Key elements and structure of freehold property transactions Flashcards
What happens at exchange of contracts?
Deposit normally paid and through the exchange of contracts the parties become bound to complete the transaction on the agreed completion date.
The buyer gains an equitable interest in the property under a constructive trust.
What happens on completion?
Balance purchase price is paid, keys handed over and transfer deed is completed. The buyer becomes entitled to apply to become registered as the proprietor and gains legal ownership.
What does a seller’s solicitor do at pre-contract stage?
Carries out an investigation of title and then undertakes a deduction of title for the buyer’s solicitor.
They then provide a draft contract and supporting documentation as well as replied to standard pre-contract enquires.
They also respond to any additional pre-contract enquiries and requisitions on title.
They also request a redemption statement from any mortgagee(s).
Arranges for contract to be signed.
What does the buyer’s solicitor do at pre-contract stage?
Carries out investigation of title under the principle of caveat emptor.
Check and approve/amend the draft contract.
Carry out and review the results of standard pre-contract searches and enquiries of both the seller and third parties.
Also raise any additional enquiries and requisitions on title.
Arranges for contract to be signed.
What is meant by investigation of title?
The process whereby title to the property is check/examined to ensure that the seller is entitled to sell and there are no materially adverse incumbrances.
What are requisitions on title?
Additional enquiries of the seller’s solicitor as part of investigation of title and the results of pre-contract searches and enquiries. They are specific questions about an issue that requires a solution.
Following exchange of contracts is the pre-completion stage. What is this?
The buyer’s solicitor prepares the draft transfer deed for approval by the seller’s solicitor and the mortgage deed for execution by the buyer. They carry out pre-completion searches and enquiries of the seller’s solicitor and third parties, submit their certificate of title/report on title to the lender and request the mortgage advance.
They also request the balance due in order to complete, and deal with any amendments to the transfer deed.
The seller’s solicitor approves the transfer deed and arranges for it to be executed by the seller. They also respond to the buyer’s completion information and undertakings form.
What happens at post-completion stage?
The seller’s solicitor discharges any existing mortgage and provides the buyer’s solicitor with proof of discharge. They also pay any estate agent’s costs and account to their client.
The buyer’s solicitor deals with the submission of the Stamp Duty Land Tax or Land Transaction Tax return and payment of the tax. They then deal with registration at HM Land Registry and sometimes Companies House.
What factors need to be considered when thinking about a survey?
- age of property
- its value
- whether it has been extended/altered
- whether the buyer plans to extend
- whether it is of non-standard construction
- whether it is in a former mining area or affected by subsidence
What is a basic valuation?
Most basic form of ‘survey’, it does not assess the physical state and condition of the property. It is commissioned by a lender as a minimum requirement to ascertain the market value of the property and its value for secured lending purposes. Limited use to the buyer.
What is a full structural survey?
The most comprehensive form of survey, contains detailed assessment of the physical state and condition of the property. Most expensive.
What is a homebuyer’s valuation and report/survey?
Between a basic valuation and a full structural survey. It will refer to the need for repairs/maintenance but it is limited. Physical inspection may be limited to exposed and accessible areas.
When is it compulsory to adopt the law society conveyancing protocol?
For firms that are part of the Law society’s conveyancing quality scheme.
What is a structural defects insurance policy?
covers defects in design and construction for a period of ten years. More common for new build properties.
What is the Law society conveyancing protocol?
Sets out to standardise the residential conveyancing process, making it more transparent and efficient. Provides a standard set of steps/instructions to follow and provides standard forms to be used.
