The 5 Stages Of The Conveyancing Process Explained
Regardless of whether you are buying a house with a partner or alone, it’s still one of the most expensive, stressful, emotive, daunting and confusing processes. We hope this guide to conveyancing will make it just a little bit clearer.
This guide refers to the England and Wales conveyancing process. This is not legal advice; it is intended to provide general information about the conveyancing process.
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What is Conveyancing?
Conveyancing is transferring land from one person to another. In terms of a property purchase, the conveyancing process starts when your offer on a property is accepted and finishes when your purchase has been registered at HM Land Registry, after you have moved into your new property.
Who does Conveyancing?
Solicitors, licensed conveyancers and conveyancing executives can be instructed on conveyancing matters. Most solicitors firms, like Mullis & Peake LLP, will have several people in their residential property team with different qualifications and levels of experience.
To be a licensed conveyancer you must successfully complete various assessments and pass several exams before qualification and being regulated by the Council of Licensed Conveyancers.
Conveyancing executives would normally have several years’ experience dealing with property transactions.
It is worth checking that your solicitor’s firm is registered with:
- The Council of Mortgage Lenders
- Your chosen lenders panel – if not you will possibly have to deal with two solicitors firms which would be two fees for essentially doing the same job
Good accreditations include:
- The Law Society Conveyancing Quality Scheme
- Lexcel Practice Management Standard
- ISO 9001
These accreditations mean that the firm in question has shown they have excellent practice management skills. At Mullis & Peake we are proud to have secured membership to the Law Society’s Conveyancing Quality Scheme.
Stage 1: Documentation
Once your offer has been accepted on your chosen property, you need to instruct your chosen solicitor. This gives your legal representative the authority to act on your behalf and to collect the information you need to buy a property.
The estate agent and solicitor would then liaise regarding details of the sale.
The solicitors will send you documentation regarding the transaction and questionnaires for you to complete to assist with their understanding of the matter and you will be asked for money on account for searches.
Questionnaires and Documentation
You can expect to receive from your solicitor at the outset: -
- Letter of engagement – this is the terms of the instructions to the solicitor – make sure you read this thoroughly, several times!
- Client questionnaire – this will ask you to provide as much information about the transaction as you can. Don’t be shy, you need to make sure you tell your solicitor anything that may affect your transaction, such as if you are getting a Help to Buy ISA or are being gifted money. This questionnaire is used to build up a picture of you as a client including who you are; if a mortgage is required; what surveys you are planning on having completed; where the funds are coming from; other people living with you who would not be on the deeds such as a parent or child over 17 or a lodger; anything that is an added value in the sale; any particular requirements on moving dates.
You will need to provide ID to your solicitors. This is to verify that you are who you say you are so that the firm complies with anti-money laundering regulations.
If you are planning to carry out any work on your new property then you should provide your solicitor with full details. It could be the case that the property is affected by a covenant prohibiting such works, or there could be pipes or sewers in the ground where you are planning to build, in which case you would need to speak to the Water Authority about consent to such works. This is aside from the fact that planning permission and building regulations approval may be necessary along with notices if the works are covered by the Party Walls Act. If your Solicitor does not know what you are intending to do, then they cannot advise on any possible implications.
What searches can I expect to pay for?
The solicitors will put searches in hand through their search provider once in receipt of monies on account from you. Most providers have a bundle of searches that are provided as a matter of course, although additional searches can be obtained if required by either the location of the property (for example a tin mining search in Cornwall) or to ascertain planning applications in place in the nearby area for buyers anxious about nearby development.
The bundles tend to include:
- Environmental search – this desktop search reports on the risk of flooding, ground stability, contaminated land, energy and infrastructure
- Drainage and water – this includes connection to the water systems and location of public pipes and sewers
- Local authority search – this searches only the property you are purchasing and not applications regarding the surrounding area. It will show up any planning applications and building regulation approvals and if the property is in a conservation area, if your permitted development rights have been taken away (this means that even for small extensions you would be required to get planning permission) or if there are any enforcement notices registered against the property (for instance, if there are any unsafe alterations).
