08 May, 2013/ by Homeward Legal /Buyer, First Time Buyer, Remortgage, Sale & Purchase, Seller, Transfer of Equity
Interested in getting an online conveyancing quote? Confused about what conveyancing is all about? Find out about the conveyancing process you can kickstart online here. Conveyancing is the process of transferring ownership or legal title of a property from one person (or company) to another.
Factors in conveyancing
The conveyancing process is the set of steps carried out by solicitors on behalf of the buyer and seller. The time and complexity involved in completing the conveyancing process varies. How long conveyancing takes will depend on, for example:
- The tenure of the property
- Obtaining finance to buy
- The number of parties involved in the chain
Get the knowledge
Many buyers and sellers are unaware of what the conveyancing process involves and place their full trust in their solicitor. Armed with the knowledge of how conveyancing works, you can ensure you are getting the best possible attention from your legal representative. The following is divided into sections for buyers and sellers and assumes you have already chosen your solicitor (for more information see how to choose a conveyancing solicitor) Throughout the process, your solicitor should be in constant communication with:
- Buyer/seller
- Buyer's/seller's solicitor
- managing agents or freeholder (if leasehold)
- Lender, the estate agent and any number of other parties
A good solicitor will take a proactive stance and push other parties along to reduce delays.
The conveyancing process for buyers
File set-up
The initial file set-up stage is where your solicitor must issue you with a formal written quote along with their terms and conditions, client care letter and complaints procedure. This initial pack of information will also include a number of forms and a request for identification details, which must be completed before work can commence on the file. Once the requested information and buyer's authority to proceed is received, the solicitor will proceed with the initial stages that will include:
- Allocating a suitable Fee Earner to your case
- Notifying the estate agent of the solicitor's instruction to act and requesting a copy of the Sales Memorandum (aka Sales Memo) detailing the details and parties involved in the property sale.
- Processing the initial pack of information and setting up a file
- Verifying the client's identification from the provided information such as passport or driving licence, NI number etc. Increasingly this is carried out using an online service.
- Returning any supplied identification documents to the client
Acquire/review the estate agent's particulars of sale
Once in receipt of the Sales Memo, which contains the selling solicitor details, the solicitor will write to the seller's solicitor confirming instructions (and raising management enquiries if leasehold). The solicitor will then:
- Email Agent confirming receipt of sales memo
- Apply to the Land Registry for Office Copies
Chasing papers from seller's solicitor
Should there be any delay, a proactive solicitor representing a buyer will chase the sellers lawyer for the initial papers. This includes things like a draft contract of sale. Often these papers are incomplete and further chasing is needed. The client will be advised of any missing documentation and kept informed during these initial stages. A client is often able to assist with chasing relevant parties. The solicitor should apply for Local Authority and other conveyancing searches at this stage, as it reduces the chances of delays later on.
Enquiries of the seller's solicitor
Once in receipt of the information supplied by the seller's solicitor, the purchaser's lawyer will:
- Approve the contract
- Submit additional 'enquiries' about the property
- Report to the client on any provisional issues
- Send the estate agent a copy of the additional enquiries
- Identify and obtain suitable indemnity insurance policies where necessary
- Raise enquiries of appropriate government body
- Submit further searches - such as Chancel, Coal, Tin and other geographically specific searches
- Inform the mortgage lender of any issues or concerns
- Chase the seller's solicitor for replies to enquiries
- Review replies to enquiries received
- Chase any missing replies/clarifications to enquiries
- Run a Lender Issues Report
- Chase the lender for comments on issues raised
Searches
At the searches stage, the buyer's solicitor confirms they have all conveyancing searches and inform the client of any implications. This advice may already be in the report on title. The Environmental Search results are sent to the client and, in the event of a fail, an indemnity policy may be advised. Read more about conveyancing searches here. Further enquiries may also be raised depending on search results. Both the client and agent will be advised of progress.
Mortgage Lender
Typically the mortgage lender will need to be pushed for issue of the mortgage offer. Once received, the client and agent will be advised. The offer will be reviewed and any issues reported to the client and or lender where appropriate.
