Help On Hand
The stress of buying or selling your home has been likened to that experienced in bereavement or divorce. But a problem shared is a problem halved and we are here to help you through the process. We can advise and assist in many ways but perhaps the most important is our ability to liaise with all the solicitors to ensure as little hassle as possible:
- If you are selling, we will undertake the marketing and use our best endeavours to suit your requirements by introducing a suitable buyer at the best possible price;
- you will need to have a package of information available about your home which we can provide for you; and
- if you are buying, we can offer you our wide range of properties on which we are instructed and guide you through the purchase procedures generally.
Smoothing The Way
In either case, your solicitor or licensed conveyancer will ensure that all the legal requirements are met and you are selling or purchasing as smoothly as possible.
The legal process may seem a minefield but the sale or purchase of land is fundamentally different from buying or selling anything else. If you agree upon a price to buy or sell a motor vehicle, but then change your mind, you could be sued for breach of a verbal contract. This does not apply to land as there are many more obligations involved which need to be checked through and understood.
'Subject To Contract'
For over three hundred years - since the Statute of Frauds 1677 - the law has required the sale or purchase of land to be set out in writing, signed and containing all the important terms. It used to be commonplace for any offer made, and any acceptance of that offer, which was in writing, to be endorsed with the magic words 'subject to contract' - this was to avoid either party being legally bound inadvertently. If those words were not used, then an exchange of letters could be sufficient to bind both parties.
You may find the term 'subject to contract' still in use but it is no longer so critical since modern legislation requires sales of land to be recorded in a specific format, called a Deed, which cannot be created unintentionally. That said, the expression remains in use as a convenient shorthand note to indicate that an offer is still provisional and not a firm commitment so the term may still appear in the correspondence. It is no longer critical.
At this stage there may still be minor negotiations to be concluded. For example, does the sale agreement include, or exclude, furnishings and fittings? By this is meant any of the moveable items which could be taken from the property without damage to the structure - 'chattels' in legal terminology. Misunderstandings can arise and should be dealt with at the outset. Carpets and curtains are the most common chattels. They can be excluded, or included, in the price. As can other items.
Fixtures And Fittings
It should be remembered that the legal definition of 'chattels' is 'personal property'. Often, a description of the property will include (or exclude) 'fixtures and fittings'. This can be a trap for the unwary buyer or seller. As stated, in law, a 'fixture' is something secured to the property which cannot be removed without damage to the structure. for example, a hob which is part of a fitted kitchen. As such, it is part of the property and the seller has no right to remove it without notice.
Unless the contract expressly makes reference to this item being excluded from the sale, it should remain. As it is fastened to the property it is, in law, an immovable. The same applies to plants and shrubs in the garden, although light fittings may generally be removed if this does not significantly damage the ceiling.
Stamp Duty Adjustments
To avoid delay, expense and uncertainty, we always recommend spelling out exactly what is being taken and what will be left. With most properties being liable for Stamp Duty based on the contract price there may be more attention paid to the value of the 'fixtures and fittings' to avoid falling into a higher duty band.
A separate contract and price is then concluded for these excluded items, additional to the purchase price of the property. Please be certain, at the very beginning, as to what is, and what is not, included. Incidentally, the structure and collection of Stamp Duty (now called Stamp Duty Land tax) has recently been tightened up. The Inland Revenue has set up a team of investigators to look into the true value of 'extras'. They can inspect property and there are now heavy fines for cases of tax evasion.
Preparing The Contract
When all is agreed in principle, the seller's solicitor prepares a draft contract to send to the buyer's solicitor for approval or suggested amendment. This is because only the seller knows what title he can give; whether freehold or leasehold and including any documents to any critical aspects, such as the death of the original owner and Probate of the Will vesting ownership in the seller plus any encumbrances (easements) against the title, such as rights of way.
From June 2007 this information must be made available at the outset. The changes sound more traumatic than they really are and we can take care of everything for you. It is all part of our comprehensive service.
Sales used to involve the physical transfer of the title deeds or lease which were handed over to your conveyancer or, if the property is mortgaged, obtained from the lending source. These days the large majority of titles are registered: then all your conveyancer needs to know is the title number so they can obtain all the necessary information from the Land Registry. These will come electronically although they are still called 'Office Entries'.
Incidentally the whole operation of HM Land Registry is changing following the Land Registration Act 2002 which, in effect, rewrote all the procedures for the age of electronic communication.