If you are concerned about planning applications in the surrounding area or areas of land that could be used for development, you can request an additional planning search which can be a basic or enhanced package, these will be at an additional cost.
Searches vary in cost depending upon the searches required and the area in question but you can usually expect to pay between £350.00 and £500.00 and they generally take around 10 working days (although some local authorities take longer).
What else happens during the First Stage?
After the solicitors have received instruction, they request the draft contract and supporting documentation from the sellers’ solicitors.
Your solicitors will then investigate the title and raise any enquiries they deem necessary whilst applying for the searches.
Enquiries may include possible discrepancies in the title or plans, inconsistencies in the documents, any right of way issues affecting the title, and covenants affecting property use and requests for further information and/or documentation.
You will then receive from the seller, via your solicitors a copy of: -
- Property information form
- Fittings and contents form
- Leasehold information form (if you are buying a leasehold property)
These forms are completed by the sellers and give all sorts of information like boundary responsibility, details of works that have been carried out and any guarantees for those works.
The fittings and contents form tells you what is included in the property price and sometimes gives you the opportunity to purchase certain items the seller is willing to sell, in addition to the purchase price.
HMRC have a useful guide on their website providing advice on what would be deemed to be a fixture or a fitting and thus part of the property, and what would be classed as a “chattel” on which Stamp Duty Land Tax would not be paid.
Stage 2: Surveys
Your mortgage lender will want to carry out their own valuation on the property you are buying. However, even though this is paid for by you, you cannot rely on it. As such, it is recommended that you have your own, independent, survey as you will be deemed to accept the property in the state of repair and condition it is in at exchange, regardless of any issues.
There are two main surveys available:
- HomeBuyer’s Report
- Building Survey
For most clients, a HomeBuyer’s Report should suffice. You may choose a Building Survey if you are buying an older property or if you think the property may have some structural defects.
Remember the phrase: “With any purchase, buyer beware”!
Buying a property is a significant financial investment; possibly the greatest in your lifetime, so it is important that you are fully aware of the property's true condition and seek a professional opinion. It is surprising how many Buyers try to ‘save money' by not having a survey carried out at all, or relying upon the Lender’s valuation which is what it says it is, a valuation only.
The survey report will highlight any works which need to be carried out, and whether these are urgent. This will enable you to prepare a more detailed budget of expenses and renegotiate the price if appropriate. If there is some urgent remedial work required, then you may elect to ask the sellers to fix this prior to the exchange of contracts.
Surveys usually cost around £700.00 to £1,000.00 and take between two and four weeks.
Please note that your solicitor cannot advise you on any physical aspects of the property.
Stage 3: Getting ready for the Exchange
Once your solicitors receive your mortgage instructions, they will make sure that the transaction is in compliance with the UK Finance Lenders’ Handbook and that they have dealt with all of the lender’s requirements and conditions.
Once all enquiries have been answered satisfactorily, acceptable search results received and your mortgage offer approved, your solicitor will send you a Report on Contract, which details what it is you are purchasing; their findings and any areas of concern they may have and any advice they can offer; as well as reporting on any title and/or mortgage conditions. They would also include the contract, the mortgage deed and any other documentation that might need signing. This could include a:
- Transfer deed
- Deed of Covenant
- Membership Form for a Management Company (if you are buying a leasehold property or a property on a managed development).
The solicitor will then ask you for the deposit funds in readiness for the exchange. The deposit is 10% of the purchase price.
Once both solicitors are ready discussions will commence regarding the completion (moving) date.
If you are getting a mortgage, the time between exchange and completion is normally between one and two weeks but any completion date can be agreed upon as long as all parties in the chain are in agreement, and there is sufficient time to request mortgage funds, and it is within the expiry date of your mortgage offer.
Before your solicitor can exchange you must ensure that you have made the necessary arrangements to ensure the property, in accordance with your lender and solicitors’ instructions, from the exchange of contracts.
Stage 4: The Exchange
On exchange of contracts, the completion date is agreed upon and documented in the contract and the contract becomes legally binding to both parties.
