Buying Your New Home Part IV (the final stages)

We’re finally there – the end of the conveyancing process.  Its been a long series.  Only 4 parts, but its taken me ages!  You can all rest assured that generally my conveyancing work is quicker than my blogging.  Actually, the blogging has been delayed so that I could concentrate on the conveyancing.

We’ve reached a point where we’re happy with the title, the searches are all fine (or any issues have been resolved) and all of our enquiries have been answered.  Both the buyers’ and the sellers’ solicitors will be contacting their clients and inviting them in to go over the paperwork and sign contracts.  This is where a lot of misunderstandings exist.

The Sellers’ interview will be brief.  They just want to get rid of their property and receive some money.  Their solicitor will explain the effects of the contract and transfer deeds and they will sign them.The Buyer, however, need to know exactly what they are getting and their interview will be much longer.  They are also likely to have mortgage information to go through. Their meeting with their solicitor will be all about re-assuring them that their investment will be safe and ensuring that they know exactly what they are getting.  It is usually at this point that a solicitor is able to start talking about completion dates without raising false hopes.

Once a date has been agreed, everyone knows what they are heading for.  The Sellers’ solicitor can get a redemption figure for the sellers’ mortgage and calculate what will come out of the sale after all costs have been met.  The buyers’ solicitor can request mortgage funds and the balance due from the buyer.  Crucially, contracts can be exchanged.  Many people think that signing their contract seals the deal, but it doesn’t.  You could sign a contract and then tell your solicitor that you don’t want to proceed – the contract can be torn up and nobody is the wiser.  Contracts don’t become binding until they are ‘exchanged’ with the other side.  Both parties to the transaction then have a contract signed by the other side and the comfort of knowing that the agreed completion date will be met.

The buyer and seller can now concentrate on organising removals, meter readings and the other practical steps taken when moving house.  The buyer’s solicitor now carries out some minor searches at the Land Registry, which check that the seller hasn’t had anything registered against their title (such as new mortgages) since the transaction started.  These searches also prevent anybody else registering anything for 6 weeks.

On the day of completion, the buyer’s solicitor should have received the mortgage monies and any balance required from his clients and sends this, electronically through the banking system, to the sellers’ solicitor.  Once the funds have been received at the other end, completion has taken place and keys are released.

And that’s it…the simple version.  Anyone who has ever bought or sold a house will know that there is more to it than that.  Outside of the office, there is a lot of waiting.  Inside the office there is constant work behind the scenes throughout a transaction.  As solicitors, we try to keep our clients updated on progress at each of the stages I have outlined.  A regular question is…how long will it take?  Or, right at the outset, ‘Can we complete on x date?”  We always try to meet these expectations but until we have received search results, title papers, etc, we can’t give any guarantees.  Always remember that a few days’ delay is probably saving you, as a buyer, a ton of future hassle.

It will be a personal blog post next time.  There’s been lots going on in Newark lately.

Buying Your New Home Part III – Honing the transaction

Once again, I find myself apologising for the delay in moving this series forward.  Its been a hectic couple of months as I’ve been dealing with Tallents’ Solicitors’ admin as we move towards a new era of regulation from the Solicitors’ Regulation Authority.  There’s been a lot of new regulation and procedures to take on board, most of which solicitors have always done, in the main, but which now needs documenting in a different way.  However, that’s a story for another day.  Those who have been paying attention have got their contracts issued for their house sale and are probably wondering what happens next.

Next is actually where the work of the buyer’s solicitor really begins.  If I’m acting for a buyer, I need to check the title papers for the property.  A lot of the time, it is relatively straightforward, as the title is registered and all of the relevant information is on the title registers.  Sometimes, however, it is unregistered land and each of the documents has to be read in detail, to trace ownership and check any covenants (obligations) and easements (rights).  We have to make sure that the property can be used for what the buyer is expecting to us it.

Consideration has to be given to the specific circumstances of the individual property.  Does it have direct access from a public highway?  Is there a possibility that the property may have to contribute to the maintenance of a local church (Chancel repair)? Is there a possibility of a public footpath or right of way affecting the property.

The Buyer’s solicitor then carries out a number of searches – usually these are Drainage, Local Authority and, in Nottinghamshire, a Mining Search (although, interestingly, not in the centre of Newark, which is too close to the River Trent, and not in the heart of Southwell, where mining was forbidden within a couple of miles of the Minster).  Environmental searches are often requires, although solicitors with a good local history will have a reasonably good knowledge of former land uses in the area.

The solicitor must then interpret the search results.  There may have been works to the property for which there is no planning consent.  There may be planning consent that has not been implemented.  The local authority may be considering enforcement action for planning breaches.  All of these things need to be considered and, if necessary, resolved.  In recent years there has been more and more bureaucracy requiring paperwork (and I pass no comment as to whether this is a good or a bad thing).  Since 2002, any new windows need the proper paperwork.  Since 2005, all electrical and boiler work has needed it.  In the last 10 years, the Building Regulations became more complex and most works need completion certificates.

