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Buying - Frequently asked questions

• What are the main processes involved in buying a property?
• I am thinking about buying a flat / house, whom should I consult?
• I have had an offer accepted for a flat/house; what do I do next?
• What costs will be incurred other than the price of the property?
• How long will it take?
• Once we have asked you to act for us, what should we expect to happen next?
• The agent told us we shall need a 5% deposit, is that correct?
• What does 'exchange' and 'completion' mean?
• Will I be able to telephone the person in charge of my matter direct?
• When do we need to pay all the extra costs?
• If I decide not to go ahead with the purchase, how much will I have to pay?
• How often can I expect to hear from you?
• Will there always be someone we can talk to who knows about my / our situation?
• Should we have a survey in addition to the mortgage lender's valuation?
• If you give us an estimate for costs, could that be increased?
• I may wish to let out the property; how will I know if this could be a problem?
• I have been told to check up on covenants that might affect my use of the property - what does this mean?
• How can I be sure that I will not be 'gazumped'?
• When two or more of us are jointly buying a property, and we put in different amounts when we buy, how can we be sure that this will be correctly apportioned if and when we sell or die?
• Freehold or leasehold - is there any disadvantage in leasehold? What do these terms mean?
• I am buying a flat in a building - what other complications are there?
• As a leaseholder, could I buy out the freehold?
• What in general can cause problems or delays?
• How can I know what sort of chain there is in my transaction?
• What should I expect from the estate agent?
• Can you recommend a surveyor?
• When will I be sure of the removal date?
• What about life insurance? Do I need it even if the mortgage lender does not require it?
• What is a 'rent charge' - if there is one on the property I wish to buy, can I get rid of it?
• I may need to be out of the country before the purchase is completed; is there anything I can do to arrange for someone else to sign the documents for me?
• What information do you need when I instruct you?

What are the main processes involved in buying a property?

There are two main legal stages in the purchase after the offer is accepted: -

'Exchange of Contracts'

This occurs when the buyers and sellers solicitors exchange identical contracts signed on behalf of the buyer and seller and an agreed deposit (in cleared funds) is paid by the buyer. At this stage all the terms of the agreement are reached, the buyer has his or her financial arrangements in place, and everyone has agreed the date when they will move house. The agreement is then legally binding - ONLY THEN - should you make definite removal arrangements!

'Completion'

This is when the balance of the monies change hands and you may move in; this will be anything between a few days and a few weeks after exchanging contracts (sometimes it can be on the same day as exchange of contracts) depending on the agreement you reached with the seller.

An outline of the processes before exchange of contracts:

When you have found a house to buy and agreed a price with the seller, the agent will send the details of the sale to us. This gives the address of the seller's solicitor to whom we shall write requesting a contract, provided you have confirmed your instructions to us.

We shall require proof of your identity such as a copy of your passport or a full driving licence, as this is a general requirement of Lenders for whom we also act, and to comply with our obligations under the Money Laundering legislation.

If you are obtaining a mortgage advance for the purchase, you should now contact your financial adviser, or your chosen lender (if you have not already done this) so that the mortgage application may be processed, and the house surveyed as soon as possible.

As soon as we receive the contract, and the plan of the property, we shall make various searches including a local search via the Council or Local Authority, to ensure that there are no road schemes, outstanding planning matters, or other information held by the council that might adversely affect the new house. We shall by this stage have asked you for £300 on account of search payments which must be made when we send off the application. We shall be examining the contract documents carefully to ensure that everything connected with the ownership and other legal matters is as it should be, both for you and also for the mortgage lender if you have one. We may need to raise quite a number of queries with the seller's solicitor before we are satisfied that we can advise you to proceed with the purchase.

If you are buying a leasehold property, for example a flat, at this stage there is a great deal of information to be gathered. This includes, in particular, details of the management company, the freeholder, insurance and maintenance charges, as we have to be quite sure that all these matters are properly set up and administered. If they are not, your enjoyment of the flat, and the ease with which you would sell it in the future, could be severely limited. In addition, the lease itself has to be carefully examined as we come across quite a number of inadequate leases, which can sometimes be rectified, or, occasionally, must be rejected completely.