The solicitor requests your mortgage advance from the lender. Best practice is to request it a day before completion so that it is ready to go on the day. You will be charged interest from the day the funds are released. We ask for funds a day before as a precaution to avoid delays in completion as most lenders will not guarantee the time funds will be released and the contract usually provides for completion to take place (the monies to be received by the seller’s solicitor and the seller to have vacated the property) no later than 2 pm.
Your solicitor will then work out a final invoice and statement which would take into account any money already paid on account and would include your solicitors’ fee, stamp duty, land registry fee and balance of the purchase price. As a precaution, we would suggest that clients send the balance to complete at least one day before completion as well to avoid any delays.
Stamp Duty Land Tax
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland and Land Transaction Tax in Wales. Check out the HMRC website on stamp duty.
Make sure you are clear on the rules of SDLT. If you doubt, please speak with an accountant specialising in SDLT.
Stage 5: Completion – nearly there!
On the day of completion, your solicitor will send the purchase monies to the seller’s solicitors and they will notify your solicitor once they have received the money. The solicitors will then formally confirm completion has taken place. The seller’s solicitors would then authorise the estate agents to release the keys to the property.
The seller’s solicitors will send your solicitors the title deeds and your solicitor will then make the application to HM Land Registry to register your ownership of the property and any mortgage to be secured against it.
The return time of this application from the Land Registry can vary but due to current backlogs, it can take several months, especially for registrations of new properties. Once registered, you will be sent a copy of the updated title and any deeds for safe keeping.
Get your affairs in order
When buying and selling your home, it is a sensible time to review your arrangements as to what would happen if you were to lose your job, become unwell or pass away. It is a good time to take independent financial advice from an expert as to whether you should take out some policies to protect you and your family. Equally, if you have not made a Will and a Lasting Power of Attorney then this is the right time to set this up and, even if you do have a Will, then you should get this reviewed to ensure that it remains appropriate in view of your change of circumstances. If you are buying with someone else, your solicitor will be able to advise you as to the appropriate type of joint ownership.
Notify the service providers
You will receive details of the service providers in the forms completed by the sellers and you should make a note of these. It is important that you take meter readings when you move in and whilst the sellers should have done likewise, you should not assume that this is the case. This will ensure that any bills sent to you are accurate and will prevent there from being disputes at a later date. You should not assume that the council tax banding for the property will remain the same, particularly if the property has been extended or enhanced since the last valuation. The local authority can revalue the property, meaning that you could be responsible for a higher level of council tax.
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Frequently asked questions
The average time taken from first instructing a conveyancer/solicitor to moving into your new property/completing the sale is between eight and sixteen weeks.
- Instruct your conveyancer/solicitor before you make an offer on a house.
- Conveyancers and solicitors can’t begin work until they have conducted anti-money laundering checks. So by instructing your conveyancer/solicitor first and giving them the necessary ID you’ll start strong.
- Arrange your mortgage as soon as possible
- Before you start property-hunting, do your research into what type of mortgage you want and how much a lender will lend to you. If you’re getting financial help to buy the property from a family member, tell your conveyancer straight away. Your solicitor will need to write a gifted deposit document for the lender. And this can cause delays if it’s left until the last minute.
- Arrange your survey
- Get a move on and arrange your survey. Let your surveyor know any issues you particularly want them to look at.
- Get your paperwork in order
- Answer any queries quickly and promptly
Conveyancing delays often happen when both parties are not as responsive as they should be. Delays also occur in more complex cases, such as if the purchase is part of a divorce case or probate, or a leasehold property (where information and documentation are required of third parties).
The Government’s target is that searches should take a maximum of ten working days. But in reality, it can take much longer and can be a frustrating cause of delays. Some local authorities are slow to respond.
Other delays could be:
- Building survey revealing problems
- Missing information from the seller
- Issues with the buyer’s mortgage application
- Being in a chain
- Problems with the property title
- Buying a new build property that isn’t ready
Conveyancing fees can be split into two parts: the legal fees (what the conveyancer or solicitor charges for doing the work), and the disbursements (what third parties charge for certain services like searches, obtaining copy title documents from HM Land Registry or in the case of leasehold properties, information packs from any landlord and/or managing agent, SDLT and Land Registry fees).
