ON THE MOVE: CONVEYANCING EXPLAINED
From removal vans to endless paperwork, unpacking to redecorating, moving to a new house is commonly cited as one of life’s most stressful events. Lockdown has confined us to our homes in the last year and whilst, for some, it may have given a newfound appreciation of our nest, for others it has sparked a desire to pack up and find somewhere new.
Moving or thinking about it? Read on, as Leicester’s Dodds Solicitors has a specialist property department with a wealth of experience. They offer a comprehensive conveyancing service, assisting in all legal and practical aspects of your house move from buying or selling to remortgaging your property – taking the pain out of moving on.
DLUXE magazine spoke to Debbie Poonia at Dodds Solicitors to answer the most frequently asked questions.
How long will my completion take? / How long will be it before I can collect my keys?
The average time between instructing your Solicitor and completion is usually between 10 to 12 weeks but some transactions may proceed quicker than that, but some may take longer if for example there is a chain involved in the transaction. If there is a chain (the number of other transactions linked together) it may take longer than this as all parties will need to exchange contracts at the same time with the same completion date.
Is a survey necessary?
A survey involves a professional property Surveyor undertaking a thorough inspection of the property and then producing a report about the property. If you are buying the property with the aid of a mortgage your lender will carry out an inspection, but this is not a survey and is for the lender’s purposes of investment only. It is always advisable to have an independent survey carried out as you will buy the property as it stands, and the survey may highlight any problems with the property that you should be aware of. The Surveyor appointed should be a member of the Royal Institute of Chartered Surveyors (RICS).
Is insurance required?
If you are buying a property, the contract usually provides for you to insure the property on exchange of contracts. This would be a buildings insurance policy. A contents insurance policy would only be required when you actually move in to the property.
What is a local search?
This is a set of standard enquiries that your Solicitor will raise with the local authority. These relate to the property itself and would not reveal if any adjoining properties or adjoining land are subject to development. The local authority charges a fee which your Solicitor will collect from you up front to cover the cost of the searches required. The local search covers such matters as planning permissions, building regulations approval, highways and tree preservation orders.
Do I have to pay a deposit and if so how much?
The purchase contract provides that you pay a deposit which is 10% of the purchase price on exchange of contracts. It may be possible (if the seller will accept it) to pay a 5% deposit if for example you are having a 95% mortgage. You can also usually use any deposit you receive on a sale as part payment of your deposit on the purchase. However, if the property you are purchasing is worth more than the one being sold you may be required by the seller of the property you are purchasing to “top the deposit up” to 10%.
What does exchange/exchange of contracts mean?
In readiness for exchange of contracts both the seller and the buyer must sign identical contracts and the buyer must pay a deposit to their Solicitor which will need to be cleared funds (for example a chaps transfer). The actual point of exchange of contracts is when the Solicitors acting for both the seller and buyer hold signed contracts and agree during a telephone conversation that they have actually exchanged contracts. Buyers and sellers do not need to be present for exchange of contracts to occur. Following exchange, the transaction is a legally binding contract and no one can pull out without being in breach of contract and the completion date is fixed.
What do we need to know if we are buying in joint names?
Where more than one person owns a property together, they can choose to own the property as joint tenants or tenants in common. It is especially important to consider the different options available to co-own a property.
Most couples who are married will hold the property as “joint tenants” which means that upon the death of one of them that person’s half share will automatically pass to the other. The alternative is to hold the property as “tenants in common”. This means that each person’s half share is treated as being separate so that upon the death of one or other of them his or her share will not automatically go to the other but to the beneficiary in the deceased’s person’s will. So, it is particularly important if you hold the property as tenants in common that you have a Will. Furthermore, If you were to own the property as tenants in common you could specify what share each person owns (either equal or unequal shares).
If buyers are putting unequal amounts into the property, the person who is paying the larger amount can have a declaration of trust prepared. This is a document which sets out who has put what amounts into the property and it outlines who will get what from the proceeds of a sale. For example, it can state that if the house is sold (once the mortgage is repaid and costs deducted) the person who put in the deposit gets that amount first, before the remainder of the monies are shared out.
Can I book removals and if so, when can I?
It is only advisable to book your removals when contracts have been exchanged. If they are booked before exchange the completion date is not a guaranteed date and you may end up losing money if the completion date changes.
What happens on completion?
The agreed completion date is the date put into the contract on exchange of contracts.
On a purchase the completion date is usually the date on which you move into your new property. The buyer’s Solicitors will send to the seller’s Solicitors the purchase monies to complete the transaction. If you are buying with the aid of a mortgage the mortgage advance will be requested by your Solicitor from the lender to arrive in time for completion. When the money has been received by the sellers Solicitors keys can be collected from the estate agents.
On a sale, the completion date is when you must vacate your current property and clear the property of all your furniture and belongings (those items which you have stated are excluded from the sale). Any mortgage secured on the property will be repaid by the sellers Solicitors when the sale monies are received from the buyer’s solicitor. The sellers will need to deposit the keys for the property with the estate agent so that keys can be collected on completion by the buyer. If there is no estate agent involved, the buyer and seller will need to make their own arrangements to collect the keys on the day of completion.
What happens if the transaction falls through?
Once contracts are exchanged the transaction is a legally binding agreement and neither party can back out without being in breach of contract. Until that point either party may withdraw. However, the search fees you pay at the start are non-refundable, along with any survey fee if this has been carried out and, possibly any mortgage application fee. In addition, your solicitor will make a charge for the work carried out up until the point you withdraw. The cost will depend on what stage the transaction has fallen through.
When do the fees get paid?
On a purchase the legal fees and the balance of any disbursements (expenses incurred on your behalf, such as searches) will need to be paid prior to completion. On a sale the legal fees are deducted from the sale price (along with the mortgage redemption monies and the estate agents’ fees) and the net sale proceeds will then be sent to the seller. If the sale proceeds are insufficient to cover the repayment of any mortgage and the fees, then the seller will need to pay the balancing sum to his/her Solicitor shortly before completion.
When will I receive the deeds?
There are no “Deeds” as the Land Registry only issue an electronic copy of the official copy of the register of title which confirms ownership of the property. Paper certificates are no longer issued by the Land Registry. However there maybe a number of documents relating to the property for example guarantees, local authority approvals, installation certificates etc. which you should keep safe as they will be required in the event of a subsequent sale of the property.