We have provided this Guide in the hope that it may explain some of the terms used in conveyancing, the steps which are usually taken (and the reasons for them), and the factors which dictate when these steps are to be taken.
A short written explanation like this cannot cover all the points which may arise. Please discuss any worries you have with a member of our team.
Conveyancing – what is it?
Transferring the ownership of land is not like transferring the ownership of, say, a piece of furniture or a car. Land is always there, and in the course of time many rights and obligations may be created in relation to it. They are often not evident on an inspection of the property.
For example, someone may have a right to occupy part of it, but not be there when you call; a neighbour may have a right to enter the property and dig up the drains in order to inspect or clean his drain.
The public, too, may have claims – perhaps there is a public footpath across the property; the council could have rights in respect of, for example, compulsory acquisition or unpaid charges for making up the road.
The planning authority, or the highway authority, are perhaps considering schemes which would affect the environment of the house you are thinking of buying.
Then there is the question: Does the seller really own it and, if so, is he free to sell it? If he inherited the property, were the correct steps taken to transfer legal ownership to him, or is it still outstanding in someone else’s hands?
These are only a few of the snags which arise and which it is your solicitor’s duty to discover, if they exist, and advise you about. Conveyancing is the name given to the process of transferring ownership of land from one person to another, the solicitors for the seller and buyer each being obliged to safeguard their client’s interests.
What happens in a conveyancing transaction?
There are three main areas to consider and we shall briefly look at each. They are:
The work carried out after agreement in principle is reached, but before the seller and buyer are bound by contract to proceed with the matter.
The stage between “exchange of contracts” (when the parties become contractually committed) and “completion” (the day on which money changes hands in return for the keys and transfer of ownership, i.e. the day on which you are entitled to move in).
The conclusion of the formal side of the transaction, when we deal with the H M Revenue & Customs regarding payment of any stamp duty land tax and submission of an application to the Land Registry for “registration of title”
(A) The Buyer: You have found the property you want, and the seller has accepted your offer. (Another guide ought to be written about this stage – before most people even consult a solicitor!) Some of the most difficult and responsible work has to be done by your solicitor at this stage. The making of “local searches” and “preliminary enquiries” is by no means a formality.
We shall summarise for you the information obtained about the property and advise you as to the meaning of the provisions in the draft contract. It is also your solicitor’s duty to ensure you do not “exchange contracts” before you have available all the money needed to pay for the house at completion.
We shall be in touch with your lending institution (or your bank, if bridging finance is needed) and with 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: Having found a buyer, you will instruct us to send a draft contract to the buyer’s solicitors. To do this we shall need the “deeds”, to check the nature of your ownership and the existence of any rights or burdens which must be revealed and passed on to the buyer.
If we have acted for you before, we shall know where the “deeds” are and shall send for them straight away; otherwise you will have to tell us – the sooner the better. In addition we will need you to fill in a couple of forms (Sellers Property Information and Fixtures Fittings & Contents Forms) which deal with the
When we have the “deeds”, we shall prepare a draft contract and send it to the buyer’s solicitors, with the forms referred to above, who may send us additional “preliminary enquiries” designed to discover from your own knowledge of the property whether any of a number of possible disadvantages actually affect this property.
Once the buyer’s solicitor is satisfied, he will approve the contract and we shall ask you to sign it. Contracts will be “exchanged” and a date fixed for moving and payment: “completion”.
Having decided to sell, the sooner you instruct us the better. We can then get together a package of the documents and information which will be required by the buyer’s solicitors so that no time is wasted once a buyer is found.
Between contract and completion
Traditionally it is in this period that the buyer’s solicitors are required to check the title of the property and prepare the document to transfer ownership to the buyer, but these days with the need for speed it is often done beforehand.
The “mortgage” is prepared and the buyer will have it explained to him before he signs it. An obligation to repay thousands of pounds at a rate of perhaps hundreds a month, is not undertaken lightly. In some cases the “transfer” only has to be signed by the seller.
In others it must be signed by the buyer too, either because the buyer must “covenant” with the seller to observe the “restrictions” or because there is more than one buyer and the transfer document contains a declaration of trust.
