1) When should
I instruct a solicitor?
If buying you should instruct your solicitor as soon as your offer
has been accepted. Your solicitor can then be moving ahead with
getting on with the paperwork and searches. If selling it could
be a good idea to advise your solicitor when you list your property
for sale, so that the agent has solicitor details right from the
beginning and it does not delay matters.
It is not good practice to delay instructing your solicitor until
you have received a survey report or a mortgage offer as this may
cause delay and, perhaps more importantly, may lead to the estate
agent or the seller to believe that you are not getting on with
things and therefore prejudice the transaction.
2) What about surveys?
Valuation: Normally required by your bank
or building society for mortgage valuation purposes, which is the
most basic kind of survey, more or less consisting of a cursory
inspection of the property and an assessment of its present market
value.
Home Buyers Report: If you are wanting
a more in depth report on the condition of the property, for peace
of mind, not really asked for by mortgage companies, but is included
in the proposed HIP’s (Home Information Packs). Ask us to
recommend a surveyor for you.
Full Structural Survey: Sometimes a lender
will ask for this report, if the mortgage valuer thinks there may
be structural issues, you can also have one if you would like further
peace of mind about the property.
Many people consider that this basic inspection of the property
is insufficient to protect their investment and choose to additionally
pay for their own survey. Depending on the nature of the transaction
it is normally best to wait until your solicitor has received a
draft contract before instructing the surveyor, which is a sign
at least of a basic commitment on the part of the seller although
even then there is no guarantee that the deal will go through.
3) What type of searches will my solicitor
undertake?
Before exchange of contracts it is usual to undertake a local search.
There are sometimes other less common searches which are carried
out depending on the location of the property.
- The local search is a check at the local authority as to any
information that may be recorded against the property and would
reveal, amongst other things, it’s planning history, whether
there are any road schemes or compulsory purchase orders affecting
the property and matters of a similar nature.
- There are considerable difficulties with some local councils
where the turnaround times for processing local searches have
become unacceptably long. Recognising that most of our clients
will be unhappy to see their proposed purchase delayed we now
use a personal search agency, PSG The searches carried out by
PSG are usually slightly less expensive than the fees charged
by the council and nearly always quicker.
- The environmental search is a relatively new type of search
and is conducted on line (the result is normally obtained within
a few minutes), and provides an indication as to the recorded
uses of the land shown on official maps of the vicinity. It includes
an assessment as to the likelihood of serious quantities of contamination
in the land around the property and of the flood risk of properties
in the area. It does not however involve any soil testing or other
physical inspection.
- A planning search is a search in the immediate vicinity of the
property for any planning permissions affecting adjoining or nearby
properties. You may wish such a search to be carried out as the
local search will produce information only for your particular
property and not for planning applications in the vicinity.
4) It is not our policy to carry out an
environmental search or a planning search as a matter of course.
If you do require either or both of these searches to be carried
out please let us know.
- In some areas it may be necessary to carry out a coal mining
search to check whether the property is affected by subsidence
due to mining.
- In certain rural locations it may be advisable to carry out
a Commons Registration search. This identifies whether any land
in the area is common land and therefore subject to certain public
rights of way.
5) How much deposit will I have to pay (and
when)?
Most residential conveyancing contracts require 10% of the purchase
price to be paid when the contracts are exchanged If you are also
simultaneously selling a property it is usual to use the deposit that
is received on your sale as the deposit on your purchase and to request
that the seller accepts this even if it is less than 10%. However
a seller will not normally accept less than 5% and the contract will
normally require that the balance of a 10% deposit is paid if you
do not complete the purchase on the due date.
If you are obtaining a 95% or more mortgage the seller may be advised
to accept a 5% deposit on exchange of contracts.
It is not normally advisable to pay any deposit until exchange of
contracts and any money should go through the solicitor. It is sometimes
necessary to pay a small reservation deposit e.g. when buying a new
property from a developer but you should ensure that this is refundable
if you pull out.
6) Is there anything
I can do to reduce stamp duty?
