness or where the property differs substantially in some material respect from your expectations.

If the Sellers fails to complete on the contractual completion date you may serve a Notice to Complete on the Seller. If the Seller then fails to complete within the time scale specified in the Notice you may revoke the Contract and require your deposit to be repaid with interest. You may also have a right to claim damages against the Seller to compensate you for other losses and unavoidable expenses.

Please note that litigation is a costly route to resolve completion disputes and claims for relatively small amounts of money. We endeavour to ensure that all arrangements are in place which reduce the likelihood of delays and disputes arising on or following completion.

YOUR MORTGAGE

You must satisfy yourself that the mortgage package as issued to you is acceptable to you. Your mortgage adviser will advise you direct of the various packages which are available and those which are best suited to you.

It is not our function to advise on the type of mortgage you obtain. We would just say that certain mortgages carry penalties for early repayment and you should establish these levels direct with your mortgage adviser. This is particularly important where you are redeeming an existing mortgage where penalties apply as these will be required to be paid on completion. We are obliged to repay any existing mortgage on the figures as supplied to us by your present lender (where applicable) and as the period between exchange and completion can be fairly short it is difficult to obtain the confirmation of the lender in the time available to us for the removal of the penalty costs. You could therefore find that you have a shortfall on completion and be required at the last minute to obtain funds from your own resources in order to complete. Any penalty which is paid which should have been waived by the lender (where you are possibly taking a new mortgage with the same lender) would then be reimbursed to you direct following completion.

BUILDINGS INSURANCE

Where you are arranging your own Building Insurance then it is appropriate for you to obtain an offer of insurance direct from your own insurance company, which insurance must comply with the requirements of the lender and if appropriate you should let the insurance company have details of the Lender’s requirements.

The Buildings insurance is at your risk from the date of exchange of contracts and the policy must go into effect as at that date. We are required in numerous cases to refer details of the Buildings Insurance to the Lender prior to the funds being released and you should therefore ask your insurers to fact details of the insurance to us prior to exchange of contracts. Failure to arrange the insurance would delay exchange of contracts.

PURCHASING FROM EXECUTORS AND MORTGAGEES IN POSSESSION

Where you are purchasing from Executors or Mortgagees in Possession you will not be able to rely on replies given to the Property Information Form. In the case of Executors they will possibly never have lived at the property which you intend to purchase as this clearly would have been occupied by the deceased owner and in the case of Mortgagees in Possession a Building Society or Bank would have taken possession of the property under a Court Order and will be selling on the property in order to redeem the defaulting borrower’s mortgage. Neither of these parties will have much knowledge of the property which you intend to buy and you must therefore rely on your own inspection, survey, search and independent enquiry where appropriate.

FIXTURES FITTINGS AND CONTENTS LIST

A fixtures, fittings and contents list will be referred to you in the early stages of the transaction. You should check that all items which you expect to remain at the property are listed thereon and if you have any queries you should notify us straightaway.  The fixtures, fittings and contents list will be finally attached to the contract and form part of it. If you decide to purchase any items separately it would be appropriate for you to let us know in order the any additional amounts to be paid are referred to in the contract and an amount inserted for Chattels in the contract.

IDENTIFICATION PROCEDURES

We are required by all Lenders to adhere to their requirements on identification procedures. You will be required to produce certain original documents at the outset of the transaction and we will send to you a separate questionnaire for you to complete and return to us with all relevant documents. It is usual to produce either a passport, driving licence, birth or marriage certificate, utility bill, or a combination of one or more of these documents.

We trust that these notes have been of interest and use to you. We will, of course, report to you on the purchase in due course.