Clarkson Hirst are committed to providing a quality service to our clients in respect of their sale of an existing property and purchase of an alternative. The aim of this information form is to help explain the basic steps taken in the conveyancing transaction and some of the terms and procedures that you will encounter along the way.
This is an explanation of basic procedure and cannot cover all the points that might arise in your own transaction. If at anytime you have any queries or questions that you wish to raise, we will be happy to discuss them with you.
Once a buyer for your property has been found and you have advised us of the full selling price either directly or through your Estate Agent, the following will occur:-
- When we are in receipt of your mortgage account details (if your property is mortgaged) we will apply to your Building Society or Bank for the release of your Title Deeds.
If your property is mortgage free, it will be necessary for you to supply a full set of Deeds to us.
When we have the Deeds we shall prepare a Contract for submitting to the buyers Solicitors.
The Contract will confirm your ownership of the property and to what rights or burdens it is subject.
- We will forward on to you at this stage a Property Information Form and Fixtures, Fittings
and Contents Form.
a) PROPERTY INFORMATION FORM
These are a series of multiple choice questions addressed to the seller, and they are answered from your own knowledge of the property. They should be answered honestly and as fully as possible. They relate to such matters as disputes with neighbours, work done requiring planning permission, or any informal rights others have over your property.
If you have documentation such as guarantees, copy planning permission or building regulations or other building arrangements, copies of these should be supplied.
If you have undertaken any building work requiring planning permission or building regulations or consents from third parties these should be made available for the buyers inspection.
b) LEASEHOLD PROPERTY INFORMATION FORM
If you are selling a Leasehold property you will be required to fill in this form. It is necessary for you to provide details in respect of whether a Management Company is in existence or details with regard to the Landlord who owns the property. You will be required to provide full details as to the amount of ground rent and/or service charge and to whom it is payable.
If a Management company is in existence then full details should be obtained from the Company Secretary in respect of rent, service charges, insurance cover and charges for the sale of the property.
c) FIXTURES, FITTINGS AND CONTENTS FORM
This is a definite list of items being included or excluded from the property on sale. The list will be attached to the Contract at the point of exchange and then becomes binding. It is not possible to then take items from the property that have previously been stated will remain.
Complete the list carefully.
The original copies of the completed Contract Forms referred to in a – c above will be forwarded onto the Buyers for their consideration and the forms should be completed carefully and bearing in mind the Buyers will rely on the information supplied. Please read the forms carefully.
- A copy of the Contract, the Fixtures, Fittings and Contents Form, Property Information Forms are sent to the Buyers Solicitors for their approval. If they have any queries to raise in respect of the property they will do so at this stage. Once the Buyer and their Solicitors are happy to proceed it will be at this stage that dates for actual Completion of Sale will be put forward. Here it is important to note the difference between Exchange of Contracts and actual Completion. a) Exchange of Contracts – the seller and the buyer become contractually committed to sell to and buy from each other. The seller signs his part of the Contract, the Buyer signs theirs and the Solicitors literally exchange the signed copies. Normally on exchange a deposit is paid by the buyer to the seller via the Solicitors. The Contracts usually state a 10% deposit is required. The deposit can be less by negotiation before exchange. If you are selling and buying, the deposit on the sale is often used as the deposit on the purchase. If a lesser deposit is paid the Contract will normally stipulate that on the Contract failing due to the fault of the buyer, a full 10% deposit will have to be paid over to compensate for the sellers loss.
b) Completion Day – This is the actual moving day. The completion monies are handed over by the Buyers Solicitor in exchange for the Deeds to the property and the keys. The property should be vacated early afternoon on the completion day and the keys then taken to the Estate Agent for collection by the Buyer. If you have agreed to hand over your keys direct to the Buyer you should ensure that the completion monies have been received by your Solicitor before doing so. Exchange of Contracts should hopefully take place two to four weeks before completion to give sufficient time for pre-completion formalities, i.e. obtaining mortgage redemption figures, arranging removals, obtaining signatures on legal documents. It is not always possible to have such a time lapse and more often these days, particularly at holiday times exchange and completion takes place virtually simultaneously. This can lead to last minute requests for signatures on documents and preparation of completion statements. We will try to give you as much notice as possible.