There are some very sophisticated stamp duty saving schemes which
are sometimes used in very high value transactions. There is not really
any way to reduce stamp duty in general and the Government have recently
tightened up. However a simple way to reduce the duty (which applies
to transactions of more than £125,000 or in certain special
areas over £150,000) is if part of the price can legitimately
be apportioned (allocated) to fittings or contents. This can be particularly
useful if the price is just over one of the stamp duty bands, i.e.
£125,000/£250,000/£500,000 or if the price is in
one of the higher bands. The amount must be agreed with the seller
and be reasonable and realistic. It may be helpful to agree a list
of relevant items, and if possible for the seller to let you have
some proof of the value of the items such as receipts. Your lender
(if applicable) may need to be notified that the price for the property
itself has been reduced but in most cases this will not affect the
terms of the mortgage offer.
7) What difference will it make to my transaction
if there is a chain involved?
Inevitably if there are a number of people looking to buy and sell
simultaneously, any delay in relation to any one of the transactions
will prevent everyone else from exchanging contracts. If you do find
yourself in a chain it is always sensible to try to find out at the
beginning of the transaction the position of the other parties in
the chain, and to try to monitor the progress made by each person
as the transaction progresses. You should ask your agent to do this
for you.
8) Why do you charge more for leasehold rather
than freehold transactions?
Unfortunately, there is a lot more work involved in leasehold Conveyancing
. Leases are complex and usually lengthy documents often many years
old, which need to be carefully studied to check that they are satisfactory
and that they meet present mortgage company requirements. The Council
of Mortgage Lenders in recent years has laid down a stringent set
of criteria that all residential leases must meet and if they do not
they are considered defective and remedial action will have to be
taken by the solicitors involved in order for the sale to proceed,
normally putting the seller to some expense.
In addition, because service charges and ground rents are usually
payable under the terms of the lease, the present level of service
charges, future charges and other matters such as buildings insurance
need to be carefully checked.
9) My estate agent tells me it is possible
to exchange contracts and complete on the same day. Why should there
be a delay between exchange of contracts and completion?
The period between exchange and completion is there for a good reason
in that until exchange of contracts the transaction is not binding
on either party. Obviously arrangements need to be made to move including
packing, notifying changes of address and, in particular, arranging
removals. Although it is possible to exchange and complete on the
same day if the preparatory work is done, this gives rise to the possibility
that someone will change their mind or fail to meet the completion
date and there will be no liability on that person as there has been
no exchange of contracts. Therefore by exchanging and completing on
the same day, you are taking a large risk that you will be disappointed
on the proposed moving day if your seller or somebody further up the
chain of transactions is unable or unwilling to move. 10)
I am obtaining a 100% mortgage and cannot afford a deposit. What
should I do?
There are effectively only two ways of dealing with this and that
is to persuade the seller's solicitor to exchange contracts without
a deposit or with a nominal deposit, or alternatively to proceed
with a simultaneous exchange and completion (see above). The seller
is more likely to accept the solution of a simultaneous exchange
and completion if there is no chain of transactions or a very short
chain.
11) I signed my contract weeks ago but
my solicitor has still not been able to fix a completion date, why?
In many cases although all your work has been completed by your
solicitor and the contract is signed, the transaction is unable
to proceed because somebody elsewhere in the chain of transactions
is encountering a delay. Unfortunately, we are powerless to change
this situation as a delay elsewhere in the chain is entirely beyond
our control. We will, however, do all in our power to keep in touch
with the relevant estate agents and solicitors until the delay is
resolved.
12) My solicitor tells me that the other
solicitor is not responding to his enquiries or correspondence is
there anything I can do?
Sometimes such delays are caused by inefficiency or problems in
the solicitor's office and on other occasions they are caused by
the other parties to the transaction not instructing their solicitor
properly. If this sort of delay occurs you can help by either contacting
your seller direct and asking him/her to press his/her solicitor,
or contacting the seller through the estate agents and reporting
back any response to your solicitor.