Once we are satisfied with the contract information and searches and once you have received a satisfactory mortgage offer, we shall prepare a full report on the property for you, and agree with you an appropriate 'completion' date. This is the final stage when the money is paid over and you will take possession of the house or flat. In preparation for that we shall arrange to 'exchange contracts' with the seller's solicitor - it is only then that the agreement to complete the purchase becomes binding on everyone. At this stage the deposit of 10% of the purchase price is payable by you, although it may be possible to negotiate a lesser amount if necessary. Please do not make any practical arrangements to move until contracts have been exchanged.

We shall then prepare the financial statement setting out the amount we shall need from you to complete your purchase. You will need to let us have this amount in cleared funds prior to the completion date. We will make the final searches, and request the mortgage funds. You will need to sign the Mortgage and Property Transfer Documents.

On the day of completion, we send the balance of the purchase price to the seller's solicitors by bank transfer, and as soon as this has reached their bank, they will notify the agent that the keys may be released, and you may move in.

Following completion, as soon as we receive the title deeds from the seller's solicitors, we send the Stamp Duty Land Tax form to the Inland Revenue and then to complete the transfer of ownership we send the documents to the Land Registry for your ownership, and the mortgage if there is one, to be entered on their registers. The documents when returned by the Land Registry will be sent by us to your mortgage lender and we shall then close the file, having sent you copies of for your records. If there is no mortgage we can retain the documents for you if you so wish.

I am thinking about buying a flat / house, whom should I consult?

There is a bewildering array of packages available from mortgage lenders, estate agents, surveyors and solicitors that can provide you with the services you need. However, as totally independent advisors we have a duty to provide you with the best combination of services to suit your needs in all these areas. We therefore recommend an early, no obligation consultation with one of our solicitors so we can provide you with expert advise and guidance before you make your move.

I have had an offer accepted for a flat/house; what do I do next?

You will need to instruct us to obtain and examine the proposed contract for you, and we will send on request an estimate of the costs involved and our terms of business. Please either contact us directly for an estimate or complete the form in the What Will You Charge? section.

What costs will be incurred other than the price of the property?

We will give you an estimate of costs (see What Will You Charge? section), which will include: -

• Stamp Duty Land Tax (a Government tax applied if the price is over £125,000)
• Land Registry Fees
• Search Fees
• Bank Transfer Fees
• Leasehold Assignment Fees
• Mowbray Woodwards fees

How long will it take?

This will depend on several things; the information provided by the seller's solicitor, the time it takes for you to obtain a mortgage offer, the searches to be made, and the other people in any related transactions ('the chain').

Once we have asked you to act for us, what should we expect to happen next?

We shall receive the agent's particulars and write to the other solicitors requesting a contract and all relevant information. We shall also write to you, asking for some information from you, and confirming our terms. You will put in hand any mortgage application, and we shall then keep in touch as the matter develops be it by post, e-mail or telephone.

The agent told us we shall need a 5% deposit, is that correct?

Technically, a 10% deposit is payable on exchange of contracts (see Buying and selling your home - Buying) but it is often possible to negotiate a lesser amount, although you would remain liable to pay the full 10% if you did not complete the purchase through your own fault.

What does 'exchange' and 'completion' mean?

Please refer to “What are the main processes involved in buying a property?”

Will I be able to telephone the person in charge of my matter direct?

Yes.

When do we need to pay all the extra costs?

There will be £300 required upon our instruction to cover payments we make on your behalf. Then 10% of the purchase price (or possibly less) in cleared funds on exchange of contracts, and the full balance to include all costs and disbursements as cleared funds by the day of completion.

If I decide not to go ahead with the purchase, how much will I have to pay?

A proportion of the estimated costs, based on the time we have spent up to the time when the matter aborted.

How often can I expect to hear from you?

As often as there is any fresh information, or need to take your instructions, but you are welcome to contact us for an update at any time.

Will there always be someone we can talk to who knows about my / our situation?

Yes, each solicitor or executive has a secretary/assistant who will have access to your case.

Should we have a survey in addition to the mortgage lender's valuation?

This is always advisable, but especially where the proportion of mortgage to purchase price is quite low. The lenders valuation is for their benefit only and does not give you any protection in the event of subsequent structural problems.

If you give us an estimate for costs, could that be increased?

Only if it became clear that considerably more time or work was going to be involved, and we will always endeavour to discuss this with you. You may need additional advice outside the normal conveyancing process e.g. holding a property in trust, and if so we would agree any additional charges with you before proceeding.

I may wish to let out the property; how will I know if this could be a problem?

You must inform us if you wish to do this at the outset. The contract documentation will reveal any such restrictions and we will give you advice on them. If this is the purpose of your purchase, you should make it clear to your mortgage lender at the outset.

