In Part I, I considered the first steps of the Conveyancing process, and what you are actually getting for your money. On the face of it, it seems like your Solicitor is only required to fill out a few forms, but as we shall see, the legal work for a property sale can be much more complex. . .
Your Conveyancing Solicitor will be ready to proceed as soon as you have confirmed instructions. The sellers’ agents will send out a sale memorandum to both parties lawyers, so make sure the agent has the name of your Solicitor.
Why is a contract needed?
Many people are aware that they have to sign a contract document, and that until then the purchase is ‘subject to contract’ but do not understand why.
The two major stages in the legal work on any house purchase are
- exchange of contracts, and
- completion of the transfer
Any agreement for the sale and purchase of something will usually constitute a contract, whether or not it is in written form. However contracts for the sale and purchase of land are not enforceable in English law unless in writing, incorporating all the terms agreed between the parties. Although you will have agreed a price with the seller, until a formal written contract has come into existence, either party can pull out without any penalty. Buyers may pull out because their surveyor finds a defect in the property, or because they have found another house they like better, and sellers cannot sue them for any costs they have incurred.
This means that until there is a formal contract, any date agreed for completion will not be binding and cannot be relied on.
The sellers’ Conveyancing Solicitor will now prepare a draft contract. This usually follows a standard format, setting out the names of each party, a description of the property being sold, the price agreed, and other specific terms. The contract normally incorporates Standard Conditions of Sale which are published by the Law Society, and contain provisions setting out the rights and duties of each party after contracts are exchanged, and the penalties which will be applicable if either party fails to perform its contractual obligations.
What happens now? – Pre-Contract Steps
Your Conveyancing Solicitor will now carry out the following work for you on the purchase of a freehold house. Not all steps may be required on a particular transaction, and they may not all be carried out in the same sequence.
- Check that details of price and property stated in the agents’ sales memorandum agree with information you have given
- Confirm receipt of sales memorandum to agents
- Initiate the usual property searches as soon as possible
- Local authority search
- Drainage and water search
- Environmental search
- Chancel search to check for any potential liability for chancel repairs
- Additional searches required for properties in certain areas, such as a coal-mining search.
- Contact the sellers’ Solicitors to confirm that firm is acting for buyers, requesting draft contract with copy of registered title and sellers’ replies to usual property information forms.
- When draft contract and other documents are received from sellers’ Solicitors –
- Check that all documents referred to in covering letter are included
- Review the sellers’ title and note any matters on which further enquiries need to be raised or where additional documents are required
- Check the title plan and send copy to you for confirmation that it correctly shows the property boundaries.
- Review the draft contract and check
- Names of buyers and sellers are correctly spelt
- Price is correct
- Property description is correct
- Whether there are there any conditions of sale which are not acceptable or require amendment
- Review sellers replies to property information forms
- Prepare any additional enquiries that need to be raised and send to sellers’ Solicitors
- Add any proposed amendments to the draft contract and return to sellers’ Solicitors
- Prepare the Transfer form and send to sellers’ solicitors for their approval
- Report to you with list of Fixtures & Fittings for checking and raising any preliminary points of concern
- Review replies to searches when received, and note any points requiring further attention, in particular:
- Obtain copies of planning consents and other planning documents revealed in local search, unless already supplied by the sellers’ Solicitors
- If the searches show any local financial charges such an improvement grant, which may have to be repaid when the property is sold, ask the sellers’ Solicitors for confirmation that this will be done
- Note any matters that you should be made aware of, such as whether the property is in a conservation area or if a nearby road improvement scheme is planned
Report on Title
Once all the necessary information has been received, enquiries are satisfactorily answered, and the contract has been agreed, your Conveyancing Solicitor will prepare and send you a full report on title.
The report sets out all matters discovered by the Solicitor, including not only details of the legal title but also reporting on the results of the various searches and the sellers’ replies to enquiries. It will include copies of all relevant documents. It is important for you to read this through and query anything which you do not understand.
At this stage you will usually be asked to sign the contract and transfer documents, and return them to your Solicitor. Signing the contract at this stage still does not bind you in any way, the contract will only become binding when ‘exchange’ takes place.
Agreeing the completion date
The completion date is the date on which the purchase will be legally completed; the purchase money is sent to the sellers’ Solicitor and you will then be able to pick up the keys and move in. The date has to be agreed between both parties before exchange can take place. Where there is a chain of linked sales and purchases, the same date normally has to be agreed for all transactions in the chain, this can take some time to arrange.
In the past it was common for there to be an interval of one month between exchange and completion. That was because the conveyance deed had to be drafted by the buyers’ Conveyancing Solicitors, approved by the sellers’ Solicitors, and then a fair copy had to be typed up and signed by all parties. The spread of title registration and computerisation has enabled several processes to be considerably speeded up, and much of the work traditionally done between exchange and completion is now usually carried out before contracts are exchanged.
This means that is now usual for completions to take place shortly after exchange, and sometimes a simultaneous exchange and completion can be agreed. It is however recommended that there should be an interval of at least seven days between exchange and completion, to allow time for any mortgage advance to be organised and for final searches to be obtained.
As most Solicitors offices are not open at weekends, completion has to take place on a weekday.
The work involved in the exchange and completion phase of Conveyancing is set out in my next article.