The Agreement, also known as The Contract, contains all the details of the transaction together with what has been agreed, e.g. purchase price, property details and any special conditions that apply. A copy of the document will be sent to you for signature and the other party will receive their own copy to sign. An exchange date will then be agreed between the solicitors when the seller and buyer are both in a position to legally commit to the transaction and the Agreement will then be legally binding. If either party decides not to go ahead, financial penalties will be incurred once exchange of contracts has taken place.
Chancel Search
If you are purchasing a property, which is located within the historical boundary of a parish, there is the possibility that there could continue to be a chancel repair liability based upon it. This means that you could, in the future, be asked to make a contribution towards the maintenance of the chancel of the local parish church. This could run into a large amount that you would be required to pay. Currently there is a case where a property owner in the boundary of a parish, has received a demand for £190,000.00 plus VAT as a contribution and the current legal bills are £400,000.00! It is important to have the Chancel Repair Search carried out to see if your property falls within one of these boundaries. If this is the case, we can put indemnity insurance in place to protect you in case you do receive a demand. Your lender may not be able to offer you the mortgage if you decide not to take out the indemnity insurance as it would also be a risk to them.
Chattels
Chattels are any extra items that are to be left at the property after the sale. These could be items of furniture, fridge-freezers, beds, etc. They are different to the fixtures in that they are not fitted to fabric of the property and are not included in the purchase price. An amount for the chattels will need to be agreed (preferably in writing) between the seller and purchaser.
Coal Search
The Coal Mining Search gives details of any past or present underground mining activity that may still affect the property or cause subsidence and damage to the property. If your property is in an area where a Coal Mining Search is required, we will advise you.
Completion Date
The completion date will be decided on between the buyer and seller before exchange of contracts. Once exchange has taken place, this completion date is legally set, although this may have to be revised if any of the paperwork is still outstanding at the time. We will have arranged with the lender for the mortgage advance to be released in time for completion on this date, and this will then be forwarded to the seller's solicitors. The estate agents will release keys once the funds have been received by the seller's solicitors. We will advise you when completion has taken place.
Completion Statement
The Completion Statement provides you with details of the financial aspect of your sale or purchase. It gives a complete breakdown of the costs involved and the amount either required to complete in the case of a purchase, or owing to you on completion if you are selling.
Deposit
The deposit is usually 10% of the purchase price of the property which is normally paid from the buyer's own funds. This sum will be handed over to the seller's solicitors on exchange of contracts. This amount may be reduced if agreed by both parties. Please note that if you were to pay a reduced deposit as a purchaser and the property failed to complete through no fault of the seller, you would then be liable to make up the deposit to the full 10% together with any compensation required by the seller.
Environmental Search
The Environmental Search is carried out in order to ensure that there are no environmental factors affecting the property from previous uses of the land. This could be caused by the likes of previous waste disposal sites, industrial areas, landfill, etc. It will also reveal whether the site is at risk from flooding, subsidence, toxic emissions, or any other environmental issue that could cause concern to a potential purchaser. This is essential as any required clean up costs would be the responsibility of the landowner.
Exchange of Contracts
Once exchange of contracts has taken place, this is the time when you become legally committed to purchase / sell the property at the price stated in the contract. Up until that time, either party is able to walk away from the deal without incurring any financial penalties under the contract.
Fileview
We now provide a file viewing service, details of which can be supplied to you when you instruct us. You will be supplied with a username and password and will then be able to access your file at your convenience to check on the progress. If you wish to take advantage of this, please let us know.
Fixtures, Fittings and Contents Form
This form is completed by the seller and passed on to their solicitor. This is part of the Agreement itself. It lists the items at the property that are to be included or excluded from the sale. The seller's solicitors will forward a copy of the document to the buyer's solicitors who will then pass it to their client so that the purchaser is aware of what is included in the purchase price. The seller will also be sent a copy to ensure that they agree with what is to be included in the sale. If there is anything in the forms that you do not agree with, please inform your solicitor immediately so that any problems can be dealt with early on to avoid delays.
Freehold
If a property is freehold, the owner has complete ownership of the property for an unrestricted amount of time. There would normally be no rent to pay as opposed to leasehold land. The use of the land may still be restricted however due to any legislation, rights, reservations and covenants revealed in the title.
H.I.P.S
The Home Information Pack Scheme (HIPS) comes into force on 1st June 2007. The pack will contain all of the essential information about the property, including:
Indemnity Insurance
Indemnity insurance is sometimes taken out by solicitors to cover potential losses to clients arising from potential breaches of any covenants contained in the title to the property or other defects in the title. Once in place, the indemnity insurance covers the current buyers, their lender and any future purchasers and is kept with the title deeds for that purpose.
Land Registry
The Land Registry holds records of land ownership in England and Wales. The information they hold includes the current owners of the property, charges made against the property e.g. mortgages and any covenants or restrictions that affect the title of the property. The title will be checked thoroughly by us when you are purchasing a property.
