Searches

Two searches have been mentioned in the section on HIPs, the water and drainage search and the Local Authority search. There are a host of other searches that can be undertaken. Not all of them are necessary in every case and we will discuss with you what searches are appropriate in your case.

It is important to appreciate that the Local Search relates only to the individual property searched against. It does not disclose details of any pending planning applications or development proposals relating to adjoining properties or land in the vicinity. If you are concerned as to the possibility of there being any such proposals, you should make your own enquiries of the Planning Department of the Local Authority before contracts are exchanged. Alternatively, there is now an organisation which will carry out a search to ascertain whether any planning applications have been made within the preceding five years in respect of land or properties within a 250 metre radius. The search also provides a summary of land use policies and development proposals within a 500 metre radius of the property and discloses whether it is in a natural river floodplain or a coastal floodplain. Please let us have your specific instructions to do so if you wish us to arrange such a search on your behalf.

If the property which you are purchasing is in an area in which mining operations, including coal, salt or tin are taking place, or have done so in the past, please let us know as soon as possible to enable us to submit any additional searches which may be appropriate.

If you are obtaining a mortgage, it will also be necessary for us to make a bankruptcy search on behalf of your lenders. It is, therefore, essential that you should let us know before exchange of contracts if you have at any time been adjudicated bankrupt or entered into an Insolvency Voluntary Arrangement with your creditors or have any outstanding money judgments against you.

Searches have to be ordered at an early stage and this is one of the reasons why you will be asked to make a payment toward your legal expenses once you have instructed us to begin work for you.

Exchange of Contracts

This is a legal term and means that the contract which you sign is exchanged in the post for the other party’s signed contract. It is this ‘exchange’ which makes the transaction LEGALLY BINDING. If you are selling and buying we ensure (unless you have instructed us to the contrary) that exchange of both contracts takes place at the same time so that you are not bound to sell without having secured your purchase of the other property or the reverse.

When contracts are exchanged, the agreed completion date (i.e. moving day) is inserted in the contract. This is usually two to four weeks after exchange of contracts and it is only in very exceptional circumstances that the date can subsequently be changed. It is becoming increasingly common for the completion date to be less than two weeks from the date of exchange.

Although you will need to make provisional arrangements before contracts are exchanged, it is extremely inadvisable to enter into any commitments in reliance on a particular date before exchange has taken place. We appreciate that this can cause difficulties with things such as ordering carpets or furniture for your new property, but we are simply not in a position to give you any guarantee as to the completion date until contracts have been exchanged.

You may sometimes hear from estate agents or others that exchange of contracts and completion can take place simultaneously and in some circumstances this may seem to be an attractive proposition. Don’t be fooled – it is an extremely hazardous exercise. The potential problem is that until contracts are exchanged, either party is free to pull out of the transaction, seek to increase the purchase price at the last minute if they are selling or reduce their offer if they are buying. This can happen even on the proposed day of completion and no one who has suffered any loss has any redress or right to claim compensation.

Mortgage

If you are taking out a Mortgage then we will be acting for both you and your Mortgage Lender in the majority of cases. Your lender will expect you to pay us for work done to protect their position and to complete papers for their benefit. If you attempt to mislead your Mortgage Lender in any way and we become aware of that fact, then we are under an obligation to inform them. We have to have your permission to do this but if you withhold your permission then we have no alternative but to stop acting in the transaction. This in itself will suggest to the Lender that something is not right, so in practice disclosure to the Mortgage Lender is inevitable.

If you are buying jointly, then you must mortgage jointly. If, therefore, you are buying in joint names you should have completed the Mortgage Application Form in joint names. If you did not do so, it is a simple matter to have the mortgage ‘switched’ into joint names provided the other purchaser is over 18.

Following completion, you will hear direct from your Building Society or other lending institution regarding your repayments. You normally have a lapse of three or four weeks before your first mortgage repayment falls due. However, some Building Societies add on to the first full month’s payment interest for the period from the date of completion to the end of the month in which completion takes place. You are, therefore, strongly advised to check with your lender precisely how much your first repayment will be, when it will be payable and whether it will be advantageous for you to complete at a particular time of the month.

Deposit

For the purposes of the contract a deposit of 10% of the price is usually payable when exchange takes place. The purpose of the deposit is to provide the seller with some security against the possibility of the buyer failing to complete on the due date or attempting to withdraw from the contract. If a buyer does not complete on the due date, the seller can normally, after a short period of time, forfeit the deposit and sue the buyer for damages. This could result in a very substantial claim if the seller had been prevented from completing his purchase of a more expensive property.