Our costs for undertaking residential sale and purchase transactions depend on a number of factors including:
- the sale/purchase price of the property
- whether the property is freehold or leasehold
- whether the transaction involves either repaying an existing mortgage or securing a new mortgage on a property to be purchased
- whether there are any additional or unusual aspects of the transaction
In the vast majority of cases; we will be able to act on behalf of your existing mortgage lender to repay your existing mortgage on the sale of a property and on behalf of your new mortgage lender in respect of the purchase of a property.
Costs and expenses can vary depending on the particular circumstances of each transaction but we endeavour to keep such costs and disbursements to a minimum.
Costs depend upon the nature of the transaction but are around £1,000.00 plus VAT charged at 20% and disbursements.
On the day of completion the buyer’s solicitor will send the purchase money to the seller’s solicitor. The seller’s solicitors will then formally confirm completion has taken place and authorise the estate agents to release the keys to the property. In order to provide a vacant possession, the seller must ensure that the property is vacant and that all contents are removed, except for the items referred to on the fittings and contents lists which was provided at the outset of the transaction. Any additional items to be left at the property have to be identified and agreed with the buyer. Once in the new property the buyer might wish to read all of the meters and check that the gas, electricity, and water are working. Notify the utility providers of the change of ownership and of the meter readings. Check the property against the fittings and contents list prepared by the seller and consider changing the locks at the new property.
We will prepare a completion statement for you as soon as possible following exchange of contracts as it is not possible for us to do this beforehand. Therefore, if you wish to know what the net proceeds of sale will be on completion, please refer to the estimate provided to you at the outset of our initial retainer letter and also take into consideration any estate agents’ fees and monies outstanding to a mortgage lender which are secured against the property. We will account to you on the day of completion with a net proceeds of sale. We can send you a check or if you prefer a CHAPS payment can be made into your bank account.
Under no circumstances whatsoever should the keys be handed direct to the buyer unless the solicitor has confirmed that completion has been affected. Usually a set of keys will be left with the estate agents who should be given written instruction not to pass the keys over to the buyer without consent from the seller’s solicitor on the day of completion. This consent would only be given when the balance of purchase monies is received in the solicitor’s bank account. You should always keep a copy of your letter to the agent in this respect. In the event that you are selling without using an estate agent you would need to liaise with your solicitor for alternative arrangements to be made for the keys.
Well, people get very confused about completion dates and they think that the normal time in between exchange and completion is four weeks, but there's no set time. The parties to the contract and the parties, the seller and the buyer, agree between themselves what is a convenient date.
An exchange of contracts is when the contract that you've signed on each transaction becomes binding. So each solicitor, the seller and buyer’s solicitor will have a contract that's been signed that is identical, and it is literally an exchange of contracts in the post. So from the moment that the exchange of contracts is effective, the seller’s solicitor and the buyer’s solicitor undertake with each other that they will put the signed contract in the post to the other.
It's always advisable to have your own survey carried out on the property because that will give information about the condition of the property. And you have to remember, when you're buying a house that you buy it in the condition it's in and the seller is not under any obligation to put anything right in connection with that. That's slightly different from a mortgage valuation where the lender will go in, will send a valuer, and basically decide on the value of the property based on the condition but will not give you any detailed information about the property. The valuation is merely to ensure that that property is worth what the lender is going to let you borrow.
Contracts in conveyancing are slightly different in that, in most cases when you sign a contract, you are committed immediately. When you sign a contract in relation to a conveyancing transaction, you will have been given an explanation as to what you're signing, and you will sign in readiness. So, we hold the contract on our file ready, but that contract will not become binding until exchange of contracts.