Lease
The Lease is the document that is created to grant a leasehold ownership to the Tenant of the property for a set number of years. The Landlord will still own the freehold interest. On completion the lease will be granted or assigned to you and you will be advised of the amount of years left to run on it. The Lease will also contain a list of restrictions on your use and ownership of the property that you will need to abide by. We will advise you of any ground rent or service charge that you may be required to pay towards any maintenance costs and premiums for insuring the building together with any rights that you will benefit from. The lease will also contain the landlord's obligations towards the upkeep of the building.
Leasehold
A leasehold property is a property held for a specific amount of time, on terms set out in the lease with the freeholder retaining ownership of the freehold interest in the property. When the lease expires, the ownership reverts to the freeholder. If you are purchasing a leasehold property, there will be extra work carried out by us, as we will need to contact any management company that may be involved and obtain details of the ground rent, service charge and overall management of the property. We will also need to go through your Lease to find out if there are any onerous restrictive covenants on your property. These could include things such as not making alterations without the landlord's consent, not to keep pets on the property, etc. We may also need to arrange for any shares in the management company to be put in your name and provide the landlord with a notice of change of ownership, there is usually a fee charged by the landlord for dealing with this.
Legal Fees
These are the fees charged by us for the work carried out on your purchase/sale. These are separate from the disbursements that will be charged for things such as Stamp Duty, Land Registry fees, search fees, etc. All fees will be set out in the Completion Statement that we will provide you with in the course of the transaction. Please note that if the matter does not complete, we may not charge you for any legal fees for the work that we have done, but the money you have paid us on account of costs is non-refundable if we have already paid out for the disbursements.
Local Authority Search
This is a list of questions sent to the Council for the area that you are purchasing the property in. The Council will then send the replies to us which will reveal such things as whether any Smoke Control Orders or Tree Preservation Orders are in place for that area and whether the road adjoining the property is maintained by the Council or is paid by the residents who use the road to access their property and will also reveal any planning applications on the property. Please advise us if you have any specific concerns that you wish us to raise with the Council regarding the surrounding land and buildings as the local search results are only applicable to the property you are purchasing and will not cover the surrounding area. This means that it will not reveal any Planning Permissions or anything else that may affect the area outside the boundaries of the property.
Mortgage
The mortgage is simply the loan that a lender will agree to provide to you if you are purchasing a property in return for taking security over that property. This is also referred to as the Legal Charge. You would not be able to sell the property in the future, without first paying off the mortgage. There are various types of mortgage and once we receive a mortgage offer, we will explain the terms and conditions of yours. Your mortgage will need to be arranged as early as possible as we will not be able to exchange contracts without an acceptable written mortgage offer being in place, confirming the terms and conditions and the amount that your lender is willing to advance. If you are selling a property that has a mortgage on it, we will need full details of your lender and the account number, to enable us to contact them for a redemption figure (the amount required to clear the mortgage) and any title deeds that they may hold for your property. We will advise you of the redemption figure together with details of any early repayment charges which may apply.
Mortgage Deed
When purchasing a property, you will be required to sign a Mortgage Deed that will be supplied to us by your lender. This will be recorded at the Land Registry on completion of the purchase to show that your lender holds a charge over the property and that this will need to be repaid before any future sale can take place. Payment on Account of Costs These are costs that we need to ask for at the start of the transaction. This enables us to pay for the disbursements such as any searches required on your property in the case of a purchase, or copies of the Land Registry entries in a sale. We will advise you of the amount required on account in the initial letter we send to you.
Property Information Form
If you are selling a property, we will provide you with the Property Information Form at the start of the transaction, this forms part of the Agreement itself. You will need to complete this form accurately and to the best of your knowledge as it provides information about your use and ownership of the property and will be required by the purchaser's solicitors. It also includes sections regarding the boundaries of the property, central heating, double glazing and any alterations that may have been made to the property since it was first constructed and disputes with neighbouring properties. If you are purchasing a property, we will provide you with a copy of this form when we receive it from the seller's solicitors. Please ensure that you read through the form carefully and advise us of any concerns that you may have so that we can raise these with the seller's solicitors at an early stage.
Redemption
This is when the mortgage/loan is repaid in full, usually on completion.
Redemption Fee
A redemption fee is sometimes incurred if the mortgage is repaid early. Your lender charges this and the amount will vary depending on how long the mortgage still had to run and any fixed rate period you may have.
