The legal framework to selling a property – key stages
As soon as you’ve found a purchaser for your property your legal adviser / conveyancer will need to swing into action. As the weeks go by you will want to know how things are progressing and the best way to do this is by seeing how far the sale has advanced along the legal framework.
This consists of a series of key stages where various questions and documents fly back and forth (or sometimes crawl) between the solicitor/conveyancers acting for the buyer and seller. This lasts for what seems like an eternity, often becoming bogged down at various points along the way. Trying to understand the reasons for the occasional gridlock means understanding the legal framework.
The following are the key stages in the route that your solicitor/conveyancer will follow until your sale safely reaches exchange of contracts.
1 Sending out ‘vendor questionnaires’
The first sign that things are moving is when you receive two long lists of questions from your solicitor, known as ‘vendor questionnaires’. This involves filling in a lot of boxes in preparation for stage 4 below.
They will want to know everything from whether you’re including light bulbs in the sale to whether you bothered to get planning consent for an extension. Be careful how you complete this, and keep a copy, as disputes can often arise later over the smallest issues, such as whether curtains and carpets were included. If you’re not sure of the answer, ask your solicitor.
2 ‘Office copy entries’ ordered
Nearly all properties are what’s known as ‘registered’, but this needs to be confirmed by applying to the Land Registry for what are known as ‘office copy entries of the title’. These tell you a number of important details about the property, including any mortgages or other loans secured against it. There is also a plan showing the borders of the plot being sold.
Anyone who’s ever played Monopoly knows the value of the Title Deeds, which traditionally provided proof of ownership of a property. In the past these were usually held by the mortgage lender (the ‘mortgagee’), but are now in most cases held on computer at the Land Registry. If the property is unregistered obtaining proof of ownership is more complex.
3 Preparing the draft contract
This starts life as a standard document setting out all the terms of the sale, such as the agreed price and the amount of the buyer’s deposit. However, at this early stage a space is left for the proposed date of completion, which needn’t be inserted yet.
Most solicitors base their contracts on a standard template, although anyone can purchase a ready-made contract such as the Law Society’s standard contract. This will then be sent to the buyer’s solicitor for them to read through and suggest any changes. It normally bounces back and forth between the solicitors a number of times until both sides are happy with the final draft.
4 ‘Preliminary enquiries’ answered
Your solicitor should by now have received a list of questions known as ‘preliminary enquiries’ from the buyer’s solicitor. These investigate matters such as whether the property is connected to mains services, and whether there have been any disputes.
The only person who can answer the majority of these questions is you – the owner. So a copy will duly arrive in the post. Some questions may need to be answered jointly with your solicitor. Although replies must be honest, in practice they tend to be a touch evasive, with answers such as ‘not to our knowledge’ or ‘please rely on your own inspection and survey’.
5 Final contract prepared
Once the draft contract has travelled from one side to the other several times and any outstanding issues have been clarified, there will come a time when the final agreed version of the contract can be drawn up. This is known as the ‘engrossed’ contract. Each side keeps a copy.
6 Contract signed by seller
Before you can exchange contracts, both parties need to sign their copy of the contract. Anyone who jointly owns the house, such as your partner, must also sign.
7 Exchange of contracts
These are magic words, because only after exchange is your sale binding on both parties. If the buyer pulls out after this stage they will lose their full deposit even if it’s for a good reason such as their survey has flagged up subsidence.
The amount of money the buyer is required to put down as a deposit will have been agreed earlier. Although contracts generally refer to deposits of ten per cent of the purchase price, in most cases smaller sums are acceptable (typically 5%).
Your side will also want to obtain confirmation from the buyers’ solicitor that the necessary funds for the purchase are now all in place (which means the buyers must have received their mortgage offer – unless, of course, they’re cash buyers). When all this is done and dusted, you should be able to exchange contracts – and you’re home and dry (nearly).
8 Post exchange
There are normally 5 or so additional tasks for your solicitor to deal with after you’ve exchanged. These will be covered in future posts.
Our next blog – coming soon …….
The art of answering legal questions
Check out our Rightsurvey blog page for more industry tips and secrets written by property professionals to help put you in control.