13) I am purchasing a flat and the seller
says that it is a freehold flat but my solicitor says it is leasehold?
For complicated legal reasons which are beyond the scope of this
guide, all flats or maisonettes have to be leasehold. When a flat
is advertised as freehold what this generally means is that the
freehold of the block or building of which the flat forms a part
is owned either by the occupiers of the flats or, more usually,
by a company which is owned by the occupiers of the flats.
This is obviously beneficial in that it means that you will have
a share in the decisions regarding the maintenance and repair of
the properties and will be able to extend your lease, if required.
14) I am concerned about the shortness
of the lease of the flat I am buying. Are there any guidelines on
this subject?
Leases are usually acceptable security for mortgage purposes if
there are 25 years left on the lease after the end of the mortgage.
Typically, therefore, leases over 50 years for the normal 25 year
mortgage would be acceptable as security for the mortgagee.
However, the value and acceptability of leases has an affect on
the value of the property once the lease gets below, say, 75 years.
For a lease below that time there are a number of purchasers who
would not be happy with the length of the lease and wish there to
be an extension. This problem obviously gets worse the shorter the
lease becomes and certainly when the lease is less than 70 years
there is a marketability issue. Guide to short leases
15) Why does my solicitor write or send
me an email when a simple telephone call would be quicker?
Occasionally we need to communicate something very important itmay
involve looking at plans or other documents. In these circumstances
it is, in our opinion, sometimes better to have a written communication
to avoid misunderstanding.
16) What am I liable for if I pull out
of a sale or purchase transaction before exchange of contracts?
In a purchase, the good news is that you will not be liable for
any costs incurred by the seller if contracts have not been exchanged.
Not so good news is, of course, that you may have incurred some
fees yourself, namely survey fees, search fees and some legal costs
in a purchase.
We will keep abortive legal costs to a minimum. Obviously, if you
are doubtful about the transaction, the earlier that you pull out
of the transaction the lower your expenses will be, if the other
party pulls out, then providing you go on to sell or purchase another
property then you will not be charged abortive costs.
17) I have exchanged contracts and have
changed my mind and want to pull out of the transaction what shall
I do?
Unfortunately, after exchange of contracts there exists a legally
binding agreement and if you were to withdraw you would be liable
for very considerable expense including losing your deposit. Even
if your deposit is less than 10% the contract provides that you
are liable to pay the seller a full 10%. In addition, you could
be liable for additional expenses according to whether the seller
then has to sell the property at a reduced price. This is a particular
danger in an environment of falling property prices.
The short answer is, therefore, you must not withdraw from the transaction
after you have exchanged.
18) At what time will I get the keys to
the property on the day of completion?
Unfortunately, we can not give a definite time. If you are involved
within a chain then it would be dependant on the other parties as
well, but if you do not have a property to sell then normally the
keys should be available by mid morning. However, if you do have
a property to sell then the time that you will receive the keys
is entirely dependent upon the time the money is received on your
sale as obviously this incoming money will be required before your
solicitor can send the money on that is required to complete your
purchase to your seller's solicitor.
We have full internet based banking with Fax and Phone as backup,
which gives us direct access into the banking system. This means
that we can receive and transmit funds without the involvement of
any bank staff thus speeding up the process.
19) My solicitor has identified a legal
problem and will not let me proceed even though I am not concerned
with the problem why will my solicitor not do as I say?
If you are obtaining a mortgage, as solicitors we act not only for
you as our client but also for the bank or building society lending
the money. Banks or building societies have certain requirements
that they insist on being met in connection with legal documentation.
In some cases, therefore, even though a problem has arisen and you
are prepared to take it on board, it may be that this is not possible
for your solicitor in view of the requirements of the lender.
As we are constantly striving to improve our services, should you
have a different question that we have not covered here, please
do email us at NE Law. We cannot promise to respond personally to
emails unless you are already a client of NE Law, we do regularly
update this website and will try to include replies to any questions
we are repeatedly asked on the website.
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