Conveyancing – 5 things you may not know
Buying or selling a property is a major financial decision that can be challenging without the right advice and guidance.
Conveyancing is not always a simple process, especially if you are selling a house to buy another.
It helps if you understand the stages of conveyancing, here are 5 things you may not already know.
1) Conveyancing is the legal term for the process of transferring the Legal Title of a property from one party to another.
2) There are 2 main stages to the conveyancing process in the UK and Wales:
Stage 1 takes you from the acceptance of an offer to the Exchange of Contracts. During this time and before the Exchange of Contracts takes place, the buyer or seller may decide to withdraw from the purchase, sell to someone else, re-negotiate the price or decide not to sell at all. Each party is responsible for the payment of their own surveys and legal fees. This means that if the other party decides to withdraw from the sale or purchase of a property before Exchange of Contracts, you have no legal grounds to claim costs.
Stage 2 takes you from Exchange of Contracts to the day you move in or hand over the keys, referred to as Completion. Both buyer and seller are now legally committed to the sale and/or purchase. If either party fails to comply with the terms and conditions of the contract they will be in breach of contract and could face legal action.
3) A survey carried out by your mortgage lender is not a real survey. It is actually a valuation carried out to check that the property, if sold will cover the amount that you borrow from the lender. It is not a valuation of the overall worth of the property. The survey is for the benefit of the lender and is only legally liable to the lender and not you.
As it is up to the buyer to ensure they are happy with the condition of the property or they are aware of any work that needs to be carried out for safety and insurance purposes, an independent survey should be arranged. This should be done before the Exchange of Contracts because if the survey uncovers problems to be fixed, it gives the buyer the opportunity to re-negotiate on price or ask that the work is completed before they exchange. In some circumstances an independent survey can save the buyer thousands of pounds if a structural problem is identified.
4) The buyer is usually responsible for insuring the property from Exchange of Contracts. So if for instance the property is damaged between Exchange of Contracts and Completion, it will be the buyer’s insurance that will cover it, even if the seller is still living at the property.
The seller however, should not cancel their own building insurance before confirming this is so in the terms of contract and ensuring it will definitely be the responsibility of the buyer.
5) The Contract will usually state that on Exchange of Contracts the buyer will pay a deposit to the seller that in certain circumstances they are entitled to keep if the buyer does not complete on the purchase. The deposit is effectively a guarantee that the buyer will complete.
Forrester Sylvester Mackett offers a comprehensive range of property services for individuals and businesses. For further information, please contact a member of our Conveyancing and Property Services Team.