Whilst this going on, the buyer’s solicitor prepares a transfer deed for approval.  This is the document that both parties sign and that is ultimately the paper that hands over ownership of the property.

We’re not too far away now and next time we will look at exchange of contracts, completion and registration.  And I promise not to make you wait so long for the next one!

Buying Your New Home Part II – The First Steps

First of all, I offer my apologies to anyone reading this right now who is hoping to do their own conveyancing. There are a lot of stages and procedures and it may be some time before this series is finished! When I am finished, though, I would hope that you will all have some sort of overview of what I and my fellow property lawyers do to earn our money.

The first step that anyone contemplating buying or selling a property will have to do is choose a solicitor. If you look in your Yellow Pages or Thomson Local, you will see that there are quite a few out there. Some are local, some further away. All are desperate for your business. It is often (but not always) the case that those further away who are advertising in your locality are what High Street Solicitors would term ‘Conveyancing Factories’. With such firms, they carry out a lot of transactions and work in teams. Quite often the people you deal with will not be qualified but will have a qualified lawyer overseeing 20 or more of them. You may find that you will not speak to the same person twice on the telephone. It is also often the case that they will quote for headline costs that sound very low. You then discover the additional cost if there is a mortgage involved, for completing Stamp Duty forms and several other steps.

For some people this is fine. If you are only selling, the property is freehold and you have it mortgage-free, then you will be quids in. However, transactions like that are few and far between. Most people buy when they sell. A huge percentage have mortgages. Your property may be leasehold. You may only be selling part and retaining the rest.

High Street firms tend to be better placed in terms of conveyancing. Usually the lawyer dealing with you will know the area, know what specific items to look for. For instance, would a factory firm in Devon know that you need mining searches for properties throughout Nottinghamshire, but not in Newark or in Southwell? You could end up paying for searches you don’t need without that knowledge and experience on your side.

I know what you’re thinking. To quote Mandy Rice-Davies…”He would say that, wouldn’t he?” My answer is that I do have a position to protect but above are some of the reasons that I work at Tallents and not in a bulk conveyancing firm. We have systems in place to ensure that you have a named person dealing with your file (with bags of qualifications, bags of experience or (more often than not) both). You can always contact that named person and we don’t offer a charter to return calls ‘within 24 hours’ – we will, of course, be much quicker than that. Your advantage is that firms like Tallents rely on your business, your recommendation and want you to come back next time. We have to work hard to earn that from you.

OK…so we’ve looked at some differences in firms. Ultimately, though, word of mouth and recommendations are the best way to choose.

Once you have your solicitor sorted, they will open a file and send you a bundle of documents to review. Unfortunately, we are governed by more and more bureaucracy. Whether we are buying for you, selling, or both, we can no longer allow money to change hands until we are sure of who you are. (Another advantage of using a local firm with whom there may already be strong connections and who know you already). As I often tell clients, the Government has decided that everybody is a criminal and if they get away with it, its my fault! We therefore ask for certain ID documents. This used to be almost embarrassing and people baulked at it, but we’re now in a climate where such evidence has to be produced regularly for all manner of reasons.

When you are selling a property, the next stage is for your solicitor to obtain your deeds. Sometimes these are with a lender (particularly if you took out a mortgage more than 10 years ago). In more recent years, lenders suddenly realised that they were running out of storage space, so the Land Registry adapted its systems and most lenders no longer retain title deeds. Your ‘title deeds’, if there has been a transaction within the last 25 years locally, will be registered at the Land Registry and the worst case scenario is that, if you lose them, less than £10 will get you another copy from the Land Registry online.

However, solicitors generally look for more than this simple document which proves your ownership. Purchasers will be interested in planning consents, warranties, certificates and more. Sometimes a Land Registry Title Information Document will raise issues that only an old deed can provide the answer to.

The additional paperwork I referred to above will include a fittings and contents form for you to complete stating what is included in the sale and what is not, and a Property Information Form. This latter form gives the buyer an indication of some important matters which will not show up on the deeds – have there been any disputes? Who has looked after which boundaries? Have there been any extensions, new boilers, new windows or electrical works? These documents ultimately form part of the contract so you have to fill them in carefully.

So, we now have you identified and we have your paperwork. At this point, I think its only fair to leave you hanging and continue to retain the ‘mystique’ of the Law which is enshrined in words such as ‘indenture’ and ‘easement”.

Part III to follow.

Buying Your New Home – Part 1 – Overview

Happy New Year to you all.

I thought that I’d put together a little series explaining the steps involved in basic conveyancing transactions

These days contracts are usually exchanged over the telephone and most solicitors will call their clients immediately to let you know the good news. It’s safe to crack open the champagne now. Things can go wrong between exchange and completion but it is extremely rare. I have dealt personally with only two cases in 18 years.

In the first one the purchaser died the day before completion was due to take place. It was resolved for the deceased’s spouse and the seller’s were quite understanding so there was no additional cost to my client, although there could have been.  In the second case, the purchaser’s lender had overlooked the issue of funds, causing a lot of stress for the solicitors involved.  However, we were able to get all parties in the chain into their new properties over the weekend under licence and then completed on the Monday.  The only cost here was about £100 in interest along the chain and this was paid by the defaulting party.  As everybody had got into their properties when they expected, I imagine nobody particularly gave it a second thought over that weekend.

