Leasehold Conveyancing Process Walkthrough – The lead up to an exchange of contract

This article sets out a brief walk through of  the leasehold conveyancing process from the point of view of both buyer and seller. For a more in depth look at particular leasehold conveyancing, lease extensions, Property Information Questionnaire (PIQ)  or HIP topics (leasehold or freehold) use the menu on the Fridaysmove web site. This overview focuses on general leasehold  conveyancing. London does not have specific requirements  and this article is not focused on Conveyancing London transactions although there are a significant amounts of leasehold property in London. Specific advice on Conveyancing London properties is found elsewhere on this site.

The conveyancing process begins with both buyer and seller instructing a conveyancing solicitor or property lawyer . Other than certain exceptional circumstances the same conveyancing solicitor  cannot act for both parties (although the Council for Licensed Conveyancers have more lenient rules in this regard) .

The purchaser's conveyancing solicitor or conveyancing lawyer  will usually confirm they are instructed to the seller's  conveyancing solicitor (property lawyer), at which point the seller's conveyancing solicitor will issue the leasehold contract package. Pre Home Information Packs and electronic storage of Deeds it was necessary to wait for title deeds to be delivered to the seller's conveyancing solicitor before the contract package could be issued however except in the case of unregistered land this is no longer the case. A conveyancing solicitor or property lawyer should be able to issue a contract within 48 hours of receiving the estate agent’s memo which sets out the  purchaser’s solicitors contact details ( regardless of whether the property is leasehold or freehold ).

The conveyancing package consists briefly of a draft version of the contract, Official Copies of the legal title, copies of any deed/documents which affect the title, a Sellers Property Information Form, Lease, Sellers Leasehold Information Form, Fixtures, Fittings and Contents Form, all completed by the seller. If a Home Information Pack (HIP) is supplied it will include the result of Conveyancing searches which are otherwise carried out by the purchaser's solicitor. The more proactive conveyancing solicitors will also provide office copies relating to the landlord or freeholder’s interest but more importantly the management information for the property.  

The seller's conveyancing solicitor or property lawyer (if not already obtained) may order the original deeds at this point and a provisional mortgage redemption statement should be requested for budgeting purposes.

Once the aforementioned contract papers are in hand purchaser's conveyancing solicitor or conveyancing lawyer will order the conveyancing searches (other than those contained within the Home Information Pack ) and also raise any necessary  conveyancing enquiries – sometimes referred to by conveyancing lawyers as “ Additional Enquiries “ based on the documents and in particular the Property Information Questionnaire. It is a good idea for the purchaser's conveyancing lawyer to draft the Transfer Deed for approval at this point. This is traditionally done after exchange of contracts however with many conveyancing solicitors now being at a distance from their clients, and with a gap of more than 7 days between exchange and completion a rarity, leaving it until a later stage can often cause problems on completion.

It is then up to the seller's conveyancing solicitor to answer the Additional Enquiries. Some may be technical points relating to the leasehold contract and others may be relating to the state and condition of the property, comments on the fixtures and fittings list, enquiries about disputes etc. revealed in the in the Sellers Property Information Form, Sellers Leasehold Information Form or the Property Information Questionnaire (PIQ ) . These additional conveyancing enquiries will be passed to the seller to answer in his own words. The seller must be careful to ensure the answers he or she provides are accurate and that there are no obvious omissions as it will generally be a condition of the contract that the buyer is entitled to rely on the replies. The seller's conveyancing solicitor or property lawyer   should check any replies and caveat  them where necessary, for example if the question is asked: " Has the property ever suffered form subsidence ?" and the seller answers "No" this implies that the seller has detailed knowledge of the property even before his or her ownership. Usually this will not be the case and might be amended to "The seller is unaware of any problems however no warranty is given in this regard bearing in mind that the seller  is not qualified to answer this question and the buyer must therefore rely on his own inspections and surveys". The same logic should apply to the seller when completing the Sellers Property Information Form, Sellers Leasehold Information Form and  Property Information Questionnaire ( PIQ ).

