Buying a property can be a very stressful, worrying and time-consuming experience, regardless of whether you are a first-time buyer or have moved many times. The most common complaint that we receive from our new clients about other conveyancers and solicitors is that they were not able to find out what was happening with their transaction. It was always subject to mysterious delays and, if they contacted their conveyancer to ask why, they were given a variety of reasons ranging from waiting for search results and phone calls to needing signed documents or a fax from the other party’s solicitors. There was never any explanation of why these were needed or what they were used for and this caused an enormous amount of frustration as our clients felt that their former conveyancers were simply not doing what they were supposed to.
The reason for this entirely understandable frustration is that their conveyancer simply never took the time to fully explain how the process works. We believe that if you understand exactly what is happening at each stage then you have a better understanding of the reasons for delays. That’s why we always make sure that you are completely happy and fully understand the reasons behind any delay. We find that, if you know why a delay is happening and exactly what we are doing to resolve it, then you can be more confident and relaxed about the progress of your transaction.
We have decided to write this guide to further this process. We hope that you find this guide useful, whether or not you are a client of ours. Please tell any friends, family or colleagues who are thinking of moving about this guide and we can help make their transaction less stressful. As always, if you have any questions, comments or suggestions please feel free to contact us. We welcome your feedback and hope to talk to you soon.
First Steps
As soon as you start thinking about buying a house there are many things that you need to consider. There are the obvious things such as where you want to buy, how much you want to spend, and the type of house you’re looking for. But there are other things that, if dealt with now, can save a lot of time later in the transaction.
Choosing a solicitor
Other steps
If you will be using a mortgage to complete your purchase then arranging this is one of the very first things that you need to do. The sooner that the mortgage is arranged the better. This means that if there are any problems with the offer they can be sorted out in plenty of time. Sometimes lenders can make fairly restrictive and time-consuming requirements in their offer and the sooner you and your solicitorare aware of these, the easier they are to resolve. We would strongly recommend that you arrange a mortgage as soon as you find a property to buy.
It is also important to remember that your solicitor is not a financial advisor and will not be able to advise on whether your mortgage is suitable, affordable or appropriate for you. The only areas that your solicitor can advise on are the legal aspects of your mortgage.
Be aware that your solicitor also acts for your mortgage lender. In practice this usually doesn’t cause any problems. They can arise however when there is a conflict between what is best for you and best for your lender. This can cause what is known as “a conflict of interest”. The most common example seen is when the client gives us some information that the lender should know but asks us not to tell the lender. For example the client may intend to let the property following completion but not tell the lender. In this situation it is clearly in the client’s best interest for the lender not to be told, but it is also clearly in the lender's best interest to be told. We have a duty to act in both parties' best interests, but in this case our client's and lender's best interests directly conflict. In this kind of situation we will, in all likelihood, immediately stop acting for both clients. We will not be able to tell the lender why, as we still have a duty of confidentiality to the client, but the likely effect is that the lender will know that there is a problem and withdraw the mortgage offer.
Stages in the transaction
First things first
Once you have received your estimates from the solicitors you contacted, and have chosen the one you think is best, there are a number of things you need to do straight away. The solicitors will want to get your written instructions as soon as possible and will usually have sent you a client instruction form with the estimate. Complete this as soon as you have decided which firm to use and return the form as soon as possible.
There are some things that the firm will ask you for straightaway and if these are sent with the form it will save time. The two most important things are proof of identity and a cheque for any disbursements that are required upfront.
Proof of identity will usually be a passport and two utility bills or bank statements for each client. These can be mailed or dropped into the firm’s office. Be aware though that the solicitor will need to see the originals and take copies for their own records. The solicitor might progress the transaction without proof of ID but will not be able to exchange contracts without having this on file. This can cause delays so it is very important that this is dealt with early in the transaction.
Before Exchange You should have seen the Home Information Pack for the property you are buying before making your offer (it is impossible to market any residential property now without a HIP, so make sure you ask to see a copy).
Unfortunately not all of the information required by solicitors and mortgage lenders is included in the HIP. Therefore the seller’s solicitor will simply use the information in the HIP to create a more detailed contract package, including amongst other things the contract for sale.
