Legal Stages of Buying a House
A lot of first-time buyers or even those who have purchased homes before do not know the legal stages of buying a house, however, if you are aware of the legal steps to buying a house it is an easier procedure to follow. On this page, we have provided you with the whole legal process of buying a house so you can follow these steps in future when you are purchasing a new home.
So What Are The Basic Stages That A Solicitor Or Conveyancer Will Carry Out?
Step 1: Open the purchase file
Initially, they will open a file and send a letter out to you setting down its terms of business. Within the file, there will usually be an information form which asks for basic details such as your contact, date of birth and national insurance number. Also ID and proof of address too.
They will have normally have received a ‘Sales Memorandum’ from the state agents which will provide details of the property, the purchase or sales price and who the other parties solicitors are, as well as the name of the vendor/buyer.
At this point, we would expect the solicitors will have already provided you with an estimate of charges (see above). There is always the possibility that there could be unforeseen charges later in the transaction, for instance, leasehold related charges levied by the freeholder in respect of a flat, or mining searches if you are buying in an area with this history.
Step 2: Request fee for searches
Local Authority searches, which uncover potential issues such as public rights of way, compulsory purchase orders and enforcement notices for the property, can take a while to process. So, it’s best to hand the money for this to your solicitor now and get the ball rolling.
It is common for the firm to ask for £300 to £350 upfront to cover the cost of searches including drainage and environmental ones, in addition, the local authority searches.
You will also need to have signed and returned the firms ‘terms of engagement’ too.
Step 3: Contact the other parties’ conveyancer or solicitor
Your solicitor will then contact the seller’s (and/or buyer’s if you are selling too) solicitors to let them know they’ve been instructed to act for you with the purchase of the property.
Step 4: Receive all paperwork from the seller’s solicitor
As soon as the seller’s solicitor has drawn up the draft contract, they will send it, together with a copy of the Title (or ‘Deeds’) for the property, to your solicitor.
Providing the home has been sold at least once since 1990, the Deeds will be electronically recorded with the Land Registry and available online.
But if there have been no transactions since then, the property could be ‘unregistered’ which means ownership can only be proved with the original hard copy Title Deeds. These are usually held in Deeds storage by the bank that has/had the mortgage on the property, or by the seller themselves.
Along with the draft contract and Deeds, your solicitor will be sent:
Seller’s Property Information Form, in which the seller must disclose everything from neighbour disputes to when the boiler was last serviced.
Fittings and Contents Form, which outlines what will be left and removed from the property as part of the sale. You should make sure this includes anything agreed within the sale.
Leasehold Information Form. If the home you are buying is leasehold (usually a flat or apartment) this will set out factors such as the amount of ground rent payable and contact details for the freeholders and/or management company. You may also receive a copy of the lease too, this is usually a complicated document and should query any aspect you are unsure of, pay particular attention to the remaining term of the lease, ground rent charges and services charges (and if these can be increased int he future).
Step 5: Raise queries other checks
Your solicitor will raise any questions and queries they have with the seller’s solicitor (including any relating to rights of way, responsibilities for boundaries and lease aspects too if appropriate)
Additionally, it may include confirmation of guarantees for work previously carried out on the property, for instance, damp and timber guarantees or double glazing guarantees.
These enquiries can take a while with too’ing and fro-ing between the different parties.
Delays in the conveyancing process can be as a result of:
Management companies or managing agents being slow in returning information on leasehold properties.
Delays from third parties in providing answers to outstanding enquiries and providing necessary documentation.
Local Authorities taking too long to return searches.
Poor communication within the chain or one party not instructing their solicitor in a timely manner (or arranging finance promptly if necessary)
Step 6: Send paperwork to you to sign
When the solicitor has answers to the enquiries (and in fact sometimes before these are fully resolved) they will send you all the documents to sign and return. This could include mortgage deeds and contract papers. These will need to be physically signed and posted back to them.
Step 7: Request your initial deposit
Next, your solicitor will ask you for a deposit, this will usually by 10% of the purchase price (unless you are taking a 95% mortgage, in which case only 5% is due).
This payment would normally need to be made via Telegraphic or Chaps transfer (at a small charge) and will need to be made by you contacting your bank, this is because there is generally a £10,000 fund limit on normal online transfers imposed by banks.
The funds requested by the solicitor will normally be the deposit and also the balance of any fees and charges for them too, including Stamp Duty. They will prepare a ‘statement of account’ and send it to you to advise of the amount they need and by what date.
If the exchange date is not that close to completion it might be more appropriate to send just the deposit money to the solicitor, sending the balance at a later date. With most transactions, you will ‘exchange’ and ‘complete’ within a week of each other so it is easier to send all the money at the same time.
Step 8: Agreeing exchange and completion dates
Your solicitor will discuss with you a preferred date to move into your new home (known as completion). That date will then need to be agreed with the seller’s solicitor (and buyer’s solicitor if you are selling too) and those parties further along the chain.
Once a completion date is agreed, all the respective solicitors will then work towards that date and prior to this exchange contracts.
Step 9: Exchange
The sellers at the top of the chain will need to be the first to have their contract released and ready for exchange. The exchange will cascade down the chain and will be concluded within the timeframe set.
The deposit already paid to your solicitor will be transferred to the seller’s solicitor on the exchange of contracts and the date agreed for completion fixed in the contract.
This is the point at which the purchase becomes legally binding and if you back out after exchanging signed contracts, there are serious consequences. Not only will you lose the deposit, if you don’t complete on the legally agreed completion date stated in the contract, but you’ll also be in breach of contract and this means the seller could sue you for inconvenience and costs they’ve incurred as a result of this.
Step 10: Complete
If they haven’t already done so your solicitor will then send you the final completion statement. Any outstanding balance due to complete is now payable, again including any additional disbursements, stamp duty and the solicitors fees if not already paid.
Any money you’ve paid in advance, such as for searches, will be deducted from the balance due.
Your solicitor will request the mortgage monies from the bank or building society (or the balance in cash from yourselves if buying without one).
On the day of completion, your solicitor will send the balance along with any other amounts payable to the seller’s solicitors by same day Chaps transfer.
Once the funds have arrived with the seller’s solicitors, they will telephone to confirm completion and authorise the estate agents to release the keys to you.
Step 11: Register Change of Ownership
The solicitor’s job now includes dealing with the change of ownership of the property which will need to be logged with the Land Registry.
Once the Land Registry has completed the registration, you’ll be sent a copy of its Office Copies which is proof of your ownership (and Deeds where they exist) along with any guarantees for your new property.
If it’s leasehold, your solicitor will also notify the landlord or management company that the lease has been assigned to you. That way, they know who to send any service charges and ground rent bills to.
Step 12: recycle the packing boxes and relax!
Now its all over sit back and take a breath, reflect on what hopefully has been a stress-free transaction and enjoy your new home.
Please call or email us for advice or any assistance you want in arranging a firm to act for you in either sale, purchase or remortgage. If you require any guidance on the legal stages of buying a house, contact us today to speak to one of our mortgage advisors.
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