What is conveyancing?
Conveyancing is the legal process of buying and selling property. It involves various important steps before the transaction is completed and ownership of the property legally changes hands.
When you decide to buy or sell a property, you will need to instruct a solicitor to do the conveyancing for you. Your solicitor will take detailed information from you including your personal details, the property and (if you are buying) how you will fund the purchase. Your solicitor should explain the conveyancing process to you so you know what to expect. Below is a brief overview of the conveyancing purchase in a typical sale/purchase:
The Seller’s solicitor obtains a copy of the registered title from the Land registry or, if it is unregistered, the title deeds from the Seller. This is evidence of the existing owner’s legal ownership of the property, and shows other important information such as any rights and mortgages affecting the property. The Seller’s solicitor then prepares a draft contract of sale, and sends it to the Buyer’s solicitor for approval.
The Seller will complete two questionnaires relating to the property which will also be sent to the Buyer’s solicitor. These will provide important practical information about the property.
The Buyer’s solicitor approves the draft contract (or agrees necessary amendments with the other side); undertakes pre-contract searches and enquiries; and checks the existing legal ownership (‘title’) of the property – raising queries if necessary.
What are pre-contract searches and enquiries?
Pre-contract searches are crucial questions about issues impacting the property, for instance, if any proposed roads will affect the property, environment issues and planning applications. These searches are made with the Local Authority, the local water authority, and any other relevant board or authority depending on the location of the property.
Pre-contract enquiries are the questions specifically put to the Seller’s solicitor about the property and its use. For example, whether there are any third-party rights and interests in the property. These searches and enquiries are vital as it is the Buyer’s solicitor’s responsibility to ensure enough information about the property is obtained to enable the Buyer to make an informed decision whether or not to commit to buying the property.
The Seller’s solicitor will respond to the pre-contract enquiries and any queries about the registered title. The solicitor must respond accurately, taking instructions from the Seller where necessary. However, the Seller’s solicitor has no duty to disclose the facts or issues which are discoverable upon inspection. The principle of ‘caveat emptor’ (buyer beware) applies. This means it is the Buyer’s responsibility to check the condition of the property before purchase.
Once satisfied, the Buyer’s solicitor will then report on title to the Buyer, explaining the extent of the property, the rights and any restrictive covenants affecting the property, boundaries, etc.
The solicitors exchange contracts and the Buyer’s solicitor sends the deposit to the Seller’s solicitor, at which point the contract becomes legally binding. It is therefore vital that the Buyer is certain about proceeding before exchange takes place, otherwise they will in breach of contract if they change their mind after exchange.
The Buyer’s solicitor prepares the transfer deed, and takes various pre-completion administrative steps such as pre-completion searches, applying for the mortgage advance from the lender, and making sure the buyer sends the balance required to complete the purchase to their solicitors ready for the completion day. The Seller’s solicitor approves the purchase deed and replies to requisitions from the Buyer’s solicitor concerning issues such as discharge of a mortgage, and the amount required on completion from the Buyer.
Completion then takes place on the contractual completion date. The balance of purchase money is sent to the Seller’s solicitor who will then release the keys to the Buyer – and pays off any mortgages and legal charges on the property.
What happens post-completion?
The Buyer must pay Stamp Duty Land Tax (SDLT) where they are paying more than £125,000 for residential property. If the property is considered to be in disadvantaged area, the threshold is £150,000. For commercial properties, no SDLT is payable where the purchase price is £150,000 or less.
The Buyer’s solicitor will send the completed transfer deed and any other relevant documents, eg. the mortgage deed, to HM Land Registry so that the Buyer can then be registered as the new legal owner
What are the differences between residential and commercial conveyancing?
There are some key differences between residential and commercial conveyancing. For example, in commercial conveyancing, there are important commercial considerations that need to be taken into account. Commercial conveyancing frequently involves complex commercial leases; the buyer and seller/tenant and landlord are typically business organisations; and there are often planning and use issues to consider. The tax treatment of residential and commercial purchases and leases is also different.