Once the contract package has been received your solicitor will provide you with a copy of all the relevant documents for your own information. We would strongly recommend that you look through all the paperwork provided, even if you don’t entirely understand it and even if it duplicates some of the information you have already seen in the HIP. If there is anything that you are not sure about or that raises any concerns then it is vital that you raise this with your solicitor and ask for further information. While your solicitor will report to you on any issues before contracts are exchanged, it is very important to remember that, while your solicitor might not consider something to be an issue, you may see it very differently. Besides if there is a problem, then it is much better to deal with it at the beginning than the end of the transaction when your solicitor reports to you.
Exchange of contracts
Up until this point all negotiations between you and the seller will have been "subject to contract". This means that either you or the seller could withdraw at any point without fear of being sued for not completing the transaction [perhaps insert link to gazumping faq here?]. Once your solicitor has received satisfactory replies to queries concerning the legal title of the property and all the queries which you have asked him to raise he will report to you with the contract for you to sign. At this point you will be asked to supply your solicitor with your deposit (normally 5% or 10% of the purchase price [insert link to faq?]). While this is happening your seller will also be signing another contract, identical to the one which you are signing.
When you have signed your contract (which does not have to be witnessed) you should return it to your solicitor together with cleared funds for the deposit. At this stage, even though you have signed the contract, you are not yet contractually bound to complete the purchase.
Once your deposit has cleared in your solicitor’s account she will telephone you to ensure that you are happy to proceed with your purchase. Your solicitor will then telephone your seller’s solicitor, who should have a copy of the contract signed by his client, the seller. During that telephone conversation contracts will be "exchanged" in accordance with rules and guidelines laid down by the Law Society, in which the deposit and completion date (the date you move in) are confirmed. Exchange of contracts is (or should be) the point of no return: it is at this point that you and the seller are bound by the contract. You will be bound to buy at the agreed purchase price and the seller will be bound to sell to you.
After Exchange
After exchange of contracts you will have a definite date for moving into your new home, this is normally a week or two weeks after the date of exchange, but can vary enormously (from one or two days if the buyer does not need a mortgage, to several years if the property is being bought "off-plan", i.e. has yet to be built). During this time you should be making arrangements for your move – booking a removal company and time off work etc. You should also inform all relevant bodies, such as local authorities and utility providers, that you will be moving and, if necessary take meter readings etc.
During this time your solicitor will be arranging for your mortgage advance to be paid to his account in time for completion. He will also carry out some further searches.
Very shortly after the day of exchange your solicitor will write to you with a Completion Statement showing a breakdown of all the monies involved in the transaction, taking into account all the money which you have already paid (such as your deposit and your money on account of disbursements) and your mortgage advance. It will also show monies to be paid following completion (Stamp Duty Land Tax and registration fees). The Completion Statement will show a balance of money required from you to complete your purchase. It is vital that you ensure that you supply this amount to your solicitor in cleared funds before the day of completion (direct bank transfers are the best way of doing this. Cash cannot be accepted for obvious money laundering reasons and it is wise to avoid any problems which may arise from cheques not clearing). If your solicitor does not have cleared funds on the day of completion then he may not have enough money to complete your purchase and you will be in breach of the contract.
Completion
The big day! You will have packed and be in the process of moving.
Your solicitor will have received your cleared funds and your mortgage advance. She will then send by CHAPS (same-day bank transfer) the purchase monies to the seller’s solicitor. Once these are received by the seller’s solicitor then "completion" has taken place and you can move in, the seller’s solicitor will normally telephone the estate agents and authorize them to release the keys to the property to you.
After Completion
Following completion of your purchase, there are still a few things left for your solicitor to do. He must pay any Stamp Duty Land Tax on the transaction to HM Revenue & Customs and he must register you as the new owner of the property at the Land Registry. It is important to remember that you only become the legal owner of the property once registration is completed at the Land Registry.
Once all this has been done your solicitor will write to you with a copy of the records held by the Land Registry showing you as the legal owner.
In the past Title Deeds would have been sent to your mortgage lender, but in this day and age most documents are held electronically and mortgage companies prefer not to hold any documents (they don’t have room), so if there are any paper documents relating to the property (which is very likely if you have bought a leasehold flat) then these will either be sent to you or held by your solicitor.
