Conveyancing Purchase of Freehold/Leasehold House
We have put together a comprehensive guide for the conveyancing in acting for the buyer in the conveyance of a registered freehold/leasehold property.
The first stage in the conveyancing is to obtain clients instructions which should include the full property address of the property you are buying, the purchase price, the sellers estate agents details and whether you are purchasing with the aid of a mortgage?
During this stage you would have to provide us with your full identification as we cannot proceed any further in your conveyancing without the relevant identification
If you are purchasing as joint buyers then we would need to know if you wish to hold the property as Joint Tenants or Tenants In Common.
Once we have received your written initial instructions for your conveyancing we would write to the sellers solicitors requesting the conveyance contract paperwork.
Estate Agent Particulars
During the conveyancing process we obtain a copy of the estate agent’s particulars of sale (with photograph). There are several things that could be picked up from the estate agent’s particulars, such as signs that the property has been altered or extended (in which case planning permission, building regulations approval and/or covenant consent may have been required), boundary discrepancies, breaches of covenant etc.
The Contract Package
When acting for the purchaser of the property, in order for the conveyancing procedure to begin we would need to receive the ‘contract package’ from the seller’s conveyancer. A contract package in respect of a registered freehold/leasehold property should contain at least the following:
- A draft contract
- Official copies of the Registers of Title
- A completed Seller’s Property Information Form
- A completed Fixtures, Fittings & Contents Form
- Copy Lease (if leasehold)
- Any copy conveyances/documents which will have restrictive covenants
In addition there may be other documents in the contract package such as copies of any planning permissions, building regulations and copy guarantees etc.
Checking the Contract for Sale
The first stage in the conveyancing is to check the contract for sale and any other documents sent through from the sellers conveyancer.
Sellers Property Information Form
The sellers property information form is a Law Society standard form and it contains a list of pre-contract enquiries to be answered by the seller. The form is largely self-explanatory and will be forwarded to the you at the start of the transaction so that you may request us as your conveyancer to enquire further about any points of interest.
Fixtures, Fittings & Contents Form
This form will be completed by the seller and forwarded via the conveyancer, so that you can check that it accords with what was agreed with the seller at the time the offer to purchase the property was made. As your conveyancer we would advise that regardless of any other negotiations or agreements that may have been made, the content of this form is the only legally binding agreement in terms of the contents of the household.
Sometimes the seller will list certain items which are offered for sale. If you do not comment on whether you wish to purchase the items then it cannot be assumed that you have agreed to do so. For clarity however we as your conveyancer would specifically advise the seller’s conveyancer in writing, after of course taking your client’s instructions, which items (if any) you would like to purchase.
Any alterations made to the Fixtures, Fittings and Contents Form should be initialed by the seller. The form must be signed by all sellers. A copy should be attached to the contract on exchange.
Raising Pre-Contract Enquiries
Having gone through the contract papers the we are your conveyancer will usually have a list of points on which we require clarification or additional information, and perhaps a list of documents we require copies of. We would therefore list these enquires in a letter to the seller’s conveyancer.
What are “conveyancing searches”?
Conveyancing searches are a set of standard enquiries raised with a particular authority, for example a local authority search is raised with the local council, a drainage and water search with the water authority etc. It should be remembered that searches are intended only to cover the legal aspects of a property purchase – a conveyancer will not requisition a survey and will not report on the physical state of the property.
Who pays for the conveyancing searches?
You would pay for the searches.
What conveyancing searches do I need?
All purchasers should obtain a local authority search, certainly if purchasing with a mortgage you are obliged to the lender to do so. A drainage and water search is also advisable. Additional searches are required in certain areas, for example a coal mining search may be required or a tin mining search in Devon or Cornwall.
After receiving the search results further enquiries may have to be raised with the sellers conveyancer.
The Mortgage Offer
When acting for you in buying with a mortgage we as your conveyancer will, on the vast majority of occasions, also act for the lender.
We as your conveyancer must check the offer to ensure that we are complying with the lenders’ instructions and that details such as the purchase price, property address, borrower’s names etc are correct. We must also satisfy any special conditions.
The mortgage offer will state how much you are borrowing, and how much we your conveyancer will actually receive. This figure is obviously required to calculate the balance which will be required from you prior to completion.
Property Report to the Purchaser
Once we as your conveyancer have received satisfactory conveyancing search results and satisfactory replies to his pre-contract enquiries, and if required a satisfactory mortgage offer, then we should be in a position to report to you . This is sometimes done in person and sometimes through the post, however in either case a written property report will be prepared.
