Moving Home

Cleared funds:

Professional rules require that solicitors hold client’s money in a separate account to their own funds. The rules also provide that we may not use one client’s funds to fund another client’s transaction. It is imperative therefore that before we pay out funds on your behalf (usually at exchange of contracts or completion) that these have been received into our bank account. You may pay us by cheque (for which we must allow seven days clearance) or electronically – in which case it is treated as cleared on the day of receipt.

Completion Statement:

This is a financial statement which we will send to you, usually between exchange of contracts and completion. The statement will record any monies to be received from a sale and those required to fund your purchase and will provide to you an explanation of the monies which we will need from you to fund the transaction. Any monies which you give to us to fund your transfer will be kept securely by us in our client account. We are not allowed (for obvious reasons) to use one client’s money to fund another client’s transaction and accordingly we must have from you cleared funds before we can draw on these. Please note therefore that we shall need from you funds at least seven days in advance if by cheque on the day, before completion if by electronic transfer.

Completion: The day upon which:-

Legal title of the property is transferred from seller to buyer.Parties become entitled to “move house”.

Contract:

The contract is the document which identifies the piece of land which you are intending to purchase and records the terms of sale. Many of these terms are “standard” but we will write to you at the relevant time explaining the key elements. “Exchange of Contracts” is the moment at which you become legally obliged to proceed with the transaction and the responsibility to insure the building moves from Seller to Buyer.

Deposit:

This is the money which must be paid by the buyer to the seller on exchange of contracts. The sum is generally 10% of the purchase price. We may often be able to use the monies which we receive from you on any sale towards the deposit on the purchase. If you will not be able to raise a 10% deposit please let us know straight away and we can negotiate with the buyer.

Defective Title Insurance:

Even with the computerised records available at the Land Registry uncertainties can still sometimes arise in relation to a seller’s title to the property. These are becoming increasingly common because in recent years the Council of Mortgage Lenders has laid down very detailed guidance as to what is acceptable to their members. Many of these difficulties are modest and specialist title insurance companies have been established. It is a matter for negotiation who is responsible for meeting this cost – but responsibility for passing good title does fall upon the seller.

Easements:

An easement is a right contained in the title deeds by which the owner of one piece of land retains or gains rights over an adjoining property. For example, rights of way either to physically walk/drive across land or for example to run wires, cables, pipes and so on.

Joint ownership:

In any case where a piece of land is to be owned by two or more individuals a legal entity known as a “Trust of Land” arises. The maximum number of legal owners is four. Land owned by two or more owners can be owned in different ways:-

(a) Joint tenancy. The effect of a joint tenancy is that on the death of one owner “survivorship” will apply so that the deceased’s persons interest in the land will pass automatically to the co-owners. The status will be suitable for married couples and others in a permanent relationship who wish their interest in the house to go to the other party on their death. A joint tenancy can be subsequently severed.(b) Tenancy in common. In a tenancy in common the interest of the co-owners should be expressly recorded in a Deed of Trust, the existence of which is recorded at the Land Registry. In the event of the death of one of the owners their share does not pass automatically to the other but instead passes under the terms of the deceased’s estate. A tenancy in common would be usual between business partners and in other circumstances where the parties do not wish the right of survivorship to apply.

Money laundering:

In response to government concerns about terrorism and drug dealing organisations within the “regulated sector” which includes for example solicitors, estate agents and banks, they must now comply with money laundering procedures. These regulations require first for us to receive proof of your identity in satisfactory form before we can commence any transaction and secondly impose upon us and all others within the regulated sector a legal obligation to notify the authorities if we believe that the transaction involved criminal activity. We recognise that this can be a nuisance but we commit a criminal offence if we do not comply…… so please bear with us!

Mortgage:

Most transactions are now dependent upon mortgage finance. The lender (mortgagee) will advance money to the borrower (mortgagor). Where we are acting for a buyer with the benefit of a mortgage we must see the mortgage offer before contracts can be exchanged. This means that it is important that a mortgage application is submitted quickly at the beginning of the transaction and that we are kept informed of progress. It is vital to know before exchange what the terms of the mortgage offer are (since there are often special conditions imposed – for example retentions of funds, etc. which would make it unwise to exchange without this information).