Removal Arrangements – At this point we would ask you to note that although most removal firms require two weeks notice, confirmation of a completion date cannot be given until Exchange of Contracts has taken place. This can cause problems if Exchange is only a few days before completion. We would ask you to bear this in mind when making your removal arrangements. We can only guarantee a Completion Date when Contracts have been exchanged for a set date.
- Once a firm completion date has been set and Contracts have been exchanged we will request a redemption statement from your existing mortgagee’s to ascertain how much will be owing to them in respect of your existing mortgage on the completion date. If you have any second mortgages or loans secured on the property please advise us of those at the earliest opportunity in order that they can also be paid off. We will request an account from your Estate Agent as this will be repaid from your sale proceeds unless you have previously advised us not to pay the same, in writing, prior to Completion.
We will prepare a Completion Statement to account to you for any balance due to you in respect of the sale. If monies are required from you, due to the fact the same proceeds are insufficient to discharge all liabilities on the property we will try to ensure you have sufficient time to raise the same prior to Completion. If you are aware at the beginning that monies will be required from you, you should advise us of this at the outset to avoid future delays. If monies are required from you, we will need to be in receipt of all cleared funds due prior to Completion taking place.
You will be requested to attend at our Offices to sign the legal Transfer document (this is the document transferring ownership of the property). All sellers will be required to attend, we will try to ensure as much notice as possible is given for attendance but as the document is prepared by the Buyers Solicitors, we have to await it’s arrival at our offices before asking you to attend.
- On Completion – you do not have to attend at the Solicitors Offices, but you should ensure that you have vacated the property by early afternoon and the necessary arrangements have been made with regard to the keys and the buyer is aware of them. Liase with the Estate Agents as to the procedure for handing over the keys and they in turn can contact the Buyer.
- When you have advised us of the Estate Agent with whom you have seen the property you wish to purchase we will contact them to obtain their sales particulars.
Once these are in our possession we write to the Solicitor/Legal representative acting for the seller and request that they forward on to us a Contract and the relevant property information form, Fixtures, Fittings and Contents Form.
- When the contract and accompanying documents and searches are received we will forward on to you copies of the relevant title documentation and summarise for you the information obtained about the property. If the title documents contain a plan of the property we would ask you to ensure that the plan covers all of the property you are intending to purchase. It is important that you also read carefully the Estate Agents details ensuring that they are correct in their description of the property.
- Your Survey – We would not recommend that you purchase a property until you have had the property surveyed by a reputable Chartered Surveyor. The level of survey you undertake is your personal choice. We advise you obtain a home buyers’ report and/or structural survey. We cannot advise on structural problems or queries, and you should raise all such matters with your Surveyor and rely on his report. If you are requested to have further reports undertaken by Builders, Drainage Contractors etc we would once again advise you to rely on the Surveyors professional judgement. We are not qualified to advise on such matters and expert advice should be obtained. We will not be inspecting the property and therefore we cannot guarantee the structural integrity of the property, and indeed the seller makes no promises in the contract that the property structure is sound and it is for you to ensure the structure is sound before you proceed to purchase the property.
- Additional searches – The cost of repairing the chancel of a parish church is generally met by either the parochial church council or the representative body of the church. In some rare incidences however land owners are liable for the cost of such repairs. If this is recorded in the title deeds we will inform you of that liability. It is possible to do a search to establish whether there is the potential for chancel repair liability in relation to the property you are buying. If you wish us to undertake such a search then there will be an additional charge by the search company for undertaking the search and please let the writer know if you wish us to undertake that search.
Further additional searches would include coal mining and tin mining searches or salt mining searches and if you wish us to carry out mining searches please let us know. If the property you are buying is likely to be subject to a flood risk then we can carry out a flood risk search if you wish.
If you wish us to carry out these searches then please let us know.
- Local Authority search – A search is made at the Local Authority in relation to matters such as planning decisions, road adoptions, mains drainage, smoke control orders etc. The search will only give information about the property itself and any roads within approximately 200 metres. The search will not give information about other property i.e. neighbouring buildings or land. If you are therefore concerned about the possibility of development or any other matter relating to land nearby, you should make your own enquiries at the relevant Local Authority Office or Planning Department. It will be necessary to make such enquiries before you commit yourself at Exchange of Contracts to purchase the property.
- Drainage Search – we will put in hand a drainage search to establish the property is connected to mains drains and public sewage system.
The drainage search will produce a plan showing main drains and sewers.
The pipes that connect the property to the main drains and sewers will almost certainly be your responsibility to maintain and we would advise you to have a survey to check that these pipes are in good repair and functioning.