I have been told to check up on covenants that might affect my use of the property - what does this mean?

Covenants are legal obligations or restrictions that are imposed on a property and may be enforced by a third party. For example, not to use the property for business purposes. We would advise you of the implication of any covenants.

How can I be sure that I will not be 'gazumped'?

There is no binding agreement on either party until contracts have been exchanged, but there are strict Law Society rules concerning a seller's solicitor sending out a second draft contract. Occasionally an exclusivity agreement can be entered into giving a specified period within which contracts are exchanged and during that period no gazumping can take place. This agreement is often not acceptable to a seller and does increase the conveyancing costs.

When two or more of us are jointly buying a property, and we put in different amounts when we buy, how can we be sure that this will be correctly apportioned if and when we sell or die?

We can easily prepare a deed called a Declaration of Trust for you at the time of completing your purchase, setting out the amounts, and your intentions, to be binding on all parties in the event of a future sale, rearrangement or death. This is also known as a trust deed. An additional charge will need to be made for this.

Freehold or leasehold - is there any disadvantage in leasehold? What do these terms mean?

With a free hold you are the assured owner forever. With leasehold you hold the ownership for a term of years only and in theory after the lease expires it reverts to the freeholder. Most residential leasehold properties in the Bath area are held on the residue of a lease for 999 years, although some have terms of 125 or 99 years. Provided the lease has at least 60 years to run, there is very little disadvantage in owning a leasehold property. It is, however, a complex matter and should be discussed fully with a solicitor when a copy of the lease is available. Provided that the lease still has at least 60 years to run there should be very little difference in its market value from a freehold.

I am buying a flat in a building - what other complications are there?

Flats will be leasehold but the building, of which the flat forms a part, will probably, be freehold. Usually there is a management company or a freeholder who's job it is to look after the property and maintain the parts of the building that you don't own. They exist to ensure that there are sufficient funds to maintain the parts of the building used by all the individual owners, and to have necessary works carried out; to arrange insurance, and collect the contributions due and to enforce the covenants (obligations) contained in the lease. The company may consist just of the individual owners, or may be an outside professional property management firm. It is therefore advisable to obtain 3 years accounts of the management company, insurance details and as much background information as possible about the past and future works to the building. It is also of course possible to get some idea of the efficiency of the management company from the appearance of the building, and your survey report. We will be happy to advise you on all aspects of this.

As a leaseholder, could I buy out the freehold?

This may be possible, but is a specialist area of law, and all the facts would need to be available and discussed with a solicitor.

What in general can cause problems or delays?

These can arise from many causes, such as defects in the contract documentation, inadequate planning or building regulations consents, delayed mortgage offer, or, commonly, difficulties in synchronising the wishes and needs of all in the chain.

How can I know what sort of chain there is in my transaction?

The estate agent should be able to inform you fully of this.

What should I expect from the estate agent?

The agent will keep you informed of associated transactions, assist with mortgage and insurance applications, and liaise generally with the solicitors and the various buyers and sellers. It must be noted that their duty is to the seller and not the buyer.

Can you recommend a surveyor?

As a long established practice we can recommend a number of surveyors and other associated property experts.

When will I be sure of the removal date?

Only when contracts are exchanged.

What about life insurance? Do I need it even if the mortgage lender does not require it?

In the event of your death the mortgage would have to be repaid if payments could not be kept up, and to do so, the property might need to be sold. To protect your relatives life insurance would usually be of benefit. As a long established practice we can recommend suitable financial services advice.

What is a 'rent charge' - if there is one on the property I wish to buy, can I get rid of it?

This is a small annual charge payable on some properties in a few areas, including Bath. The implications need to be discussed with a solicitor, although it is rarely a matter for concern, and can usually be bought out.

I may need to be out of the country before the purchase is completed; is there anything I can do to arrange for someone else to sign the documents for me?

Yes, you can appoint an attorney, usually a member of your family or one of our partners. We can of course draw up the appropriate deed for you.

What information do you need when I instruct you?

• Your full details and in particular the full name of all prospective legal owners.
• The full address of the property you are buying with particulars of the selling agents, the sellers, and their solicitors if known.
• Any specific details about the property you think we should know about e.g. is it a leasehold property, is it being let?
• Your mortgage arrangements if known.
• Is the purchase dependant upon the sale of another property?
• You will have to provide us with some evidence of identification. This is usually passport or driving license.