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Conveyancing Explained – Leasehold Purchase Part II: Pre-Contract

So what happens next?

Welcome to the second article in my Conveyancing Explained series, taking a look ‘behind the scenes’ at what your Conveyancing Solicitor actually does to earn their Fees. As we’ll see, it’s not just admin and form-filling. Part one considered the very early steps, from the Conveyancing Quote, to confirmation of instruction to your Solicitor.
Today, the Pre-Contract stage is under the microscope. . .

Confirming instructions to your Conveyancing Solicitor

Once you have confirmed instructions, the Conveyancing Solicitor will be ready to proceed. If you have given the name of your Solicitor to the sellers’ agents when the sale is agreed, the agent will be able to send out a sale memorandum to both parties’ Solicitors.

Why do I need a contract?

There are two major stages in the Conveyancing work on any house sale, these are

  1. the contract, and
  2. completion of the transfer

In English law, no contract for the sale and purchase of land is enforceable unless it is in writing, and incorporates all the terms agreed between the parties. Until a contract has been agreed, signed and exchanged, either party can pull out without any penalty. Buyers may pull out because their survey 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.

It is now usual practice for the Conveyancing Solicitor acting for the seller to prepare a contract. For ordinary residential sales this will follow a fairly 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 will usually incorporate the Standard Conditions of Sale; these 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.

Starting the Conveyancing Process – Pre-Contract Steps

These are the usual steps a Solicitor will undertake on your behalf for this stage of the Conveyancing. Brace yourself – it’s a long list, and this is still Pre-Contract!

  • Receive sales memorandum from sellers’ agents and check that details of price and property agree with information given by clients
  • Acknowledge receipt of sales memorandum to agents
  • Request usual property searches if possible (may not be immediately possible if a property plan is required): 
    • Local authority search
    • Drainage and water search
    • Environmental search
    • Chancel check (to see if there is any potential liability for chancel repairs)
    • Additional searches required for properties in certain areas, such as a coal-mining search.
  • Write to sellers’ Solicitors confirming that firm is acting for buyers, requesting draft contract with copy of registered title and lease. Also request replies to management enquiries or information pack from landlord/managing agents.
  • On receipt of contract from sellers’ Solicitors  –
    • Check that all Conveyancing 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
    • Review the lease and note: 
      • Whether the freeholder’s consent to transfer of the lease is required
      • Length of term unexpired
      • Amount of ground rent and provisions for rent increases
      • Maintenance and Insurance provisions
      • Service charge provisions
      • Any particular covenants that might be of concern to buyers
      • Will the buyers have to sign a deed of covenant with the freeholder?
      • Generally check that lease is satisfactory and will comply with mortgage lenders’ requirements
    • Review the draft contract and check:
      • Names of buyers and sellers are correctly spelt
      • Price is correct
      • Property description is correct
      • Are there any conditions of sale which are not acceptable or require amendment
    • Review sellers replies to property information forms
  • Prepare a list of any additional enquiries that need to be raised and send to sellers’ Solicitors
  • Return draft contract to sellers’ Solicitors with any proposed amendments
  • Prepare the transfer form and send to sellers’ solicitors for their approval
  • Report to client with list of fixtures & fittings for checking and raising any preliminary points of concern
  • Receiving management information pack or landlords replies to management enquiries and checking:
    • Are there service charge accounts for last 3 years?
    • Estimate for service charge for current year
    • Is there a reserve fund to cover future major works?
    • Are any major works in hand or proposed?
    • Is buildings insurance cover satisfactory?
    • Has the seller paid the service charge and ground rent up to date?
    • Is there any known breach of covenant or other reason for the landlord to refuse to register notice of the transfer after completion?
    • What fees will be payable for registering notice of transfer and on whom such notices should be served
    • Do the managing agents supply a form for any deed of covenant, or will the Solicitor have to prepare a draft for their approval.
  • If the flat is being sold with a share of the freehold, or a share in a company which owns the freehold title, check the freehold title and prepare a title transfer deed or a share transfer form for signature.
  • 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
    • If there are any local financial charges registered, e.g. an improvement grant, which have to be repaid when the property is sold, inform the sellers’ Solicitors
    • Note any matters that need to be brought to the clients’ attention, e.g. if the property is in a conservation area or a nearby road improvement scheme is planned.
  • Once all necessary Conveyancing  information has been received and enquiries satisfactorily answered, prepare and send a full report on title to the clients.

The report on title reviews 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.

Collating and interpreting this varied information is one of the reasons why Conveyancing can be so challenging, and hence why I recommend engaging a Solicitor to push through your transaction to successful completion.

In Part III, we’ll review the most crucial phase of the transaction, the point at which a Quality Conveyancing Solicitor is almost invaluable – The Exchange.

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