Buying your property is exciting but it can also be stressful at times especially if you do not understand the terminology which is used throughout the conveyancing process. Don’t worry as Girlings' expert conveyancing team is here to help and we hope that you will find this short guide useful:
1. The Conveyancing Process
When you find the property you wish to purchase and you make your offer and it is accepted, the next step is for each party to instruct their Conveyancer to commence the conveyancing process. Conveyancing is the legal term for transferring the legal title of the property from the seller's name into the buyer's. In England and Wales this is a two stage process:
- The first stage is exchanging contracts. Once contracts are exchanged the buyer and seller are legally committed to buying the property. Until this stage is reached, either party is free to withdraw from the transaction. No party will have any legal liability towards the other and you will not be able to claim any costs up to that point.
- The second stage is from exchange of contracts until completion. At completion, the buyer’s Solicitor will transfer the purchase money to the seller’s Solicitor’s bank account. Once the money reaches that account the transaction is completed and the buyer can collect the keys from the seller (the keys are usually held by the agent). If either party fails to complete on the agreed date they will be in breach of the contract and the defaulting party will have to compensate the other for any financial loss suffered In addition to paying a penalty under the terms of contract.
2. The Deposit
At exchange of contracts the buyer must pay a deposit. The seller is entitled to ask the buyer to pay 10% of the purchase price. Sometimes this is not feasible because the buyer will be relying on his mortgage offer on sale proceeds of a related sale to pay the whole of the purchase price. However, the standard conditions of sale do state that if a deposit of less than 10% is paid, the balance becomes due immediately if the buyer fails to complete on the agreed date. Your Conveyancer should advise you if your deposit is less than 10%.
3. The Sellers’ Representations
These are statements which the seller makes about the property and which the buyer is entitled to rely upon.
However, the buyer can only rely upon this information if it is contained in the Law Society property information form (which will be provided by your Solicitor) or if it is referred to in correspondence between Solicitors. Therefore, if the buyer wishes to rely upon any information they must tell their Solicitor so that it can be confirmed in correspondence.
There is a caveat to the above point. The seller’s replies in relation to the physical condition of the property should not be a substitute for undertaking your own survey. A survey at its most basic should highlight any urgent defects in the property which may be expensive to rectify. This gives the buyer an opportunity to renegotiate the purchase price, or withdraw from the transaction.
5. Joint Ownership
If two people buy a property in joint names they can either own the property as joint tenants or tenants in common.
- A joint tenancy means that the property is owned in equal shares by all parties. When one person dies, the other(s) automatically inherits the deceased share. It is not possible for either party to leave their share by will. Although it is possible at any time to sever the joint tenancy after the property has been purchased.
- Tenants in common means that each person’s share is held in distinct proportions (e.g. one half each, or two thirds and one third). This means that each party can leave their property to somebody else.
- It is also desirable to record the financial agreement in a separate trust deed.
For further advice on this and other Residential Property issues contact our Residential Property department.
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