Moving Home - The Legal Process

Buying or selling your home has been likened to death or divorce: It can be a stressful experience. But a problem shared is a problem halved. We will help you through the process. We will liaise with your solicitor 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 purchaser at the best possible price. If you are purchasing, we can match you to our wide range of properties on which we are instructed. In either case, your solicitor or licensed conveyancer will ensure that all the legal requirements are met and you are selling, or purchasing, in accordance with your instructions.

To the uninitiated, the legal process can be a minefield. First and foremost it is essential to understand that 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 can be sued for breach of a verbal contract. This does not apply to land. For over three hundred years, since the Statute of Frauds in 1677, the law requires that the sale or purchase of land shall be in writing, signed and contain all the important terms. So any offer made, and any acceptance of that offer, which is in writing, should always be endorsed with the magic words “subject to contract”, to avoid either party being bound. If those words are not used, then an exchange of letters could be sufficient to bind both parties. To avoid that situation, it is better never to put anything in writing. Along with your conveyancer we will ensure you are not bound in contract by writing the necessary letter at the right time. If, for any reason, it is essential to put your verbal agreement in writing, the note should be worded “I confirm that, subject to contract and survey, I am prepared to buy (address of property) for a price of £XYZ”. The reason for adding ‘subject to survey’ is to further limit your offer to a survey which is satisfactory to you. If you are selling, the wording would be “I confirm that, subject to contract, I am prepared to accept your offer of £XYZ to buy (address of property)”.

At this stage there may still be negotiations to be concluded. For example, does the agreement include, or exclude, furnishings and fittings? By this is meant any of the moveables that may be taken from the property without damage to the structure - “chattels” in legal terminology. Misunderstandings are very common 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. And so can other items. 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 adherent 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. Unless the contract expressly makes reference to this item being excluded from the sale, it cannot be removed. It adheres to the property and is, in law, an immovable. The same can be said for plants and shrubs in the garden, although light fittings may generally be removed without damage to the ceiling.

To avoid delay, expense and uncertainty, it is far better to spell out what exactly can be taken and what cannot. With the increase in Stamp Duty, especially at the stepped rates, it is now common for the asking price to exclude “fixtures and fittings” to avoid falling into the higher duty band. A separate contract and price is then concluded for these excluded items, additional to the purchase price of the property. Just be certain, at the very beginning, as to what is, and what is not, included.

When all is agreed in principle, the seller‘s solicitor will prepare a draft contract to send to the purchaser‘s solicitor for approval or suggested amendments. This is because only the seller knows what title he can give; whether freehold or leasehold and including any documents or events, 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. The best evidence of title is, of course, the title deeds or lease and these may be handed to your conveyancer or, if the property is mortgaged, obtained from the lending source. The last statement from your mortgage provider will be a great help. If the title is registered, your conveyancer will need to know the title number so s/he can obtain all the necessary information from the Land Registry.

At this stage, when the sale or purchase is still going through the initial preparatory procedure, either side may withdraw without liability and can do so right up until contracts are exchanged. Often, with rising prices and the inherent delay built in to the system, “gazumping” may occur. This happens when the seller accepts a higher offer than the one already agreed. Note that the seller has previously agreed a sale verbally and then reneges on that agreement enticed by the higher amount. The word “gazump” derives from the Yiddish word “to cheat”. It does not mean that the seller is unable to cast around for the best bid; it only occurs when he has already agreed to sell at a definite price, but “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. The purchaser can, when the offer is accepted, ask the seller to agree, in writing, to treat with him alone for a specific period, to allow the purchaser to conclude his enquiries and exchange contracts. But the seller will rarely agree to disadvantage himself, especially when the purchaser may still pull out with no liability whatsoever.

After receiving the draft contract from the “sellers” solicitor, the “purchasers” 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 “purchasers” 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 purchaser signs the contract which is sent with the deposit.

The “sellers” solicitor will ensure his client is ready to be committed. If so, a contract in identical terms is signed and exchanged with the purchaser. Both parties are now legally bound and neither can back out, without consent of the other, as there would be a breach of contract.

The next step is for the “sellers” solicitor to send proof of ownership of the property, normally the lease or title deeds. The “purchasers” conveyancer will check ownership and that it may be transferred to the “purchaser” in terms of the contract, ensuring there is no undisclosed mortgage and the seller is not bankrupt. S/he will then prepare a Transfer Deed or Conveyance, to transfer ownership to the purchaser, signed by the purchaser and sent to the “sellers” solicitor for signature by the seller and return. Normally, prior to completion, the purchaser 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 purchaser who becomes liable for the Council Tax and all other outgoings from that date.

Even with the best preparation, there are delays inherent in the system which ensures that each side has the bargain they agreed, without any hidden liability surfacing after completion. Selling normally entails another purchase at the same time. Conversely, your purchaser, unless a first time buyer, is trying to sell and cannot exchange until his own property has been sold to provide the purchase money and/or a mortgage has been obtained. Apart from delays in searches and enquiries, being involved in a chain of transactions means you can only move at the speed of the slowest link in the chain. We will do everything we can to smooth out the delays that inevitably occur. Your solicitor/conveyancer will do their utmost to keep you informed of progress. But always ask them the reason for delay; they are there to help and keep you fully informed.