If you are aware the property is served by private drainage and/or a septic tank please contact me and let me know as soon as possible. A specialist survey should be undertaken of the septic tank to ensure it is functioning. If the septic tank is not functioning then it would probably be expensive to repair.
- Your Mortgage – this is a loan of money secured on your new property. The arrangements for obtaining a mortgage should be dealt with directly by you or with the assistance of a mortgage broker. It is your responsibility to ensure that a satisfactory mortgage offer is available before Exchange of Contracts to finance the purchase price of the property you intend to buy. Please remember that if you do not pay the mortgage instalment, the Lender will have the power to apply to the Court for an order that you give up possession of the property to them and then they would have the power to sell the property to repay the Loan. Any shortfall being the difference in money between the loan and costs and the amount of the sale proceeds will be your responsibility to pay, even if you have taken out mortgage indemnity cover. You should also ensure that adequate Life Insurance cover, if required is obtained and also building insurance cover is put in place that meets the requirements of the mortgagor. It is often a requirement of a mortgagor that they are supplied with full details of both buildings insurance and life cover before Completion and you should ensure that their requirements are met at the earliest opportunity to avoid delays later.
- Deposit – You should ensure that deposit monies are available for use at exchange of Contracts. Monies will be requested at the earliest opportunity and we would ask you to note our requirements with regard to timescales for clearance of cheques given later on in this Information form.
- Funds from you/banking information – in the course of your transaction we will request funds from you to pay a deposit or pay the balance due including the legal fees to complete. If you are holding funds on a deposit account which requires notice to release funds I would suggest that you transfer the funds from this account into an instant access account at the commencement of your transaction. As to the transfer of the funds to this office we do not accept cash payments either here at the office or by payment to our banks cashier for security reasons. We encourage our clients to bank transfer funds to our client account for speed and security reasons. Please contact us for our client account bank account and sort number.
You can pay by cheque. However personal cheques take 6 to 7 working days to clear and building society cheques take 4 working days to clear. All cheques should be paid to this office and not through our bankers direct.
- Property Information Form and Fixtures, Fittings and Contents Form – you should read carefully the answers given on these forms by the Seller of the property. If you have any queries, please raise them and we will put your queries and questions to the Sellers through their Solicitors. They may be helpful with regard to boundary queries, deeds can be silent on the responsibility for their maintenance and these replies can shed light on the responsibility that has previously been taken. If there are any guarantees you should ensure that they are capable of being transferred to you and that the originals are available and will be handed over to you.
- On the day the Contracts are exchanged, responsibility for insuring the structure and Contents of the property you are purchasing falls upon yourself. You must therefore ensure that your cover is in place for the date for Exchange of Contracts.
- Exchange of Contracts – this can only take place when
(a) a contract has been investigated
(b) a Local Authority search and drainage search results are received by us.
(c) a Solicitors copy mortgage offer for the correct purchase price is available
(d) the balance of your finance is in place
(e) You have received your survey and are quite happy that the property is structurally sound, and you have inspected the property and you are quite happy that the boundaries are correctly positioned.
When all the above are in place we will ask you to sign the Contract and pay the deposit to us so that Contracts can be exchanged. You will also be asked to sign the Mortgage Deed prepared by the Building Society or Bank in respect of your mortgage finance. You will have been forwarded by the Mortgagor a booklet containing the Mortgagors Terms and Conditions, This document should have been read to ensure you understand the terms on which the money is being lent to you.
If the property is to be purchased by one person, although more than one adult is to occupy, it is your responsibility to advise the mortgagor that there is to be another adult occupier. It may then be necessary for that adult to sign a consent to mortgage form to confirm their awareness of the mortgage and ultimately the rights of the mortgagor or the property. The form is signed at another firm of Solicitors as independent advise has to be given on the forms contents, a small fee (currently £5.00) is required to be paid.
After exchange it is the responsibility of ourselves to carry out final searches and to prepare the legal Transfer document.
When purchasing land, two or more people can hold the legal title to the property in two ways;
(a) joint tenants – when one party dies their share of the property automatically passes to the surviving owner.
(b) Tenants in Common – the share of the deceased owner goes by way of their Will or Intestacy and therefore does not automatically pass to the other owner. The Transfer will indicate that the legal title will be held as joint tenants by two or more owners unless you have previously indicated in writing that you wish the property to be held as Tenants in Common.
