This note is to provide guidance to clients who are purchasing properties with our assistance. It is intended to be a guide not as to the legal aspects, on which we will report during the transaction, but as an outline of the procedure. We stress that it is only a guide and there can be significant differences on particular transactions.
We are normally informed of a transaction by the client or the estate agent. At the time instructions are confirmed we will give you an estimate of the costs, VAT and disbursements that will be payable. This estimate is a guide and if a transaction becomes unusually complicated or there is an abortive purchase our fees may be higher than the estimate - as and when this becomes apparent we will give you a revised estimate. We charge for abortive work on the basis of the time spent on the matter but capped to our overall estimate. Our hourly rates are set out in our terms and conditions which will be provided to you at the outset.
At this stage, we request a payment of £500 on account of our fees and the disbursements.
If two or more people are purchasing a property it is possible for the legal ownership to be taken by one or more of them and what is called the beneficial ownership can be shared either as "joint beneficial tenants" or "beneficial tenants in common". There is a vital distinction between the two in that on the death of a joint beneficial tenant his or her interest passes automatically to the surviving owner(s) whereas the interest of a beneficial tenant in common passes in accordance with his or her will or on intestacy. In the case of a joint purchase we need instructions as to how you wish to own the property and will provide to you at the outset an explanatory note together with an instruction form for you to complete and return to us.
Pre-contact investigations and enquiries
When you have confirmed your instructions to us we will write to the seller’s solicitors to ask them to provide us with a draft contract and supporting papers. When we have received the supporting papers it is customary to carry out searches, including searches of the records of the local authority, water and drainage companies and environmental agencies.
We will review the documentation and send copies to you with a report explaining the main legal aspects of the transaction. We will also raise with the seller’s solicitors any additional enquiries that you or we consider to be necessary.
This process should be completed within three to four weeks of receiving the initial instructions. However the timescale does depend on factors outside our control, for example how quickly papers are provided by the seller’s solicitors and how long it takes to process the searches. During this process you will need to arrange your finances, including obtaining a mortgage offer if required. If you do not wish us to do any work on the transaction before you have obtained a mortgage offer please let us know.
Exchange of contracts
When you instruct us to proceed we will require from you the signed contract and payment of the deposit that is payable on exchange of contract - normally this is 10% of the purchase price. If you are also selling a property at the same time it is usually possible to use on your purchase the deposit available from your sale. We recommend that you discuss with the seller, either directly or through the estate agents, the date on which it will be convenient to complete the transaction - all the parties should then inform their solicitors of the preferred date(s). We will then exchange contracts on your behalf and the actual completion date is agreed upon exchange.
Once contracts have been exchanged you will be contractually bound to complete the purchase. If you withdraw at that stage you will be liable to pay the penalties specified in the contract and you will lose your 10% exchange deposit. It is of fundamental importance therefore that contracts are not exchanged unless you are certain that you are in a position to complete the purchase. We also recommend that you re-inspect the property before you instruct us to exchange contracts for you.
Before completion we will arrange for you to sign various documents and provide to you a financial statement setting out the calculation of the funds required from you to complete your purchase. Some of the bills such as ground rent and service charges on leasehold properties may have been paid in advance by the seller and if that is the case you will have to reimburse the seller an appropriate proportion so that the amount required on completion may be slightly more than the purchase price alone. As soon as we have been given the exact figure by the seller’s solicitors we will prepare the financial statement showing the amount required to complete the purchase, inclusive of our costs and disbursements (such as stamp duty land tax), and giving credit for the mortgage advance, exchange deposit and any payments you have already made to us.
If you intend to let us have the balance by a personal cheque it is essential that we receive it at least seven days before completion so there is sufficient time for it to clear. This is not because we doubt the cheque will be met but because we must have cleared funds in our client account before drawing on it to complete your purchase. If necessary we can give you our bank details so that you can transfer the funds electronically instead.
On the completion date the money will be paid to the seller’s solicitors. You will not be involved in that aspect of the transaction as the money is generally sent through the bank transfer system and it can take several hours for the money to pass from one bank to another. The seller’s solicitors will not authorise the seller or agent to handover the keys to you until their bank has received the money therefore you should not arrange to arrive at the property too early in the day unless the seller has agreed to allow you and your removers access before the money clears.
You should make arrangements with the gas, electricity and telephone companies for the supplies to be changed into your name on completion and notify the local and water authorities when completion has taken place so that the council tax and water charge accounts can be transferred to you.
After completion has taken place we will deal with your stamp duty land tax liability and register the purchase and mortgage at the Land Registry. This normally takes 4-6 weeks to complete and once it has been done the title deeds will be sent to your lender and copies sent to you.
What you need to pay and when
In summary, you will need to make 3 payments to us:
1. An advance payment of £500, on account of our costs, at the outset of the matter;
2. A payment in respect of the 10% deposit required for exchange of contracts; and
3. A final payment of your contribution to the balance of the purchase price and costs, payable by the completion date.
If you have not already done so, you should consider making a will to ensure that your property and other assets pass to those whom you wish to benefit on your death. We can advise you and further information about wills is available on this website.
[Correct as at March 2014]