Once you have made an offer to purchase a property your lawyer will start the process of officially transferring the property from the seller to you or vice versa if you are selling a property. This is known as conveyancing.
The seller’s lawyer* sends the buyer’s lawyer two copies of a draft contract, together with a property information form completed by the seller which gives information about the property (for example, which fences belong to the property or whether any alterations have been carried out in recent years which required planning consent). They also send a fittings and contents form setting out what is included in the sale price.
On receipt of these documents the buyer’s lawyer will send a local search request on the property to the relevant Local Authority and carry out any other enquiries considered necessary. Once the buyer’s lawyer is satisfied that all checks have been carried out satisfactorily and discussed everything with the buyer, one copy of the draft contract is sent back to the seller’s lawyer for the seller’s signature and the buyer’s lawyer will arrange for the buyer to sign.
You should never sign any documents relating to your sale or purchase, other than your mortgage application, without your lawyer confirming that it is in order to do so. Your lawyer will go through all of the documents with you and answer any questions that you may have.
When both the buyer and the seller are ready to proceed the transaction can progress to Exchange of Contracts.
Exchange of Contracts is the key point in the legal transaction of buying or selling a house, land or other property. It is not the same as signing the contract. The buyer and the seller involved in the transaction each sign an identical copy of the agreed contract. The contract is not legally binding however, just because it has been signed. The formal process of “exchange” has to take place for the parties involved to be legally bound by the signed contracts. Before contracts have been formally exchanged by the lawyer’s acting for both parties either party is free to withdraw from the proposed transaction.
The exchange process takes place over the telephone under a prescribed procedure set out by the Law Society and the date and time of the exchange is recorded by both lawyer’s. It is only at that point that the contracts become legally binding.
It is usual for a deposit to be paid by the buyer on exchange of contracts. If you are buying a property with the assistance of a mortgage then exchange of contracts cannot take place until:
- Your lawyer, and you, are satisfied with the answers to their enquiries about the property you are purchasing
- You have paid the required deposit into your lawyer’s bank account and these funds have been cleared by their bank. This is because your lawyer needs to send the deposit to the seller’s lawyer at the time of exchange of contracts
- Your lawyer has received written instructions from your mortgage lender and is satisfied that any special conditions have been complied with or will be before the completion date
If you are in a chain of transactions you cannot exchange contracts until everybody in the chain is ready. In other words you are completely reliant on the slowest person in the chain. Your lawyer will do their best (as will many estate agents) to obtain full details of the chain, but this can sometimes be difficult.
Insurance: As soon as contracts are exchanged a buyer should insure the property they are purchasing (unless it is leasehold). If a property burns down between exchange of contracts and completion the buyer still has to pay for the property.
Just before contracts are exchanged the Completion date is agreed; this is the date when the sale is finalised, all of the monies are passed over and the buyer has legal ownership of the property. The completion date is usually your moving date also. Again, where there are several people in the chain it can take some time to arrange this date. It is not possible to arrange a moving date for a Saturday, a Sunday or a public holiday. Traditionally your completion (moving) date was always 28 days after exchange of contracts. These days however, it is possible to complete a lot sooner but your lawyer must have sufficient time to have funds paid into their bank account where necessary and cleared through the banking system to enable them to comply with Accounts Rules.
It is only when the balance of the money for your purchase has reached the seller’s lawyer that completion of your purchase can take place. Where there is a long chain of transactions your lawyer has no control over how quickly the balances of the purchase money pass down the chain of transactions as it depends upon the co-operation of the parties in the chain and the banking system. However, we would normally expect that completion of your purchase will have taken place by lunch-time on the day of completion, although on some occasions it may be delayed until later in the afternoon. Your lawyer will do all that they can to ensure that you are not inconvenienced and in particular we normally ask for mortgage funds to be released by your lender the day before completion so that they are readily available on the day of completion without us having to wait for them to be credited into our bank account.
Keys: Never hand keys over to your buyer until your lawyer advises you to do so. In many cases you may be leaving your keys with the estate agent, who should not release keys until we authorise them to do so. We will only do this when all the sale proceeds are in our hands.
We have put together a Guide to Moving Home, a PDF copy of which you can download by clicking here. The Guide covers everything you need to know about the buying and selling process. Alternatively contact us here or email firstname.lastname@example.org to request your free, no obligation, quotation.
*The term Lawyer is used to define anyone involved in the conveyancing process including Solicitors and Licensed Conveyancers.