Nevertheless there are a number of legal procedures that must be dealt with before completion can take place. The main ones are as follows.

Evidence of title/contract

The vendor’s solicitor will send your solicitor a copy of the deeds or a summary of their content. If your solicitor has any questions he will make enquiries before contract.  He will also carry out the necessary searches.

Draft transfer/conveyance

The vendors’ solicitor will send your solicitor a draft transfer (for registered property) or conveyance (for unregistered property). This is the deed which passes the vendors’ interest in the property to you.

Mortgages

Your solicitor will write to your mortgage lender to ensure that the mortgage money is available in time for completion.

Engrossment of transfer or conveyance

When both solicitors are satisfied with the terms of the deed it will be ‘engrossed’, ie a final version will be prepared for signature by both sides.

Signing of final documents

You will be asked to sign the final documents and provide a banker’s draft (or, more often these days, a telegraphic transfer) for any further money required to fund completion over and above your mortgage advance.

Final searches

Your solicitor will conduct a final Land Registry search in case the vendor has just been declared bankrupt (in which case the property would no longer be his to sell) and to ensure that no last minute charges have been registered against the property. These could affect the mortgage lender’s security.

 

Over the next few weeks, I’ll explain each of these steps in a bit more detail.  The amount of work required for any particular stage will vary depending upon the location of the property, its history and the quality of the package supplied by the vendor’s solicitors at the outset.

The advent of ‘Tesco Law’

On the 6th October, ‘Tesco Law’ arrived.  You may have heard of this and the phrase itself is used by lawyers as a derogatory term for the fact that you no longer have to be a lawyer to run a law firm or offer legal advice and services.  Anything run under this new structure will be an ‘alternative business structure’ or ABS.  When the proposals were first mooted many years ago, it was widely expected that Tesco would want to become a big player as their next step towards world domination.  Tesco have since denied any such desire.  However, the Co-op, RAC and others have said that they will create or take over legal departments and offer legal services.

ABSs are supposedly being introduced to promote competition and innovation in a market where previously only identical organisations (law firms) have competed.  Law firms tend to sell themselves in similar ways.  Most would tell you that they offer a quality, personal service.  This can make it difficult to see how each law firm differs.  However, this is also a good reason why high street law firms should continue to thrive.  The tight regulation that has been in place for many years makes for better run firms.  No firm can advertise claiming, for example, that they are ‘the best firm in Newark’.  They could, but they would need to be able to prove it and that is almost impossible.  In actual fact, when I joined the profession in the early 90′s, advertising by lawyers was not allowed full stop.

I have seen quotes asking “Would you buy your groceries from a lawyer?  Then why buy your legal services from a grocer?”  These suggestions are a little disingenuous.  The ‘grocers’ in question would have to employ at least one lawyer to oversee the work that they do.  Initially it scared me that these ABSs would be able to undercut high street law firms by treating the services as a loss leader to drag more people into their brand and sell their more expensive items to the customers once they had been reeled in

After a little more deliberation, I realised that there is room for the ABSs.  There may currently be too many law firms in England and Wales – around 10,000.  At Tallents, we believe that we are ready for the new challenges and if any firms fall by the wayside as a result of the changes, we will not be one of them.  We are of a size that can offer a wide range of legal services.  We have procedures in place that ensure a quality offering.  I firmly believe that there will always be a place for the lawyer that you can meet, get to know and he or she can get to know you, your circumstances and your businesses and concerns.  If your lawyer knows you better and has a fuller, rounder picture of your affairs and concerns, that will always ensure better advice that takes everything into account.

Lawyers have faced these challenges before.  Around 15 years ago we saw the coming of ‘conveyancing factories’.  Many of you will have used their seemingly cheap services before.  Experience shows that people used them once and then not again.  There is a view that they are impersonal (you have a team rather than an individual looking after your matter and may not speak to the same person twice) and everything is dealt with from a distance, reducing the scope to ask questions and clarify things.  General experience shows that people use these cheaper ‘factories’ once and then not again.

This is a lesson that the new ABSs will have to learn if they don’t want to be derided and discarded by customers in the future.  Many law firms have already taken note.  Those that haven’t may well fall by the wayside.  Tallents have already obtained CQS (Conveyancing Quality Scheme) accreditation, showing that the Law Society have reviewed our procedures and confirmed that we carry out conveyancing to the highest of standards.  Also, after around a year of planning and preparation, we have implemented new case management software which has improved our efficiency and ability to react instantly to the needs of our clients.

We are always trying to improve what we do and we have some exciting developments in progress.  Watch this space!

Tallents continue to be committed to their surrounding community, as we have done for almost 240 years.  If the new ABSs can offer their communities the same levels of service and support, then we, as lawyers, should welcome them and not shun them as a result of blind fear.  Those who are well organised have nothing to fear.