According to conveyancing protocol and the recommendations of the Law Society, the buyer's conveyancing solicitor or conveyancing lawyer should not use a standard pre-- formatted pre-contract enquiry sheet. Such forms contain enquiries relating to the state and condition of the property, which are issues for a surveyor rather than a conveyancing  solicitor. They not only create additional work for the purchaser's conveyancing solicitor or property lawyer but also place an onus on the seller to answer questions which he is not really qualified to answer - for example questions as to the condition of the property which ought to be covered by a survey or questions about events at the property prior to his ownership, and they should be rejected in the first instance. If the purchaser's conveyancing lawyers  insist, as some will, then it may ultimately prove simpler to allow the seller to answer them, but in this case the  seller’s conveyancing solicitor must be certain to check the replies carefully to ensure the seller is not making a statement which is clearly beyond the scope of his knowledge.

Both sets of conveyancing lawyers will need to check if the lease contains a covenant prohibiting assignment, or requiring the landlord’s consent to be obtained before an assignment takes place. If it does the seller's conveyancing lawyer will need to obtain the landlord’s consent before assigning to the buyer. If he does not, the assignment of the lease will (subject to what is said below in relation to the landlord unreasonably withholding consent to assign) be a breach of a tenant’s covenant, entitling the landlord to forfeit the lease, and accordingly it will be very much in the interests of the buyer that the necessary consent is obtained.

The conveyancing conditions of sale normally provide for the seller to apply for landlord’s consent and for either party to be able to rescind the contract if the consent is not forthcoming after a specified period. It is generally preferable for exchange of contracts to be delayed until confirmation is forthcoming that the landlord is going to consent to the proposed assignment.

On receipt of the search results and Leasehold Management information the purchaser's conveyancing solicitor may need to raise some further enquiries. Once all the outstanding points are answered, and provided the purchaser's conveyancing solicitor or conveyancing lawyer is in receipt of his client's Mortgage Offer, he or she will be in a position to report to his client. It is important to note that there are always two copies (or three if a mortgage broker has arranged the mortgage) of the offer produced. The offer that is issued to the conveyancing solicitor or property lawyer   is different to that issued to the borrowing client  in two areas. Firstly, it will contain the required documents for signing by the buyer’s conveyancing solicitor and the buyer being Certificate of Title and Mortgage Deed ( sometimes referred to as a Legal Charge ) respectively  and secondly it will contain a covering letter addressed to the conveyancing solicitor which is the lender's instructions to the conveyancing solicitor to act on its behalf. Clients often forget that the conveyancing solicitor is acting for the lender as well as buyer. This is why often the Terms of Engagement of a conveyancing law firm makes provision for where a buyer does not want certain matters disclosed to the Lender. In such circumstances the conveyancing solicitor or property lawyer has no option but to end their retainer with both parties due to the conflict of interest.   

Without these instructions a conveyancing solicitor or conveyancing solicitor  can not act for a lender. The Mortgage may contain Special Conditions which the conveyancing solicitor (or purchaser) needs to satisfy before the funds will be released by the lender. As well as specific conditions the buyer’s conveyancing lawyer has to check the Lenders general conditions which can be found at the CML Lender’s web site.   Both the general conditions or specific conditions could result in the buyers conveyancing solicitor having to raise new enquires even if it appeared to all parties that there were no further questions to be raised.

Once all enquiries have been satisfied a written Report on Title should be prepared by the conveyancing solicitor for the buyer for the purposes  reporting to his client although many conveyancing firms arrange for the purchaser to attend the conveyancing firms office to go through the papers and sign the contract, Transfer Deed, Mortgage Deed and a Deed of Covenant if so required in the lease . Often today however, in light of online conveyancing and  particularly where the conveyancing solicitor is at a distance from his client, a written report will be prepared and e-mailed  together with the papers. The client can of course discuss any points which might arise over the telephone. For conveyancing London properties Fridaysmove does see may clients face to face.