Conveyancing

Whether you are buying or selling a property you will need to understand the conveyancing process, which means the legal transfer of ownership of property. Conveyancing also allows sellers to stipulate exactly what is and is not included in the sale.

• What is Conveyancing?
• Conveyancing - Buying a Property
• Conveyancing - Selling a Property
• Conveyancing and Remortgaging

What is Conveyancing?

Conveyancing is the legal term for the transferring of ownership of a property. Whether you are a home buyer, seller or just looking to remortgage with a different lender, you will need to know how it works. Although it is possible to do it yourself, the process of conveyancing can be very complicated. First-time buyers especially, will need help with conveyancing, as it incorporates searches on the property, investigation; assessment of draft contracts, exchange of contracts, completion and post-completion paperwork.

Conveyancing may be best left to the professionals; either a solicitor or a licensed conveyancer - someone qualified specifically to do this kind of legal work. Solicitors and conveyancers structure their charges in different ways - some charge a fixed fee while others charge a percentage of the property value.

On top of fees are set costs known as disbursements. This term covers everything else your conveyancer will charge you for, such as transferring the money from your lender to the account of the person selling their home, VAT, postage and any other costs incurred in carrying out the work.

The information in this guide is based on the law in England and Wales.

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Conveyancing - Buying a Property

Once you have found your dream home and have agreed to buy it, you instruct a conveyancer to act on your behalf who, in turn, will contact the seller's conveyancer. At this stage, pre-contract enquiries begin, which include specific questions relating to such issues as disputes with neighbours, alterations to the property, etc. The seller is legally required to answer these enquiries honestly!

Although you may already have had a valuation survey carried out in order to arrange a mortgage, you may also decide at this point to have a more thorough home buyers' report done or for instance if the property is old or unusual - a full structural survey done.

Following the introduction of Home Information Packs (HIPs), some sellers may have already had a survey (called a Home Condition Report) carried out which will form part of the HIP. However, an HCR will now be a voluntary aspect of the pack and many buyers are still expected to carry out their own survey.

Any HIP that has been compiled for the property you are purchasing should also include all the necessary searches. Provided that your mortgage lender is prepared to accept these searches and does not require you to repeat them, the purchase process will be considerably faster than in the past. Previously, buyers would be responsible for searches which could take anything between four and six weeks to be processed.

Be aware that a local authority search only shows details of the property you are buying. It won't tell you about the supermarket being planned next door. Unless you pay more for a plan search, you won't know until it's too late. Your conveyancer will make any necessary additional enquires, including those that may be requested by your lender as conditions of your mortgage offer, such as a drainage search, detailing whether waste water goes into a public or private sewer.

Assuming the results so far are satisfactory, contracts and deeds will be prepared. Your conveyancer will then assess the draft contracts. As these are legal documents, the wording has to be correct and unambiguous. If the property is not freehold but leasehold , this is the point at which you will need to check thoroughly the apportionment of expenses (if you are in a block of flats), the terms of maintenance, the terms of the management of the property and what charges are made, such as ground rent and service charges.

Any offer to buy that you make will be made subject to survey and contract. This means that neither you nor the seller is legally bound to go through with the transaction and each may withdraw without incurring a legal penalty right up to the point of exchange of contracts . Obviously if such a withdrawal is made by either party, any money you have spent so far on surveys or on solicitors fees will be lost.

Assuming neither party withdraws, you will be asked to sign the contract and mortgage deed and pay the relevant deposit - between 5% and 10% is typical although if it is not your first home you are buying, it could be considerably more. A completion date for the sale will also be set - usually within 28 days.

You will be asked to sign the contract and mortgage deed and pay the relevant deposit - between 5% and 10% is typical although if it is not your first home you are buying, it could be considerably more. A completion date for the sale will also be set - usually within 28 days.

Once contracts have been signed by both you and the seller, they are exchanged by your conveyancer and the seller's solicitor/conveyancer - hence you have reached the exchange of contracts and the transaction becomes legally binding. As purchaser, you are responsible for the insurance of the property after the exchange of contracts so you need to ensure appropriate cover is in place from that date.