Energy Performance Certificates
An Energy Performance Certificate, which measures the energy efficiency of the home concerned. Much like the multi-coloured sticker on new appliances, EPCs tell you how energy efficient a building is and give it a rating from A (very efficient) to G (inefficient). EPCs let the person who will use the building know how costly it will be to heat and light, and what its carbon dioxide emissions are likely to be.
EPCs are valid for 10 years from when issued.
But that is for the future. Presently, while the sale or purchase is going through the initial preparatory procedure, either side may withdraw without any liability and can do so until contracts are exchanged. When the market is extremely buoyant with prices rising, the inherent delays built into the system, may allow 'gazumping' to occur.
This term means the seller accepting a higher offer than the one already agreed with the first buyer. The seller may have previously agreed a sale verbally but then reneges on that agreement attracted by the higher amount - or perhaps a promise by the new buyer to move more quickly which may be more understandable. Incidentally, the word 'gazump' derives from an old Yiddish word 'to cheat'.
When several people are interested in the same property various bids may be made as the seller is casting around for the best bid. That is the market operating to achieve a fair price: it is not gazumping which only occurs when he has already agreed to sell at a definite price and legal work is under way, but it is still, technically, 'subject to contract'. There is little that can be effectively done to stop the practice, as the seller is legally entitled to proceed with the best offer but this is one factor behind the Government's enthusiasm for HIPs.
Of course a buyer could, when the offer is accepted, ask the seller to agree, in writing, to treat with him alone for a specific period, to allow him to conclude his enquiries and exchange contracts within that time-scale. There are ways of avoiding much of the risk which we can suggest to you. At the end of the day the best answer is a pro-active conveyancer committed to getting the job done quickly.
Kept On The Market
If your offer has been formally accepted but the owner still wishes to keep the property on the market, you will be told. This is not only fair to you, it is also an obligation in the Estate Agents' Code of Practice to which most estate agents subscribe.
Back to the procedures... after receiving the draft contract from the seller's solicitor, the buyer's conveyancer will send a long list of printed preliminary enquiries in return covering virtually everything that needs to be known about the property, including insurance, guarantees, disputes, any unusual charges and, if not already agreed, whether the seller intends to remove those fixtures, fittings, plants, aerial, burglar alarm, telephone, etc.
He will also send off an official search, with a printed list of further enquiries, to the local authority to see, for example, if the property is subject to any local land charge or any adverse entries; how drainage is connected, what building or other development has been granted, proposed roads, compulsory purchase or mining activities past, present or future.
Once all these enquiries and searches are complete and satisfactory, the buyers conveyancer will ensure that financial arrangements, such as the mortgage offer, are in place so that the purchase price can be paid on completion, with the date proposed inserted in the draft contract. At this stage, the deposit, normally 10% of the purchase price, is forwarded to the sellers solicitor. If the mortgage advance is more than 90%, the balance is normally sent. The buyer signs the contract which is sent off with the deposit.
The sellers solicitor will ensure that his client is ready to be committed. If so, a contract in identical terms is signed and exchanged with the buyer. Both parties are now legally bound and neither can back out (without consent of the other) as that would be a breach of contract.
If the seller or buyer has another property to buy or sell in conjunction, the conveyancers will normally ensure that all the properties in the chain of transactions exchange contracts simultaneously.
The buyers conveyancer will make a few final checks to ensure that there is no undisclosed mortgage and the seller is not bankrupt, for example, before preparing a Transfer Deed or Conveyance. Normally, prior to completion, the buyer will receive a statement of account from his conveyancer setting out the financial position, taking into account any pre-contract deposit paid to the estate agent and the deposit paid on exchange. On the day agreed for completion, the balance of the purchase price is paid to the sellers solicitor, normally electronically. The keys will then be released to the buyer who becomes liable for the Council Tax, Water Rates, and all other outgoings from that date.
Even with the best preparation, delays can occasionally occur or hidden liability surface after completion though this is increasingly rare.
Selling normally entails another purchase at the same time. Conversely, your buyer, unless a first time buyer, will also be trying to sell and cannot normally exchange contracts until his own property has been sold to provide the purchase money. With the additional delays in searches and enquiries, being involved in a chain of transactions effectively means you can only move at the speed of the slowest link in the chain.
This is where we can assist as we can talk to other agents and other solicitors in the chain and keep you properly advised over what is happening. We will do everything we can to smooth out the delays that inevitably occur. Hopefully your solicitor or conveyancer will also do their best to keep you informed of progress. But always ask them the reason for delay; they are there to help and keep you fully informed.