Buying or selling a house – how the process works
Once the sale price has been agreed between the seller (vendor) and the buyer (purchaser), and if an Auctioneer is involved in the negotiations, the Auctioneer will issue a sales advice note to all the parties and their solicitors with details of the deal. Usually the Auctioneer will ask the purchaser to pay a booking deposit which is not binding and is refundable if the purchaser decides not to proceed. The vendor’s solicitor will have to get the title deeds to the property, either from the vendor or from the vendor’s bank, if there is a mortgage on the property.
When the deeds are available, and after making some enquiries of the vendor, the vendor’s solicitor prepares a contract and sends it to the purchaser’s solicitor, who checks the title. In many cases, the purchaser’s solicitor will raise pre-contract enquiries to clarify matters that may not be fully set out in the Contract documents. When these queries have been dealt with the solicitor will advise the purchaser that it is in order to sign the contract and pay the balance of the deposit (usually 10% of the price including the booking deposit already paid to the Auctioneer. If the purchaser is obtaining a loan (mortgage) to fund or part fund the purchase, the purchaser’s solicitor will request that the Contract be made conditional on the loan being granted, and on the purchaser’s bank actually issuing the money to complete the purchase. This type of condition has become the norm in recent years.
The purchaser’s solicitor will usually raise his formal queries (requisitions) on title when sending the signed Contract, and balance of deposit, to the vendor’s solicitor. Note that at this stage the purchaser has committed himself to buying (subject to satisfactory title) whereas the vendor isn’t yet committed to selling. . If the vendor is happy with the contract, he will also sign it, and his solicitor returns one copy of the Contract to the purchaser’s solicitor. At that point both parties are in a binding Contract.
The purchaser’s solicitor will also decide what title searches will be needed, and whether some of these need to be done in advance of the closing date, or on the actual closing date. The searches needed may include:
- a planning search, with the local planning office, to check whether there are plans to construct anything which would adversely affect the value, enjoyment or use of the property such as roads, railway lines, airports, shops or factories, and whether applications for planning permission in respect of the property have been lodged or refused;
- a compulsory purchase order search with the local authority to find out whether the land is subject to compulsory purchase by the state or local authority, e.g. for road building or widening;
- Judgement, Bankruptcy and Land Registry/Registry of Deeds Searches to ensure that nothing which might adversely affect the title to the property has occurred.
The solicitor will also check:
- that the property belongs to the vendor or that he has legal authority to sell it. If the property is registered with the land registry, this is a simple matter. If it’s with the registry of deeds, 30 years’ title is usually regarded as ‘sufficient’ (note that the vendor’s solicitor is obliged by law to disclose any relevant legal matters, although not physical matters, relating to the title of a property);
- that the property was built in accordance with the appropriate regulations, e.g. planning regulations, bye-laws, building standards;
- that there are no encumbrances (e.g. mortgages or loans) against the property or any outstanding debts such as gas, electricity or telephone bills and management fees (in the case of a leasehold property).
- whether there are any remaining guarantees from which you can benefit, such as the Homebond 10-year structural warranty for homes built within the previous ten years;
- that all the agreed fixtures and fittings included in the price you’ve negotiated are actually included in the legal documentation.
When he has received satisfactory replies to the Requisitions on Title, the purchaser’s solicitor will draft a deed transferring title in the property to the purchaser and give the purchaser’s bank an undertaking to register the deed and mortgage so that the loan can be drawn down. The draft deed is then approved by the vendor’s solicitor and returned for ‘typing up’ by the purchaser’s solicitor before being returned again to the vendor’s solicitor for signing by the vendor. The purchaser’s solicitor will then give the vendor’s solicitor a list of the completion documents which will be required on the closing date
The purchaser’s solicitor will arrange with his client to give him the balance of monies needed to complete the purchase and to pay stamp duty, registration fees and outlays and the solicitors fees. If there is a mortgage is involved the loan cheque is requisitioned so that the money will be available on the closing date. The closing date is agreed, searches arranged and the balance of the purchase price is paid to the vendor’s solicitor and the closing documents handed over to the purchaser’s solicitor and the sale is completed and the keys released to the purchaser.
After closing the purchaser’s solicitor will stamp the Deed of Transfer and lodge it in the Land Registry for registration. If there is a Mortgage involved it will be registered at the same time. Once registration is completed the solicitor will notify the purchaser and, in case of a Mortgage, will send the Title Deeds to the Bank with a Certificate of Title which confirms to the Bank that the property has a good marketable title and that the Mortgage has been registered against the property.
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