Moving
House - What Happens?
This guide contains some very important information about the procedures and implications of buying a property. Please read it carefully.
THE MECHANICS - There are three stages:
Stage One "The HIP"
Stage Two "Exchange of Contracts" the point when you are legally committed to buy the property.
Stage Three "Completion" the day when the property becomes yours and you are allowed to move in.
STAGE ONE
The H.I.P
In order to market a property the seller must have available for any prospective buyer, a 'Home Information Pack' (H.I.P). This document contains copies of the property title documents, some of the basic searches and a home energy report. The estate agent will arrange these for the seller and it will be available for inspection by the buyer before any offer is made. The seller is responsible for the cost of this. It should be passed on to your solicitor as soon as possible.
STAGE TWO
Before I can go to Stage Two I must do the following:
1. Paperwork
It is the seller’s solicitors who prepare the bundle of legal papers. Until these are received I cannot commence my work. Once received I must make sure that all the paperwork is in order.
I will check to see if there are any restrictions or matters affecting the property and let you know about them. You will be receiving a list of included contents shortly. Check this carefully and let me know if anything is missing from the list.
2. Searches
1. Local Search
I must undertake a Local Search and check the result is clear. This will show up obligations of a public nature which are enforceable against home owners, eg road widening schemes, compulsory purchase orders, tree preservation orders, breaches of planning law etc. This Local Search only relates to the property you are buying and not to any adjoining or neighbouring properties, so if you have any queries about this aspect of your purchase, you should contact the local authority directly. Neighbours' planning applications, for example, will not be revealed in the Local Search. Occasionally these factors can affect the value of the property and you are well advised to make these enquiries, as it does not form part of my normal work.
2. Water Search
I may have to undertake a Water Search to check the drainage arrangements of the property in areas where the Local Search does not contain this information or there is a doubt that the property is connected to mains drainage and sewers. If you have any doubts please let me know.
3. Environmental Searches
We must warn you of the potential hazard of buying a property built on contaminated land. We can undertake an Environmental Search (for £23.50 inc VAT) and can offer added protection of insurance. See our enclosed information sheet for more information.
A negative response to the standard local authority enquiries from the local authority may merely mean the site has not been inspected. It does not necessarily mean there is no problem. Compliance can be costly, and may result in expenditure which would exceed the value of the property.
3. Planning
It is unlikely that I will have the opportunity to actually view the property. Please let me know if the property has, to your knowledge, ever been altered or extended. I can then check that planning permissions and building regulations were obtained and ensure no breach of any restriction has occurred. If you intend to extend, alter, develop or redevelop please let me know.
I shall assume that you intend to use the property as a private residence for your own occupation. If you have any other use in mind please let me know.
4. Mortgage Offer
I must make sure you have a mortgage offer and check that it does not contain any unacceptable conditions.
You will receive a written offer directly from your building society or bank. I must also receive written instructions from your lender before you are able to exchange.
You must, of course, make sure you have enough money over and above your mortgage to buy the property and allow for legal fees, VAT, stamp duty and Land Registry fees.
5. Survey
You should have a survey undertaken.
You may wonder what the difference is between (i) a Valuation, (ii) a Valuation and Survey and (iii) A Building Survey (once called a structural survey):
1. A Valuation
This is a very simple inspection of the property and is a minimum requirement to obtain a mortgage. It will give a very limited inspection of the property and is not in any sense of the word a survey. It will confirm to the lender that the property is worth sufficient to cover their mortgage.
2. A Valuation and Survey
This is usually known as a RICS Housebuyers Report and Valuation and will advise on value as well as giving you a more detailed report on the condition and state of repair of the property. Minor items of disrepair which do not materially affect the value will not be reported.
3. A Building Survey
This is a very comprehensive survey of all parts of the property, going into much more detail than the ordinary survey. It does not normally include advice on price. This type of survey may be more appropriate for a larger, older property or non standard buildings or buildings of a commercial nature. It costs more than a simple survey.
It is of course, up to you which option you choose to take but you should remember that the risk is entirely yours when buying a property and that if it does have any defects, you will be unlikely to have any come back against the seller. In view of this you are strongly recommended to have a valuation and survey (option number (ii) above) undertaken at the very least. Your lender's surveyor can be used, and you will need to tell the lender of your requirements. You can of course instruct your own surveyor and sometimes this is preferable. You will however, still have to pay the lender's valuation. The advantage of an independent survey, not linked to your mortgage, is that the result will not affect your mortgage offer. Any defects revealed may be rectified by you as and when you choose. Where however the surveyor instructed by your lender finds defects, inevitably it will become a condition of your mortgage offer that you rectify these defects quickly. Sometimes they may even retain monies from your loan until the works have been done.
I can give further advice on this and you should feel free to discuss it with me, if you are in any doubt what to do.
You should also be aware that it is up to you to check such matters, as the working of the central heating system, the plumbing, the wiring etc, since you have to foot the bill if you discover problems after completion. Services are not usually tested as part of the valuation and survey. Also, bear in mind that using your lender’s surveyor may limit your rights to in negligence if something is missed. The law may take the view that only the lender can sue - as technically they instructed the surveyor (even though you paid the fee). An independent surveyor appointed by you can be sued directly for negligence.