The property report will contain information on the title to the property, point out all the covenants and rights which affect it, it should include copies of any planning permissions affecting the property (if applicable) and will comment on the results of the conveyancing searches. It will point out anything adverse which has been revealed and which will not be resolved prior to or on completion and will also comment on the implications of taking a mortgage on the property, if applicable.
You should read this property report very carefully, and speak to your conveyancer about any issue that concerns you may have. If an adverse matter is disclosed in this report and a you having been presented with it instructs us as your conveyancer to proceed regardless then we as your conveyancer is entitled to assume that you understands the implications and are happy to proceed. It is unlikely therefore that you will have any claim against is if in future.
When reporting to you a financial statement will be produced, which breaks down the incomings and outgoings in respect of the purchase and includes a bottom line figure showing how much money is needed from you in order to complete. Producing the statement prior to exchange of contracts ensures that any errors with the figures or any queries you may have has can be resolved prior to exchange of contracts.
We will send our firm’s bank details with the completion so you can pay the money by electronic transfer.
Exchange of Contracts
Once the mortgage deed has been signed by yourself, contract signed, searches have been received and satisfactory replies to enquiries have been made, you are happy with the property report and you have paid the deposit (which must have cleared in our bank account), then we as your conveyancer are in a position to exchange contracts. A completion date can now be agreed between the seller and yourself. This can be any weekday provided there is enough time between exchange of contracts and completion of mortgage funds to be requested and final searches to be completed.
Once a completion date is agreed contracts should be exchanged:
Requesting Mortgage Funds
Immediately following exchange of contracts the mortgage funds should be requested. Funds are requested by submitting the Certificate of Title to the lender.
The certificate of title will ask for the date of completion, which is the date that the funds will be transferred to us. We have to request the mortgage funds at least two working day prior to completion. This is because the lender will usually transfer the funds by CHAPS which means that they can only guarantee that the funds will arrive before close of business, not necessarily in time to actually complete.
Each lender will require a period of notice from receiving the certificate of title to releasing funds which can be up to 10 working days
When acting in the purchase of a registered property it is necessary to carry out an OS1(when buying the whole of the title) or an OS2(when buying part of a title). If you are buying with a mortgage a bankruptcy search (K16) is also required.
On the day of completion we your conveyancer will forward the funds required for completion to the seller’s conveyancer by CHAPS (same day transfer). Provided that the funds arrive with seller’s conveyancer by the completion time stated in the contract (which unless the contract contains a special condition varying that time will be 2pm) then the seller must vacate by the completion time. If the funds are not received by the seller’s conveyancer by the completion time then you are in breach of contract. Similarly if the funds are delivered on time but the seller has not vacated, then the seller is in breach.
Following completion the purchase must be registered. Briefly the process is that first the SDLT1 should be submitted to the Inland Revenue and an SDLT5 certificate obtained. Once this is done the application for registration is submitted to HM Land Registry. Once the application is completed any deeds/documents that are required by the mortgage lender are sent on to them and the remainder are sent to you.
Stamp Duty Land Tax (SDLT)
Immediately following completion the SDLT1 must be submitted to the Inland Revenue together with any duty payable. If a correctly completed return together with duty is not submitted within 30 days of completion then the Inland Revenue will issue a penalty of £100. If the return is submitted incorrectly and is returned then no additional time will be given by the Inland Revenue therefore it is important that it is submitted correctly first time.
Following receipt of the deeds (in particular the transfer deed) from the sellers conveyancer) and the SDLT5 certificate from the Inland Revenue the application for registration should be submitted to HM Land Registry. The form to be used is form AP1 which should be submitted together with any necessary documents and the appropriate fee.
Once the registration process is completed the Title Information Document, together with any other documents required by the lender, should be sent to the lender, and the remaining documents should be sent to you together with a copy of the title information document. The file can then be archived. According to CML rules the file must be retained for at least 6 years, after which it can be destroyed.
Buying Freehold Property
This means you own a property that is a Leasehold house and under the Lease you will pay a ground rent to the landlord.
The landlord could offer you a price to purchase the freehold thus ensuing you do not pay the ground rent once you have purchased the freehold.
This would mean in most cases you would own the freehold and leasehold to the property as the leasehold title may not be extinguished as you may have certain rights held under the lease.
The conveyancing transaction is very similar to a purchase of a property apart from the fact you would not take out a mortgage to purchase the freehold.
The benefit of owning the freehold is that you would not have to pay the yearly ground rent and if you carried out alterations to the property then you would not require the Landlords consent as you would in effect be the Landlord
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