If you are obtaining a mortgage of over 90% of the value of the property, please let us know as soon as possible to enable us to negotiate a reduced deposit on your behalf. On the other hand, the difference between the purchase price and your mortgage may be more than 10% but in that case the balance of your contribution is payable later, shortly before completion.

We are required to have cleared funds in our account before we can exchange. A Banker’s Draft or a Building Society cheque clears instantly but if you are providing a personal cheque this will have to be handed in about a week before it is needed to allow it to clear. Internet payments can also take several days to arrive at their destination. A telegraphic transfer also clears the same day but you will probably be charged by your bank for this service. If you need our bank details please let us know and please also tell us whenever a payment is being sent so that we can match the money to your job.

When you are selling and buying, the fact that you have to put up a 10% deposit before completion may present some difficulty as your money may well be tied up in your existing property. Most clients find themselves in this position and we can usually agree with the solicitor acting for your buyer that their client’s deposit can be paid to us as ‘agents for the seller’. This means that we can use your buyer’s money for the deposit, or part deposit, on your own purchase. It is only in exceptional circumstances that you are likely to need to arrange a Bank bridging loan.

Buildings Insurance

Usually the property remains the seller’s responsibility for fire insurance (and other normal risks) after exchange of contracts but some sellers try to shift the burden to the buyer. You should check with us to ensure whose responsibility the property is in case it becomes necessary to arrange cover from exchange.

If you are buying with the aid of a mortgage from a Building Society, Bank or Insurance Company then they can often arrange this cover on your behalf. However, if you are buying for cash, or perhaps with a private loan, then it is essential for you to make these arrangements yourselves if you have agreed to do so under the contract. Contracts are only exchanged on your direct instructions and if it is necessary for you to arrange cover you should immediately ask your insurance company or insurance broker to put your property ‘on risk’ and complete a proposal form.

We do not have any insurance agencies ourselves, but if you require any assistance in arranging cover, we will be pleased to recommend an insurance broker.

If you are selling, then your existing property will remain your risk and so you should keep your existing property covered until the sale is completed and you move. Remember to tell the insurers of your furniture and valuables that you are moving them to a new address otherwise you may not be covered. You should also check with your insurers or the removal contractors that your belongings will be fully covered while they are in transit to your new property.

If the property you are purchasing is leasehold, there will usually be a Buildings Insurance Policy effected by the freeholder covering the entire building and you will be required to reimburse to the freeholder a due proportion of the premium. However, this is not always the case and you should check before exchange of contracts whether it will be necessary for you to effect your own insurance.

If you are obtaining a mortgage but you are effecting your own buildings insurance, rather than going through the lender, it is essential that you complete the Proposal Form and obtain confirmation from the Insurance Company that the risk will be accepted before exchange of contracts. You should also take careful note of your Lender’s requirements, if you are effecting your own insurance, as they will withhold the mortgage advance until their requirements have been fully complied with and this could result in completion being delayed with disastrous consequences.

Life Insurance

If you are obtaining a mortgage then you should at least have a Mortgage Protection Policy to ensure that if anything happened to you, your family would not be burdened with the mortgage repayments.

If you are taking out any sort of life cover as a condition of your mortgage, it is essential that you obtain confirmation from the Insurance Company before exchange of contracts that the risk is accepted as delays frequently occur in obtaining medical reports from GPs.

There are many other types of insurance available from critical illness to redundancy cover. Think carefully about whether these policies represent value for money. We are fortunate in this country to have a welfare system which is designed to assist people that fall on hard times. Also read the policy documents carefully to make sure the policies are as generous as they first appear.

Gas, Electricity & Telephone

Remember to contact the local office of the Gas and the Electricity Supply Companies and fill in the necessary application forms for the supply to be transferred into your name.

If you are also taking over the telephone then you should arrange this direct with the seller and British Telecom or other service provider. If you are selling, you should make arrangements for final meter readings to be taken on the completion date. If you fail to do this, you will remain liable for the telephone charges and gas and electricity consumed after completion by your buyer.

Other services such as broadband, cable or satellite television may also be installed at the property. You should enquire with service providers directly if you wish to retain any of their services once you buy your new home.

Fixtures, Fittings & Furniture

Disputes have been known to arise about what a seller is taking and leaving but it is now standard practice for a detailed list of items to be provided at an early stage in the transaction and which we will send to you for checking.

