The following explanation aims to explain what is involved and what each party does.
The seller of a property will have found a buyer either privately or through an estate agent. The solicitor/conveyancer should be instructed as early as possible (even before a buyer is found). The conveyancer or conveyancing solicitor must get the deeds which are usually held by a mortgage company. This in itself can take a couple of weeks depending on the lender so it is a waste of time to do this after a buyer has been found. The mortgage company might make a charge for sending deeds but if the property is to be sold anyway it is well worth getting them early.
The seller must complete a Property Information Form and a Fittings and Fixtures Schedule. These forms will be sent to the buyer giving information about the property and a list of what fittings are included in the sale price (and what is available for separate negotiation). Again these can be completed at an early stage.
After finding a property the buyer must tell the estate agents which conveyancing solicitor is to act. The agents then tell the buyer’s solicitor which solicitor is acting for the seller. The two sets of solicitors then make contact.
The buyer’s solicitor will ask for some money from the buyer up front to cover the cost of the local and drainage searches.
The seller’s solicitor sends the buyer’s solicitor the draft contracts (see above), copies of the title deeds and the Property Information and Fixtures and Fittings Forms. The buyer’s solicitor reports to the buyer on these documents (usually sending copies). Local and drainage search requests are sent off.
The buyer must arrange finances at this stage. This will usually mean a mortgage. Surveys are done and any necessary life assurance proposals are made. The mortgage offer is then issued. Usually this goes directly to the buyer from the mortgage company. A copy is sent to the buyer’s solicitor together with instructions to the solicitor on any particular research the mortgage company wants.
Only when the mortgage is arranged and it is known that all conditions can be met, the searches are returned and clear, the life assurance and buildings insurance are in place can exchange of contracts take place.
The buyer signs the contract and gives the deposit to the solicitor. Deposits used to be 10% of the purchase price but commonly 5% is acceptable. It is important to understand the word “deposit” in the legal sense. Most people regard “deposit” as the difference between the purchase price and the mortgage i.e. the money that is being put into the purchase. In the legal sense it is an amount of money paid to the seller’s solicitor to guarantee performance of the contract. If the contract is broken, the seller can in some circumstances forfeit the deposit. Whatever is paid by deposit is deducted from the moneys paid over on completion; if a deposit of 5% is paid, the balance of 95% is paid on completion.
Each party signs an identical contract. Exchange of contracts takes place by the solicitors dating the contracts and swapping copies. Before exchange the completion date must be agreed and it is inserted in the contract at the time of exchange. The seller and buyer do not need to be present at exchange.
The buyer’s solicitor now requests the mortgage monies and sends a completion statement to the buyer showing how much more money is needed. Final searches are made. These are a bankruptcy search against the buyer and a Land Registry search to make sure that nothing has been added to the copy title deeds which the buyer’s solicitor has already seen.
On the morning of completion the buyer’s solicitor telegraphs money to the seller’s solicitor and on receipt the keys are released to the buyer.
Fisher Jones Greenwood now offers conveyancing from the Colchester, Clacton, Billericay and Chelmsford offices.