As we approach the date for completion, the financial details will be worked out and the buyer asked to provide the balance of the purchase price in return for the “deeds” and signed transfer document. At that point you will be entitled to occupy the house and take possession of the keys.
What remains to be done is almost entirely in the hands of the solicitor. As seller’s solicitors we shall account to you, the seller, for the balance of the purchase price after paying off any mortgage, estate agents and ourselves.
If we are acting for you as a buyer, there is rather more to be done. We shall send sufficient money to the H M Revenue & Customs to pay any Stamp Duty Land Tax and also submit the Stamp Duty Land Tax return which we will have had you sign with the other legal papers.
If a purchase price is in excess of £125,000, then stamp duty SDLT is payable at increasing rates for each portion of the purchase price
Property Purchase Price
SDLT Rate from 4 December 2014
Up to £125,000
The next £125,000 (the portion from £125,001 to £250,000)
The next £675,000 (the portion from £250,001 to £925,000)
The next £575,000 (the portion from £925,001 to £1.5 million)
The remaining amount (the portion above £1.5 million)
There are also further sums to pay on homes greater than £1,000,000, which we will discuss with you if it applies to you. There are also some exemptions which we shall explain to you if the property you buy is entitled to one.
Please note this is a government tax and should not be confused with our professional charges! H M Revenue & Customs then let us have a certificate which allows us to deliver to the Land Registry the transfer with an application to register the title. On the return of the document we shall lodge the “deeds” with the lending institution if they wish to keep them. If there is no mortgage, we shall deal with the “deeds” as you wish. We should be happy to look after them for you.
Glossary of terms used
“exchange of contracts” – literally, the exchange of one copy signed by the buyer for another signed by the seller. At this point both parties become committed to proceed.
“completion” – the date fixed for transfer of ownership, on payment of the price. Normally between one and two weeks after exchange of contracts.
“deeds” – If you have an unregistered title (in other words if your deeds are not registered at the Land Registry) the deeds are crucial to the conveyancing and we will need them. However many deeds are now registered at the Land Registry and once registered a piece of land no longer needs its old deeds as they become redundant.
A word of warning though, there are some documents that remain important and because they are important they were traditionally kept with your deeds. When you have a property with a registered title it is quite easy for these other important documents to go astray, examples are; planning permissions, building regulation approvals, guarantees (e.g. Damp proofing), indemnity policies and so on. We will arrange for you to receive these and you must keep them safe and hand them in to your conveyancer the next time you move, if lost they can be expensive if not impossible to replace.
“registration of title” – ownership of unregistered land is proved by showing its recent history as recorded in the “deeds”. A sells to B, who dies, leaving it to C, etc. In all areas of the country title to land now has to be registered in one of the registries maintained by the Land Registry on completion of a purchase. The Register records ownership and all important details of rights and liabilities.
“local searches” – the search is in the registers maintained by the district council in relation to such matters as road charges and planning decisions. The expression includes the enquiries made of different departments of the council to do with a wide range of other matters which may affect the property. Apart from road proposals affecting land within 200 metres of the property, the local authority search will only give information about the property itself.
The search will give no information about other property, for example, the development of neighbouring land. If, therefore, you are concerned about the possibility of development or any matter relating to other property in the neighbourhood, you should make enquiries of the local authority before you consent to exchange of contracts on the purchase. Also if appropriate searches with the Water Authority, Coal Authority, Chancel and Environmental enquiries will be made.
“preliminary enquiries” – a series of questions addressed to the seller, who is expected to answer from his own knowledge about such matters as disputes with neighbours, or work done on the property needing building regulation approval, or rights enjoyed over the property. These are generally done in standard forms such as a Sellers Property Information form, however additional non-standard enquiries are made from time to time where appropriate.
“deposit” – part of the purchase price paid at exchange of contracts, normally 10%.
“mortgage” – document recording loan of money secured on the property. If payments are not maintained, the lender may have the right to take possession and sell the property.
“transfer” – the document transferring ownership.
“conveyance” – the same as a “transfer” but used where the property is not registered at the Land Registry, and even then they are rarely used these days.