If there are additional items which you are either buying or selling, it is in the interests of both parties that these should be covered in the contract rather than by a private arrangement. The reason for this is that if you give the money direct to the seller in advance of completion, when you arrive at the property after the seller has moved out, you may find that the items have been removed. Conversely, if you are selling, and the buyer gives you a cheque on the day of completion it may not be honoured. However, if the sale and purchase of the items is specifically referred to in the contract, the money will be passed between the parties’ solicitors and dealt with on completion.

Completion & Removal Arrangements

Every contract provides for a completion date to be inserted. This is normally between two and four weeks from the date upon which contracts are exchanged and must take place on a normal working day, i.e. not a weekend or Bank Holiday. If you are selling and buying we ensure that the dates coincide. On completion we hand over the remainder of the purchase money to the other party’s solicitor and collect the title deeds and ownership of the property passes to you. It is also the date upon which the seller must vacate and the buyer is entitled to possession.

If you are both buying and selling it will, therefore, be necessary for you to arrange to move from your existing property to your new property on the same day. You should normally arrange to leave by about mid-day as, if you delay your removal from your existing property, we will not be able to obtain the money from your buyer’s solicitors which we will need to enable us to complete your purchase. You should contact your sellers shortly before completion and ensure that they have made all their removal arrangements and will be giving you full vacant possession.

Keys & Alarm Systems

If you are selling, leave the keys with the estate agents as you move out or, if there are no estate agents, please speak with us about making alternative arrangements. On your purchase try to make your own arrangements direct with the seller.

If your new property has a burglar alarm, do ensure that you meet the seller before completion to ascertain how the system works and how to enter your own security code.

Council Tax & Water Rates

When you move into your new property do write to the Council Tax Registration Officer of the local Council and to the Water Company and advise them that you are the new owner and give your name and the actual day you moved in. They can then amend their records and this avoids misunderstandings with you receiving demands in a former owner’s name. You should likewise notify the appropriate authorities that you have left your previous address.

If the property which you are purchasing is to be left unoccupied and substantially unfurnished for any length of time after completion, you may be able to claim a void period in respect of Water Rates and Council Tax. However, such claims cannot normally be back-dated and you should, therefore, immediately contact the local Council and Water Company and inform them and also put your claim in writing.

Joint Purchase

In the case of a joint purchase, we generally provide for the property to be owned by you as ‘Joint Tenants’. The effect of this is that upon the death of either one of you, that person’s share would automatically pass to the survivor. This rule will override anything that you may have written in your Will or if you do not have a Will it overrides the Intestacy rules. This method of owning property is commonly used by couples.

The alternative method of ownership is as ‘tenants in common’, the effect of which is that you would each own a separate one-half share in the property, or such other proportion as you agree, and which would then pass by Will or, in the absence of a Will, to the next of kin under the Intestacy Rules. If you wish to adopt this alternative method of ownership, can you please let us know as soon as possible. It may be particularly appropriate to own the property as tenants in common if you are not legally married and if one party is making a greater contribution to the purchase of the property than the other party.

It is a sad fact that many relationships end in separation. Although it may seem somewhat indelicate to raise the matter when you are about to purchase a property, now is probably the most appropriate time to consider what you would wish to happen to the property if, unfortunately, you were to separate. In particular, you should bear in mind that if you do not specify the shares in which you are to own the property, the proceeds of sale will normally be divided equally between joint owners, regardless of their respective contributions. You should also bear in mind that if one party wishes to ‘buy out’ the other party, considerable expense can be involved. In addition, the Building Society or other lender may not agree to the outgoing party being released from their liability if the remaining joint owner does not have sufficient income on their own to cover the mortgage repayments.

Difficulties can also arise with regard to the ownership of jointly purchased furniture and other household goods. These points are necessarily broad generalisations and as everyone’s circumstances will be different, they are matters upon which individual advice is required.

Wills

It is a common misconception that there is no point in making a Will as, in the case of a husband and wife, everything will go to the survivor and that in any case you have nothing to leave. In the vast majority of cases, the mortgage will be covered by insurance in addition to which most occupational pension schemes provide substantial death benefits. There is also the possibility that if death occurs as a result of an accident, the deceased’s estate will have a claim for damages. In those circumstances, there could be a substantial sum passing to your next of kin which does not automatically pass in full to the surviving spouse in the case of a husband and wife. In the case of a couple who are not legally married, generally speaking, neither party has any claim against the other party’s estate in the absence of a Will. The question of making a Will is a matter upon which individual advice is required and with which we will be pleased to assist.

Disclaimer

Nothing in this guide amounts to legal advice. The information in this guide is illustrative only. If you are unsure about any aspect of the guide, seek advice from your Solicitor. The information in this guide relates to the house buying process in England and Wales only.