Buying & Selling Residential Property
Buying & Selling Residential Property Explained
The legal process by which a property is transferred from one person to another is called conveyancing. When it’s a residential property that is being transferred, the process is called residential conveyancing. The laws that regulate how properties change hands are designed to protect both the buyer and the seller of the property.
When a property is sold there are several processes that must be completed in order for the property to change hands. These include preparing and signing documents, searching public records for information relating to the property, arranging for property inspections, and paying for the property. All of these processes are necessary to ensure that the buyer can become the new legal owner of the property.
While it’s not a legal requirement that a solicitor be involved when a property changes hands, residential conveyancing is a complicated enough process that it is useful for the buyer and the seller to have their own legal representation. Note also that while a solicitor isn’t a legal requirement, mortgage lenders often stipulate that mortgagees do work with a solicitor when they buy a home.
There are three main stages to the residential conveyancing process: the agreement to sell, the exchange of contracts, and the completion of sale. It takes an average of two to three months to complete all of the stages and for the property to legally become the property of the buyer. However, the process can take more or less time depending on various factors.
The Residential Conveyancing Process
The agreement to sell, when the seller accepts the buyer’s offer on the property, is the first stage of the process. At this stage, both parties have some obligations to meet.
If you’re selling a property, you’ll complete forms that provide legal and practical information about the property, including the property boundaries, any legal disputes the property has been involved in, and the fixtures and fittings that come with the property.
If you’re the buyer, you’ll carry out searches of public records, arranges for home inspections, and review the documents completed by the seller. The searches that need to be carried out include local authority searches to check that there are no pending issues that might affect the property or its value; land registry searches to confirm the seller is the legal owner of the property; and an environmental search to check for any potential health (or other) risks.
As the buyer, you’ll also arrange for a mortgage valuation and property surveys. The mortgage valuation is an appraisal required by the mortgage lender to ensure the value of the home is appropriate for the size of the mortgage. Property surveys check for structural problems and other issues that might need addressing before the sale can be finalised. There are several different types of property surveys, ranging from a basic condition report to a thorough building survey that details any problems that exist and provides estimates for the costs of repairing those problems.
At this point you’ll also need to arrange or finalise your mortgage.
The exchange of contracts occurs when the buyer and seller have both signed the purchase and sale contracts. Once this happens the sale is finalised, and neither party can back out of the sale without incurring a financial penalty unless they have a contractual reason to do so. For example, the contract may allow the buyer to back out of the sale if the home inspection reveals certain problems with the property.
Before the purchase and sale contracts can be signed, the buyer must make a deposit on the property. If the seller has a mortgage, they will notify their mortgage lender that they will make full payment on the balance of their mortgage once the sale is complete.
The completion of sale is the final stage in the process, where the property officially and legally changes hands.
If you’re buying a property, this is the date on which you’ll send the balance of payment to the seller. If you’re the seller, you’ll receive the money and use it to pay the balance of the mortgage, along with the fees associated with selling the property. Any money left over after paying the mortgage and fees is yours.
The last step is for the seller and then the buyer to sign the transfer deed. Once both parties have signed the buyer can be registered as the property’s new owner. They receive the keys to the property they are now the legal owner of.
How can a Solicitor Help?
Conveyancing is a fairly complicated process, particularly if you’re buying a home. There are many things a solicitor can do to make it easier for the buyer or seller they represent so it is usually a good idea to seek the assistance of an experienced law firm that specialises in such processes.
Review documents and contracts
Whether you’re buying or selling a property, a solicitor can help by drafting and reviewing documents associated with the conveyancing process. They can quickly pinpoint any problem that might arise in the documentation, discuss it with you, and serve as your legal representation in discussions with the other party. And, if you have any of your own concerns you can raise these with your solicitor and ask for advice.
A solicitor can also ensure that all documents are signed as needed, and delivered to the appropriate parties.
Perform legal searches and arrange property surveys
If you’re buying a property, a solicitor can perform all the legal searches that you need to carry out. These searches are essential, as they can sometimes reveal problems that would otherwise go unnoticed.
They can also schedule property surveys, and help you negotiate with the seller if the surveys reveal any problems with the property. For instance, if an inspection reveals electrical problems they can try to negotiate a lower buy price to cover the cost of repairs.
Work with lenders
Finally, a solicitor can work to arrange whatever payments need to be made. If you’re selling a property, they can arrange for payment of your mortgage balance once the sale is finalised. Alternatively if you are the buyer, your solicitor can arrange for payment of the deposit and balance to the seller.