The next step in conveyancing is to carry out bankruptcy searches. Mortgage lenders want to be sure that neither the buyer nor the seller has a bankruptcy notice registered against them. Title searches at the Land Registry and the Land Charges Department (depending on whether the property is registered or not) will also be carried out, confirming that the seller has the right to sell.

Thereafter, on the date of completion you must pay the balance of the funds via your conveyancer, who, in return, will get the title deeds from the seller's representatives. Finally, stamp duty is payable (depending on the value of the property) and your conveyancer will arrange to register the transfer ownership with the Land Registry, supplying you with a copy of the title and sending the original document to your mortgage lender.

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Conveyancing - Selling a Property

If you market your home for sale without a Home Information Pack (HIP), available through lenders, estate agents and specialist pack providers, you could be breaking the law! You need to check whether the HIPs rules apply to your property. Until 31 December 2007, you do not have to have a completed HIP to put up the for sale sign but you must be able to show that you have begun to compile one.

Your HIP must include an index, which provides a checklist for sellers, buyers, estate agents and enforcement authorities. Where a document that must be included in the Pack is unavailable, the Index must say so, give the reason it is missing, and indicate what steps are being taken to obtain it.

As well as an energy performance certificate, your HIP must have the following documents from the Land Registry:

• Official copies of the individual register (made up of a property register, proprietorship register and, typically, a charges register)
• An official copy of the title plan

It must also include the following search documents:

• The local land charges register relating to the property being sold. Once a search is completed, which can be carried out by a personal search company or a local authority, you will receive an official search certificate.
• Other records held by the local authority on matters of interest to buyers, such as planning decisions and road building proposals. These are referred to as local enquiries in the Home Information Pack regulations. A local authority or a personal search company can be used.
• The provision of drainage and water services to the property. The local water company or a personal search company can be used (however, the search must comply with the HIP Regulations).

You will be required to complete forms detailing information about your property and its fixtures and fittings . If the property is leasehold, you will be asked for more information about the lease.

If you have any guarantee documents relating to damp-proofing, building work, extensions and any other documentation such as planning consents, you will also be asked to provide them.

Your conveyancer will prepare draft documentation that should include a draft contract of sale and a copy of the lease if the property is leasehold. If the property is freehold either a land certificate (if there is no outstanding mortgage) or a charge certificate (showing the mortgage) should be provided. In rare circumstances, if the title of the property is not registered with the Land Registry, an "abstract of title" should be supplied which will contain copies of all deeds and documents proving that the seller actually owns the property and may sell it.

This paperwork is sent to your buyer's conveyancer who may then carry out further searches. Any questions that arise from these searches must be satisfied before you will be asked to sign the contract.

Once the contract is signed and a completion date agreed, it will be exchanged with a contract signed by the buyer. Your conveyancer will, at this stage, also receive a deposit from the buyer. Once the contracts have been exchanged, the sale becomes legally binding. Both parties are now committed to completing the sale. Backing out may incur legal action as well as high costs. Once contracts have been exchanged the property is, in fact, no longer yours to worry about. The buyer assumes responsibility for it and for insuring the building.

Your conveyancer will approve and ask you to sign a transfer deed and apply to your mortgage lender (if you have one) for a redemption figure. On completion of the sale, your conveyancer will receive the balance of the sale price and, in return, hand over the title deeds to the buyer's conveyancer. Any mortgage will be redeemed out of the sale proceeds; your conveyancer will subtract their costs and forward the rest of the funds to you.

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Conveyancing and Remortgaging

If you are changing your mortgage lender, your conveyancer will arrange to get the title deeds from your existing lender and get a redemption statement showing how much is owed on your existing mortgage.

Your conveyancer will check any special instructions from your new mortgage lender and will carry out any searches against the property that are required. You will be asked to sign the mortgage deed and agree a completion date. On completion your existing mortgage will be paid off and the new mortgage registered with the Land Registry.

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07 September 2007 © Moneyextra.com

Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.