A quick guide for first time buyers
Buying a home is stressful, especially for first time buyers, so it’s wise to do some research to ensure you know exactly what you’re getting yourself into. Conveyancing is the term that refers to the legal process of transferring one person’s property (the seller), to another (the buyer).
What does the process involve?
Put simply, this is what conveyancing looks like from start to finish:
Look to have your mortgage sorted out before you start looking, so you know your budget.
Find the property you wish to buy.
Put in an offer i.e. tell the seller what you’re willing to pay for the property. This is also the time to raise any conditions you have.
The offer is accepted. At this point you’ll need a survey to check the condition of the property and your solicitor will be contacted to start the legal process and carry out the relevant checks of the legal aspects and submit various searches.
The survey will include a range of examinations of the property including the structural integrity of the property, whether there are any signs of subsidence, damp, damage and some general information that may impact the property.
The searches that your solicitor submits will obtain information from the local authority, the water company serving the property and provide a detailed analysis of environmental issues. Amongst other matters information will be obtained about common drains that serve multiple properties, whether there is any history of land contamination and flooding, planning issues and permissions along with other important and useful information.
Your solicitors will also look at the deeds to the property, review some detailed questionnaires received from your sellers and raise relevant and pertinent enquiries of the sellers. Once all questions have been answered adequately you can move onto the next level – buying your home.
There are 2 major steps to be taken at this stage:-
- Exchange. This is when your deposit is paid to the seller via your solicitor and the contract that you have signed is physically exchanged with the contract signed by your seller. Your solicitor deals with these aspects on your behalf. The exchange process fixes the moving date known as completion. Once an exchange takes place you cannot back out from the purchase without losing a lot of money.
- Completion: This is the day your solicitor has to hand over the rest of the money for the house to the sellers solicitors and you will receive the keys whilst the title documents are handed to your solicitor. At this point, the property is legally yours.
You should note that nobody is legally bound to complete the transaction until contracts are exchanged.
As part of the process, ask for a list of fixtures and fittings the seller is willing to include within the cost of the property. This is normally provided directly to your solicitor with the contract papers. This will enable you to manage your expectations and you will not have a nasty surprise upon entering the property the first time after you have bought the property.
What is Gazumping?
This term refers to another buyer offering more money to the seller than you have, and the seller goes back on the deal you made. Sadly, you can’t legally protect yourself from this happening if this occurs prior to exchange. However, it is always worth asking the seller to take the property off the market as part of your original offer. This reduces the likelihood of another buyer submitting a higher price.
What is Gazanging?
Gazanging is when the seller cancels the sale to stay in their property. This could occur when the market price shoots up as there’s a good chance the seller will make more money if they wait to sell in a few months’ time.
In the unfortunate event that you suffer from either gazumping or gazanging, you’ll probably lose a fair amount of money, especially if this occurs just before the point of exchange. Typically both your solicitor and surveyor will have carried out a lot of work costing you both your precious time and money. All you can do is act quickly when it comes to finalising the offer and exchanging contracts as soon as is possible. This will probably involve working with your solicitor and mortgage lender to speed things up.
Finding a mortgage and doing all the checks
Before looking to buy a property make sure you have your finances in place first. Going house hunting before you have researched mortgages could complicate the process. Should you be unable to secure the full amount you need you will have to scrabble around to make up the shortfall. Do not automatically go with the first lender you find as mortgage products change almost daily. There are so many mortgage lenders out there, all hustling for your business, especially if you’ve got an excellent credit score. Almost inevitably another lender will match any first offer you receive or even try to tempt you with a better deal.
Always aim to secure a personalised mortgage illustration. This should highlight the important features of your mortgage. Taking out this kind of loan is a massive commitment so do your due diligence and do not sign up for anything you’ll regret later on. Remember that a mortgage typically lasts many years with 25 years being the normal mortgage term so this is a long-term commitment and not something to be rushed into without a great deal of careful thought.
Once you have your finances straight, it is time to…
Choose your conveyancing specialist
You need to instruct a conveyancing solicitor who specialises in property law. The solicitor will, as mentioned above handle all the paperwork and conduct the necessary searches. In addition the solicitor’s task includes:
- Review the draft contract pack received from the sellers’ solicitors and raise any necessary enquiries.
- Investigate title to the property.
- Carry out searches and check these.
- Review replies given by the seller to our enquiries.
- For a leasehold property, review the lease, freehold title, and management information.
- Negotiate the purchase contract.
- Negotiate the transfer document.
- Consider our instructions from your lender and advise you on your mortgage offer.
- Prepare a report on the searches, title and, if relevant, lease.
- Manage the exchange of money between the buyer and the seller.
- Proceed to exchange contracts and then complete the purchase.
- Calculate the stamp duty land tax, prepare and send to HM Revenue and Customs the return – but subject as mentioned below – and the tax.
- Register the purchase and mortgage at the Land Registry.
- Obtain a detailed an all inclusive quote from the solicitor you intend to use so that you can budget for hiring a conveyancing solicitor.
- Do not feel pressurised to use the solicitor recommended by the estate agent especially if their offices are in a different part of the country. Accessibility to your solicitor is key, both from a telephone and email perspective but especially from a practical point of view to be able to attend their offices to deal with the important aspects of a conveyancing matter.
- Often a lawyer recommended by an estate agent pays the agent a referral fee for the introduction so the referral is on a payment basis rather than on a meritocracy basis. This gives a clear clue as to the type of service you are likely to receive.
- Watch out for the hidden extras in the small print of a solicitors quote as these can add £100’s to your final bill.
- Use a solicitor as opposed to a licenced conveyancer as the level of qualification is very different.
We recommended that you find a solicitor who is familiar with conveyancing early on. This makes the process a whole lot smoother and helps to ensure everything goes through as quickly as possible.
This is not legal advice; it is intended to provide information of general interest about current legal issues.