Restrictive covenant:

Restrictive covenant is an obligation contained with the deeds often imposed on one piece of land on estate developments or where a parcel of land has been sold off in part. A restrictive covenant may impose obligations for example limiting what can be built on the property.

Retention:

A buyer may sometimes require a “retention”. This is usually a modest sum of less than £1,000.00 which the parties agree within the contract will continue to be held back on completion (usually by the seller’s solicitor) until a particular contingency has been fulfilled. Examples include the formal adoption of a road by the local authority for a new property or with a leasehold property the provision of up to date management accounts by the landlord. The principle is that if there are outstanding sums to be paid these will be deducted from the retention before the balance is paid to the seller.

Searches:

The conveyancing process involves many different searches being carried out at different stages in the transaction. We set out here only a few of the principal:-

(a) Local Search. This is made in every transaction before exchange of contracts. The search will identify matters contained in the records of the Local Authority. For example whether the road serving the property is maintained at public expense, some information concerning planning and other matters of local importance.(b) Environmental search: These searches are made before exchange of contracts and have become much more prominent in recent years. Owners of land contaminated by environmental difficulty can now face onerous new obligations. An environmental search will reveal for example whether the property is near to landfill sites, sites holding hazardous substances and such like.(c) Water and drainage searches. This search will identify for example whether the property has the benefit of a public water supply, has foul drainage to the public sewer and has surface water drainage to the public sewer.(d) Chancel Check Search. This will identify where the property is within an area which continues to have a potential liability to contribute towards the repair of the local church.(e) Company Search. We will undertake a company search on your behalf if you are buying a property from a limited company. The purpose is to check that the company concerned exists, that it has the power to sell the land and is not in liquidation.(f) Bankruptcy Search. This must be undertaken after exchange of contracts for every buyer who has the benefit of a mortgage. The buyer’s solicitors must satisfy the lender that the buyer is not bankrupt.(g) Land Registry Search. This is a search undertaken by the buyer shortly before completion just to check that nothing adverse has happened to the vendor’s title between the date that the buyer disclosed his title at the beginning of the transaction and completion.(h) Miscellaneous Searches. There are many other searches which can be carried out and are specific to for example properties in rural areas, mining areas or near to railway lines/ We will advise you further about these if necessary.

Stamp Duty Land Tax:

Stamp Duty (SDLT) is a government tax on the purchase of land. See Stamp Duty Land Tax for further information.

Survey:

In any sale of land the legal principle is that “the buyer beware”. In the event that the buyer takes out a mortgage the lender will commission a valuation from a surveyor. Even though the buyer pays for this valuation it is not a full survey and will not necessarily reveal sufficient information to allow the buyer to make a reasoned judgment about the property. A buyer may be satisfied with this or may instead opt for a full survey or a home buyer’s valuation and survey report (a compromise between a valuation and a full survey). One or more of the following factors might indicate the need for a full survey:-

(a) High value transaction.(b) Property more than one hundred years old.(c) A property that the buyer intends to alter or extend after completion.(d) Non conventional means of construction.(e) Proximity of the property to features which may cause subsidence (e.g. clay soil).

Title documents:

In the case of registered land these are an extract from the entries on the computer at the Land Registry known as “office copy entries”. We will investigate these carefully on your behalf since title documents:-

(a) Prove that the vendor does own the land.(b) Proves that the vendor is entitled to sell the land (for example that there is not a co-owner or the vendor is acting as a Trustee).(c) Will confirm that the property has any necessary rights (for example rights over shared driveways, authority for access of pipes, cables, etc. over adjoining lands as necessary).

Undertaking:

This is a binding professional promise given by one solicitor to another. These promises “oil” the wheels of the transaction. A common example is an undertaking given by the vendor’s solicitor to repay the mortgage on completion of a sale so as to ensure that the buyer takes a property free from the outgoing vendor’s mortgage.