- Keys on Exchange – if a property is empty sometimes it is possible to obtain a key between Exchange and Completion to carry out cleaning and / or repair works. Generally you are required to pay the full 10% deposit on exchange and to sign a key undertaking to confirm the work to be done and obtain your assurance that you will not try to move into the property. You are responsible to ensure that the meters have been read before you take the keys, and also to check the liability with regard to Insurance cover if a problem were to arise.
- Completion Date – We would suggest you discuss completion timescales at the earliest opportunity, either directly, or through the Estate Agents. This enables all parties to have sufficient time to carry out finalisation procedures. We would advise that most mortgagors require at least 7 to 10 working days notice before they will release mortgage funds. We would ask that you best this in mind when discussing dates. Most completions take place on a Friday and obviously this can cause particular delays and problems on popular Fridays, i.e. Before Bank Holidays. Whichever day you choose we would point out that we have no control over the time at which completion will take place due to the fact that completion times are dictated by the transfer of monies through the banking system and some delays can occur. We obviously understand the frustration that can be caused but however until the Seller’s Solicitors have received the purchase money in their bank account they cannot release the keys from the Estate Agent. After completion we will pay any stamp duty payable on your purchase and also register your Ownership with the Land Registry. We will then forward the Title Deeds to your lender and if you do not have a Lender we would be happy to keep your Title Deeds here at the Office for safe keeping, free or charge.
- Your Will – It is certainly sensible and indeed reckless not to make a will if you own Land or have children. We would be happy to make your Will for you at any stage during the transaction or after the transaction has been completed. We offer preferential rates for our conveyancing clients and you must feel free to enquire to obtain a quotation.
- Financial Services – If you are uncertain as to which mortgage lender you wish to choose and wish to seek independent financial advice on that choice you may contact us. As Solicitors we are bound to refer you to independent financial advisors who are not tied to sell the product of any particular financial institution.
- Stamp duty land tax – stamp duty land tax is a tax you have to pay to the Government on the property you are purchasing. There is a nil rate band which applies to stamp duty land tax so that in certain circumstances you will not have to pay stamp duty land tax. Please consult your advisor for advice in relation to the amount of tax you will have to pay.
If you do pay stamp duty land tax then you should be aware of the following;
- Even though we will submit the land transaction return to the stamp duty office on your behalf you are responsible for signing the document and the document should be submitted within 30 days of normally the completion date but please note that that date can differ especially if you receive the keys to the property you are buying sooner than the completion date. Please therefore contact us following completion to sign the land transaction return form.
- If the land transaction return form is returned late then you will have to pay a penalty charge imposed by the land tax unit.
- We will complete the land tax return form based on information you have provided us with and it is ultimately your responsibility to provide us with accurate information and to check the form before it is submitted. If the form is not properly completed this may lead to delays which could lead you to incur liability for a late penalty from the land tax unit.
- Delay in submitting the land tax document may lead to delays in receiving a certificate which could delay the registration of your property with the Land Registry which could in turn cause you to suffer loss.
- It is your responsibility to pay the tax due to the land tax department.
- You are under a duty to inform us if the purchase is linked to purchases of other properties or if you are buying from a relative or business partner. This information should be revealed to the land tax department and may alter the calculation of land tax from a calculation based on consideration for the property to one based on the market value of the property.
- On the land tax return we will state that we are your tax agents but please note this does not create an agent/principal relationship under the law of agency and therefore we have no corresponding liabilities.
- The process of completing your tax return is a self assessment process. You pay the tax with the self assessment form. The Inland Revenue may then make enquiries about the transaction and may determine that there is a greater amount of stamp duty/land tax to pay. If this happens then you would be liable to pay any shortfall from the self assessed amount after any enquiry. If we received any notification of such enquiry from the land tax department then we would advise you in writing at the address of the property you have purchased or such other address that you nominate to us. Please note that it is your responsibility to advise us of any change of address.
- If there is any enquiry by the Inland Revenue land tax department into the transaction then we will charge you separately for that work on the basis of the time spent based on our hourly rate applicable to the fee earner dealing with the case such details we will provide you with at that point.
- The documentation in relation to your land tax return will be kept for a period of six years at this office after which point it will be destroyed and by engaging this firm you authorise us in advance to destroy the file after six years. You may of course retain the documents yourself for a period longer than six years if that is your wish.