So, when you start a purchase transaction, we will be asking you for some money on account to pay for searches. And there are various searches that need to be carried out and some of them are essential and your lender will insist on them if you're getting a mortgage. So a local authority search is very important because that will tell you about any plans that the council has for the property. For example, any road widening or there may be flyovers or planning in the vicinity. An enviro-search is also important because that will tell you about any factors affecting the environment, like contaminated land, that may affect your property. Also, you'll be asked to carry out the water and drainage search, which tells you whether the property is on mains drainage and water, and will give you information about where the sewers and drains are. And there's also a very unusual search which is called a Chancel repair liability search, which, generally, we offer an insurance for because it's an extremely antiquated and difficult thing to ascertain. This is to do with the dissolution of the monasteries in the 1500s. And then depending on your location of property you're buying, you may also need a mining search or even China clay or tin mining search if you're buying in Cornwall. So it does also depend where you're buying.
There's no simple answer to this because simply each case is different, each transaction is different, the circumstances of each matter is different. So by and large, it does depend upon the number of parties that are involved in the process. In a simple case of a sale and purchase of property where there's a seller and a buyer and no other transactions related to it, we would expect that to go through reasonably quickly, and a lot quicker than a transaction that involves what we call chains where there are several buyers and several sellers all interdependent on the other. As a rule of thumb, if there's just a standalone sale and purchase transaction, we would expect that to be completed within about eight to ten weeks. If it's a sale and purchase in a chain, we are more expectant for that to take about 12 weeks. But as I say, it is only a rough estimate.
Logic would probably say that you should start your insurance cover when you get the keys to the property. After all, that's when you buy the property. That's when you hand over most of the purchase price. That's where you get the keys to the property and that's when you get control of the property. But in actual fact, most solicitors and conveyancers will advise you to ensure the property from exchange to contracts. And the reason for that is that virtual solicitors will use what's called the standard conditions of sale to buy and sell the property. Those standard conditions of sell provide that the risk of the property passes from the seller to the buyer on exchange of contracts. And because of that, the buyer is advised, therefore, to take out insurance as soon as the risk passes to them. Again, there is an exception to that, which is a common exception, and that's where a buyer is buying a property, which is in the course of construction, or is newly built from a developer. In those situations, it's quite common for the developer to maintain business insurance cover on the property until legal completion.
Exchange of contracts is one of the most important stages of the conveyancing process. This is when the seller and the buyer become legally committed to sell and purchase a property. So leading up to exchange of contracts, the seller’s solicitor will supply copies of the title deeds and replies to inquiries and information to the buyers solicitors. The buyer’s solicitor will carry out searches, will raise inquiries of the seller’s solicitors relating to the property, and of course we'll make sure that the finance is in place. Once they are satisfied with all of that, the contract, the final form of the contract is agreed, the seller will sign one part and the buyer will sign a separate but identical part. Exchange of contracts then happens between the solicitors having taken their client’s instructions first, but they then agree to exchange contracts over the telephone, at which point the contract is then dated. The completion date is put into the contract, and it's at that point in that telephone conversation, that the seller and the buyer are legally committed to the transaction. There's no going back from then. Exchange of contracts is then completed by each solicitor sending to his counterpart the contract signed by his client and in the case of the buyer's solicitor, either sending the deposit to the seller's solicitor, which is usually 10% of the purchase price or what's called holding it to order until completion.
You must pay Stamp Duty Land Tax if you buy property or land over a certain price in England. The tax is different if the property or land is in Scotland, you pay Land and Buildings Transaction Tax. In Wales, you pay Land Transaction Tax. You pay the tax when you buy a freehold property or buy a new or existing leasehold, by a property through a shared ownership scheme or if you've transferred land or property in exchange for payment. If you're buying a residential property there are different rates of SDLT, which is Stamp Duty. If you are a first-time buyer, if you already own a property and you’re buying an additional property, or you are not a UK resident.
You should have either a home buyer’s report or structural survey carried out. The seller is not obliged to disclose defects in the property and that is what your surveyor will look for. It’s the responsibility of the buyer to ensure that the property is adequately inspected. The rule is buyer beware, and as such, the buyer you are deemed to accept the property in the state of repair and condition it's in at exchange of contracts.
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Residential Property Team
Paul qualified as a solicitor in 2010 and specialises in Residential Property matters.