6. The Deposit
A deposit a part payment towards the price of the house will always be payable at exchange of contracts. This is so even if you are borrowing all or most of the purchase monies from your bank or building society.
1. Where you are just Buying:
Since the mortgage monies are not available until later (ie at Stage Two "Completion") you must give careful consideration to this early on. Normally 10% of your purchase price is required, but it is common for this to be reduced to say 5% or sometimes less if you are obtaining a 95% or 100% mortgage. I must be made aware, however, if you have less funds available, because any sums under 10% have to be agreed by your sellers' solicitors well before exchange.
2. Where you are Selling at the same time as Buying:
You will rarely have to place any extra deposit down at exchange of contracts. We can usually use the sale deposit, and pass it on to your seller’s solicitors. If the deposit does not represent 10% of your purchase price, this does not matter. Only if you back out of the deal after exchange of contracts (ie you breach the contract) will you be called on to produce the whole 10% to compensate your seller.
7. Buildings Insurance
Unless you are buying a brand new property (where the builder insures
until completion) you must insure the property you are going to buy at exchange
of contracts and not wait until completion. Since your seller can, if he
wishes, cancel his insurance at exchange. If you are having a mortgage and
your lender is arranging your insurance you need not worry about this. Also
with most leasehold properties the landlord takes out insurance. If however,
you have no
mortgage, or you are arranging your own insurance, you should give me full
details of the policy at an early stage. It will be left to you to start
the insurance, unless you instruct me otherwise.
8. Life Assurance
If you are obtaining an endowment mortgage, you will need to make sure that your life policy is capable of starting at exchange of contracts. You should give me full details of the life policy well before exchange of contracts. You should make sure that you have "Acceptance Details" from the life company at an early stage. This often causes delays and is something I advise you to pay particular attention to early on.
9. Signing the Contract
I will ask you to come into the office to go through the paperwork, sign the contract and pay over the deposit (this cheque should be made payable to Crossmans). Remember, if you want to prevent delays bring in a bankers draft or building society cheque since we are not allowed to draw on personal cheques for five clear days.
10. Other Occupants
You must let me know if anyone else will be living at the property with you since your lender will need notifying and a Form of Consent will need signing, before exchange of contracts. The occupier may need to see another solicitor for independent advice. I will let you know if this applies.
11. Identity
These days the lending institutions insist that I verify your identity and address. Please bring with you at our meeting your passport and some bills bearing your name and home address. Often a driving license is not sufficient for identity purposes it should be something bearing a photograph.
12. Completion Date
This is the date:
* You pay the balance of the purchase money
* You get the keys to your house and may move in
UNTIL I CONFIRM TO YOU THAT ALL MATTERS IN STAGE ONE HAVE BEEN DEALT WITH DO NOT DISCUSS OR AGREE ANY DATES TO MOVE. PREMATURE DISCUSSION OF DATES CAN CAUSE ANXIETY AND MISUNDERSTANDINGS AS THE LEGAL PAPERWORK MAY NOT BE READY TO FIT IN WITH ANY DATES YOU HAVE DISCUSSED.
You should bear in mind that I will usually need at least two weeks between Stage One and Stage Two, to complete the paperwork, do further searches, get documents signed and obtain your mortgage monies etc. It is important to check with your lender before agreeing a date, since sometimes it is better to complete at the end of a month to avoid extra mortgage repayments in the first month. Some lenders for example ask for a mortgage payment straight away after your completion date.
You should also ensure that your balance (including fees) is available for the agreed date. I will need cleared funds so allow time for this.
Completion cannot take place at weekends or bank holidays, since the banks are not open then (and neither are we!).
IT IS IMPORTANT THAT YOU NOTE THAT IS NOT UNTIL YOU HAVE EXCHANGED CONTRACTS THAT YOUR COMPLETION DATE IS FIXED. YOU ARE ADVISED THEREFORE NOT TO MAKE ANY ARRANGEMENTS, SUCH AS BOOKING REMOVAL VANS, HANDING IN YOUR NOTICE TO YOUR LANDLORD ETC BEFORE EXCHANGE.
STAGE THREE
This will inevitably follow after exchange of contracts. After exchange of contracts I will be sending you a second information sheet, explaining the procedure between exchange of contracts and completion. I will tell you what else you need to do at that stage. This will include a full financial statement telling you any balances due.
GENERAL INFORMATION
Wills
Now is a very good time to consider making a Will if you do not already have one. You will come into the office to sign the contract anyway so why not make a back to back appointment with Louis Browne and kill two birds with one stone! You will find our fees very competitive.
Joint Ownership
If you are buying the property with one or more people you will find a separate sheet enclosed telling you the options open to you as to legal ownership. This can have significant consequences so please read this carefully.
Commercial Property
Please let me know if you intend to rent out the property you are buying. I will need to check with your lender that this is permitted and also check there are no problems in so doing within the deeds. Please also note there are tax implications on a sale of commercial properties and all the income it generates.
AND finally, remember I am here to help you and should always keep you well informed. If at any time you feel you are not receiving a quality service please let me know immediately.