Searches
We will need to carry out a number of searches on your property to ensure that there are no problems with it. The Local Search is carried out with the Local Authority that covers the area you are purchasing in and provides us with details of whether the main road to the property is adopted (maintained at the expense of the Council) or not (in which case it will be maintained at the expense of the residents using the road for access to and from their properties. It also advises of any Smoke Control Orders or Tree Preservation Orders, Compulsory Purchase Orders or Financial Charges that may be in place. Please advise us if you have any specific concerns that you wish us to raise with the Council regarding the surrounding land and buildings as the search results are only applicable for the property you are purchasing and will not cover the surrounding area. This means that it will not reveal any Planning Permissions or anything else that may affect the area outside the boundaries of the property. The Environmental Search advises of any environmental risks that may affect the property, e.g.: flooding, contaminated land, subsidence, etc. It also contains details of previous uses of the land. We will receive a certificate from the search agency to confirm whether the property is clear or not.
The Coal Mining Search gives details of any past or present underground mining activity that may still affect the property or cause subsidence and damage to the property. If your property is in an area where a Coal Mining Search is required, we will advise you. The Drainage Search will be carried out with the local water board for the area you are purchasing in. If we have not been provided with a recent water rates account from the seller's solicitors, we will need to carry out this search to confirm whether the property is connected to a public water supply and confirmation of how the property is billed for the water charges (e.g.: water meter). It will also confirm how the sewage is dealt with, e.g.: connected to public sewer, septic tank, etc. Chancel Search. This will be required to identify if your property is in an area that is still affected by a Chancel Repair. You could still be liable for contributing to the upkeep of the church. This could work out costly if major repairs were required. It is possible for us to put in place an indemnity policy for a one-off fee which would cover you in the event that you were ever called upon to contribute to the maintenance and we will advise you if this is required. Not all of these searches will be required and we will advise you at the start which ones we will need to carry out and the cost for providing these, there may be specific additional searches depending on the location of the property being bought.
SMS Updates
Short Messaging Service. We can update you by text to your mobile, on the progress of your file at each key stage so that you are kept in the picture at all times.
Stamp Duty Land Tax
Stamp Duty Land tax is a tax that is charged by the government and will need to be paid by the buyer on completion of their purchase. If the purchase price of the property is below £125,000.00 there will be no stamp duty payable but we will still need to complete a tax return for you which you will need to sign or authorise to be submitted. If the purchase price of the property is above this amount, the following percentage of the purchase price will be charged as stamp duty: £125,001 to £250,000 - stamp duty is charged at 1% of the purchase price £250,001 to £500,000 - stamp duty is charged at 3% of the purchase price £500,000 upwards - stamp duty is charged at 4% of the purchase price.
We will complete the Stamp Duty Land Tax forms for you but you will be required to sign it (or authorise us to submit this on your behalf) and provide us with your National Insurance Number.
Survey
Most properties are 'sold as seen' and if you are purchasing a property it is up to you to ensure that the property is not affected by any defects. It is always advisable to instruct a surveyor to carry out an inspection and report on the physical condition of the property. Your mortgage lender (if you are obtaining a mortgage) will carry out their own mortgage valuation to ensure that the property is of sufficient value to protect their interest. This is not the same as a survey.
Title Deeds
Land Registry are de-materialising these i.e. recording them onto the register and then returning any Title Deeds as they are no longer required as proof of ownership once recorded. Title Deeds are the documents that show the current owner of the property, any charges held over it (by way of a mortgage) and any obligations or rights that affect the property. The lender usually holds them for the full mortgage term as security. They also provide evidence that the person named is legally entitled to sell the property. If you are purchasing a property, we will be supplied with office copy entries (the copy of the deeds held at the Land Registry) in order to check the title.
If you are selling a property, we will require from you either the title deeds (if you did not obtain a mortgage at the time you purchased), or the name and account number for your current lender so that we can obtain the deeds from them in order to forward the relevant information to the purchaser's solicitors. If your lender makes a charge for sending the title deeds to us, they will usually add this to your mortgage account and we will be advised of the figure at the time we request the deeds.
Transfer Deed
This document will normally be prepared by the buyer's solicitor and usually needs to be signed by all sellers and buyers in the presence of an independent witness (not a member of your family). This is the legal document that passes ownership of the property to the buyer and will be forwarded to their solicitor on completion. The completion date will then be inserted and the document will be forwarded to the Land Registry together with the buyer's mortgage deed (if applicable) and an application to register the change of ownership. A copy of the new records (the Title Information Document) will be sent to the buyer's solicitors when registration has taken place and a copy is forwarded to the buyer for their own records.
Valuation
Your lender will arrange for a basic valuation of the property to be done to establish the market value of the property and ensure that the property is adequate security for the loan. A copy of this should also be forwarded to the purchaser by the lender. A Homebuyers report or even a full structural survey should be considered as they are more detailed than a valuation and most properties are sold as seen therefore you would be responsible for the cost of remedying any defects in the property. It is always advisable to instruct a surveyor to carry out an inspection and report on the physical condition of the property.
Water Drainage Search
A Drainage Search will be carried out if we have not been provided with a recent water rates account from the seller's solicitors to confirm whether the property is connected to a public water supply and to confirm how the property is billed for the water charges (e.g.: water meter), whether the property has foul drainage and surface water drainage to the public sewer.