Exchange of Contracts
This is the final run-up to the Exchange of Contracts which is the point of no return. Should a buyer withdraw after exchange, they will lose their deposit (typically 5-10 percent of the sale price) and may face other costs. The exchange of contracts process includes:
- Receipt of final, signed contract, deposit and completion of necessary accounts, statements deposit and generate accounts slips
- Notification of the agent and client that contract/deposit received
- Final check and confirmation of satisfactory replies to all enquiries
- Run pre-exchange checklist
- Obtain instructions on completion dates and agree with other side
- Contact both client and lender to confirm authority to exchange contracts
- Exchange contracts and notify client and agent
- Draft and send exchange letters
- Send Certificate of Title to the lender and prepare necessary invoices
Completion
Now contracts have exchanged, some formalities must be done before Completion and the handing over of the keys to the buyer. These include:
- The submission of pre-completion searches (OS1, K15 etc)
- Receipt and interpretation pre-completion search results
- Contact the insolvency office for K15 entries
- Raise requisition on OS1 results if applicable
- Chase replies to requisitions
- Prepare financial statements and pre-completion checklists
- Contact the lender to confirm they are in receipt of the Certificate of Title
- Chase the completion statement from the seller's solicitors
- Receive mortgage advance, client's balance and forward balances to the seller's solicitor
- Inform the client and agent of completion, draft and send confirmation of completion letters and place any indemnity insurance policies on risk
Post-Completion
Most buyers assume once they have received keys and moved into their new home that the conveyancing process is complete. In fact, there are still a number of additional tasks that are outstanding. These relate to registering the new owner at the Land Registry and any charges such as lender's interest. Also critical is the completing any Stamp Duty Land Tax return and transferring outstanding duty to HMRC. These tasks include:
- Diarise search expiry dates
- Prepare stamp duty form and payment slips and send stamp duty to HMRC
- Send form and charge to companies house where relevant; for example, if Freehold Management company
- Serve notice on the Landlord or Freeholder
- Send stock transfer form for stamping if management company
- Chase Deeds
- Prepare AP1
- Deal with requisitions
- Diarise date for retention release if a retention has been agreed
- Send deeds to the lender and copies to the client
- Send copies of deeds to client
- Chase retention release or release retention at later diarised date
- Release retention
The conveyancing process for sellers
File set-up
The initial stages of file setup more or less mirror the initial stages of acting for a buyer. However, there are a number of additional conveyancing forms that sellers must complete including:
- FFF - Fixtures and Fittings Form
- SPIF - Sellers Property Information Form
- SLIF - Sellers Leasehold Information Form (where applicable)
- Apply for and review the Official Entries, Office Copies of the lease and other documents from the Land Registry.
- Chase and review the Sales Memo supplied by the estate agent
- Write to the buyer's solicitor confirming instruction to act for the seller
- Chase any outstanding Deeds, Redemption Figures from the lender and Management information if relevant
Contracts
The most important part of getting ready to issue a contract is ensuring all relevant documents are collated and reviewed. This usually means chasing of clients, lenders, agents, managing agents etc. Once all of the information has been received, the following stages will be addressed:
- A contract package ('papers') is prepared and sent to the buyer's solicitor with an accompanying letter. All parties are notified that the contract package has been issued
- Any late information such as the Deeds, the lease or Management Information Pack are also sent to the other side
- The buyer's solicitor will then raise a set of enquiries or questions that are forwarded to the seller's solicitor
- These enquiries are addressed as quickly as possible. The client's input is likely at this stage
- The contract, TR1 form and Stock Transfer Forms are sent out and the agent is notified
- A mortgage redemption statement is requested from the lender. Once received, this is sent to the client
Preparation for Exchange of Contracts
Once the signed contract and completed forms (TR1) are returned by the client, the seller's solicitor runs through a pre-exchange checklist to ensure no detail has been overlooked. The solicitor then seeks to obtain instructions relating to completion dates and broker the agreement of these details with the other side. The client must then provide authority to exchange contracts. All parties are subsequently notified once exchange occurs. Exchange is also formally notified in writing from the solicitor. A further redemption statement must be requested from the lender in case the situation has changed since the last statement. Further financial matters such as obtaining final ground rent (and service charge receipts must also be obtained if the property is leasehold), invoices are prepared and the deposit requested from the buyer.
Completion
Completion formalities are more straightforward when selling. However, there are still a number of loose ends to tie up including:
- Preparation and dispatch of financial and completion statements to the client and the buyer's solicitor.
- Internal accounts slips to be prepared and signed off
- The agent and client are notified of formal completion and keys can be issued
- Any indemnity policies must be 'placed on risk'
- If any money has been held over pending a post completion event (called a 'Retention'), this must be noted and diarised accordingly.