Residential Conveyancing
Stages of a Conveyancing Transaction
Consider how should you own the property
Survey & Mortgage
Searches – against the property
Investigation of Title & Enquiries
Exchange of Contracts
Completion
Payment of Stamp Duty Land Tax
Registration of Property at the Land Registry
How should you own the property?
If you are buying a property with someone else you should understand the basis of ownership from the outset. There are two kinds of joint ownership:
Joint Tenants
Two or more people own the property on the following basis:
On sale of the property the proceeds are automatically divided equally between the parties, regardless of contributions made to purchase price or subsequent improvements
If one joint owner dies, his or her share automatically passes to the surviving owners without payment. The transfer of the deceased owner’s interest to the other joint owners is automatic and is not affected by any Will of the deceased owner.
Tenants in Common
Two or more people own the property and the shares in the property are specified. They may own property jointly as tenants in common in equal shares or unequal shares. This form of ownership can record differing shares, particularly if one party has contributed more of the purchase money than another. The effects are as follows:
On sale the proceeds of sale are distributed between the owners in accordance with their stated shares
If any owner dies his or her share does not automatically pass to the other owner but will form part of the deceased estate and therefore pass to either the beneficiaries under the Will or if no Will has been made to the deceased next of kin.
Note: If two or more people own property as beneficial owners it is possible for any one owner to sever the joint tenancy and change it into a tenancy in common by the serving of a notice on the other party(ies). It is not necessary to have the agreement of the other owners for this to happen.
Survey & Mortgage
If you are applying for a mortgage your lender will need an independent valuation of the property. They normally appoint their own surveyor to do this, but the buyer has to pay for it. This is a valuation not a survey and cannot be relied upon in determining the condition of the property.
Unless you are buying a new property, which has the benefit of a ten-year guarantee or some other form of guarantee, it is recommend you obtain the benefit of an independent survey of the property by a chartered surveyor. This is known as a “Home Buyer’s Report”, the price of which varies according to the value of the property. Once you have completed the purchase it will be too late to rectify any defects, which were not disclosed. The golden rule is “caveat emptor” “buyer beware”.
Searches
There are various searches which can be undertaken when purchasing land or property to assist in identifying the facts, and decisions that may adversely affect the property or your enjoyment of it.
Local Authority Search – Pennine Law advise purchasers to have sight of an Official Local Authority Search rather than an agency search. Whilst slightly more expensive an Official Local Authority Search these searches are preferred by Lenders and can in the long run save time and further expense. A Local Authority Search would reveal whether any planning permission or building regulation approval applications have been adopted by the Council. It would also reveal whether there are any road schemes in place which would affect the property or the surrounding area and whether or not the local authority have issued any compulsory purchase or enforcement notices. Radon is a colourless, odourless gas which is radioactive and which occurs naturally. It is formed where uranium and radium are present in bedrock and can move through cracks and fissures into the sub-soil and into the atmosphere, or by seepage into spaces under and within dwellings. Radon occurs everywhere across the UK but usually at levels, which pose little or no risk. Your local authority search will advise the level of risk and where there is a likelihood of a high level of radon being present further advice will be required from the National Radiological Protection Board.
Drainage Search – This search reveals whether the property is connected to the mains water supply whether surface water and foul water drain from the property to the public sewerage system and whether there are any public sewers within the boundary of the property.
Environmental Search – provides information on the area surrounding the property and details of any firms or industries in the area which are subject to environmental controls. It also provides information on landfill sites within the area and any incidents of pollution or other environmental damage in the area.
Mining Search – This search reveals whether the property is likely to be troubled by past present or future underground or opencast mining. It will also reveal whether there are any shafts close to the property and whether any subsidence claims have been noted against the property.
Chancel Repair Search - The purpose of this search is to determine if the property is located in the parish of a church, which may be able to compel all the residents of the parish to contribute to repairs of the Church. If the property is identified as being in a ‘risk parish’ indemnity insurance can be arranged for a single premium based on property value and size. All lenders will require this search to be undertaken. More details can be obtained from the website www.clsl.co.uk.
There are other searches, which may be necessary for example a Company Search and a Commons Registration Search.
Pennine Law undertakes the majority of these searches on line which means the results are processed quicker.
Investigation of Title & Enquiries
The Sellers Solicitors provide the draft Contract and various information for the purchaser to approve. The Buyer’s solicitors will ensure that all the documents are checked thoroughly before proceeding thereby ensuring everything is as it should be and no difficulties should arise following completion. The seller will provide information of what is being included and excluded from the property. Boundaries and maintenance of boundaries will be identified, disputes with neighbours and work carried out to the property will also be provided. Once this information is provided further enquiries may need to the raised with the Seller solicitors.
Exchange of Contracts
Once the contract has been signed and the title document and search results are satisfactory and funds are available either by way of mortgage or personal funds all parties can proceed to exchange of contract. Exchange of contracts is carried out by the Solicitors and this is when the transaction becomes binding on all parties. A completion date will be set and the terms of the transaction cannot be varied. It is usual for the Buyer to pay the Seller a deposit of 5% or 10% of the purchase price on exchange of contracts. The buyer will also be responsible for the buildings insurance on the property from exchange of contracts. When there are linked transactions exchange of contracts must take place simultaneously throughout with the same completion date.
Completion
Completion day is when the balance of the purchase money is paid to the sellers solicitors and in return the buyer receives the keys to the property.
Stamp Duty Land Tax
Stamp Duty Land Tax is payable to the Inland Revenue within 30 days of completion. Up to date rates of stamp duty land tax are available on the following link www.hmrc.gov.uk/sdlt/rates-tables.htm
Registration of Property
Following completion and payment of any stamp duty land tax the Buyers solicitors will register the Buyer as owner and if applicable the mortgage at the Land Registry. Following registration the Land Registry will provide a copy of the Title Information Document. If a mortgage is in place on the property a copy of the Title Information Document will be sent to the lender.
Note: If you have not already done so, Pennine Law recommend you consider making a Will after completing your conveyancing, as this will have the effect of bringing certainty into what is otherwise both an uncertain and very often unsatisfactory area, particularly when people die intestate. If you would like us to assist you in the preparation of your Will please arrange an appointment with our specialist.
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