Below are the steps in a
typical Sale and Purchase transaction, sample costs and information on how long
transactions generally take
1. The estate agents handling
the sale and purchase transactions will send us details of the other solicitor
in each case. They will usually include
with these details a copy of the Energy Performance Certificate relating to the
property.
2. On your purchase we’ll write to them for the
contract papers and at the same time we’ll send you our general client care
information letter, a request to let us have evidence of your ID and also
a money-laundering form to complete asking you
to confirm the source of the funds for the purchase.
3. On your sale, we'll send you 2
Forms to complete: a Fittings and
Contents Form (what's staying/ what's going), and a Property Information form which
asks such things as whether you have undertaken works at the property(and if
so, whether you have copy installation certificates or guarantees relating to
the work), whether you have altered the
boundaries, whether there have notices from third parties concerning the
property; details of the current utility companies etc. You will receive these forms in turn, duly
completed by the Seller, in respect of the property you are buying.
4. On your purchase, the contract papers received
from the seller’s solicitors will comprise the contract itself and also legal title documents, including the land registry
plan of the property and the Seller's property information forms. On
receipt of these documents, We’ll commission the local and environmental
searches (I need the title plan to do this, which is why it is Step 4). There be other searches which are relevant to
the purchase – we will discuss these with you and you
can instruct us whether you require them. The local search in this area usually takes
about weeks (but in other areas can take up to 3 months); the environmental search is a database search
and is pretty much instant.
5. We’ll check the title
documents and contract papers and may need
raise enquiries of the sellers/their solicitors based on the documentation
supplied.
6. Your Buyer's Solicitors will
be going through the same process on your sale and may raise enquiries which we
need your assistance on.
7. If you are commissioning a
survey on the property – generally a prudent step – then consider asking your
mortgage lender to upgrade their valuation survey: this is usually cheaper than
having to pay for both the lender’s valuation and a separate survey. Should you have a survey done? Er… yes. Generally, it’s a wise move and
avoids the risk of inheriting liability for expensive defects in the property
which might not be apparent to an untrained person. There is generally no duty on a seller to
disclose defects of which they are aware
- so it’s a bit like buying a used car from a private seller: it’s up to
the buyer to check out the physical condition of the property and services such
as drains, electrics, heating etc.
8. On receipt of the searches on
your purchase, your lender’s formal mortgage instructions (about a week after the mortgage
valuation) and the seller's replies to enquiries, we'll
prepare a written report to you on the
purchase for your approval , with copies
of the searches, other relevant legal documents and the contract and mortgage
deed for signature.
9. You may have points you wish
to raise on my report, or further enquiries you wish me to make. Once
you're happy to proceed, we can then exchange contracts provide the other
parties in the chain of transactions are also ready. Exchange is the
stage when the parties become legally bound to proceed with the transaction; a
completion date is fixed, and the buyer pays a 10% deposit. Exchange of contracts must take place
simultaneously on both your sale and purchase (and on all the other
transactions in the chain), so it'll be necessary to agree the completion date
with all parties in the chain before exchange of contracts. Completion has to be on a day the banks are
open: so Monday – Friday, excluding public holidays.
10. We’'ll arrange to draw down the mortgage money
in time for completion. I'll need the
balance of the purchase monies plus stamp duty, etc., in cleared funds from you in time for
completion. Bear in mind
that if you transfer the funds by internet banking, there may be a limit of
£10k per day, so you may have to go into a branch of your bank to arrange the
transfer
11. On the day of completion, we'll receive the
completion monies on your sale direct from the Buyer's solicitors. We’ll pay off the existing mortgage on your
property and we'll transfer the completion funds on your purchase to the
Sellers' solicitors. The property is yours once the funds are
received. The sellers' solicitors will notify the estate agents that the
keys may be released to you, and you collect the keys from the agents. In practice, most people move out of their
properties on the morning of completion and then move into their new properties
in the afternoon.
12. Leasehold Property. This is generally more complex than
freehold property because it involves 2 separate legal titles: the leasehold
title and estate freehold title; and especially because the property will be
subject to a lease. These are generally
quite lengthy documents, and we will need to check that the lease complies with
lenders’ requirements (which are continually being updated). It’s also necessary to investigate the financial
issues such as liability for service charges, the risk of liability for future
large one-off payments (for example if major improvement works are planned),
whether there are any outstanding breaches of the lease (which would be
‘inherited’ by a buyer) etc. On a sale
of a leasehold property the seller is required to obtain and pay for freehold
estate information for the benefit of the buyer. The cost of this varies from freeholder to
freeholder but is usually in the region of about £350.00 + VAT. On a purchase, the buyer is required to
register the transfer of ownership with the freeholder. The freeholder is entitled to charge for
this. The cost varies but is usually in the region of about
£200 - 300 + VAT.
Sample Costs
Here are the costs including expenses
(“disbursements”) that may be incurred in a typical freehold sale and purchase transaction at a sale price of £270,000 and a purchase
price of £380,000. VAT is charged at the standard rate of
20%.
SALE |
|||
Sale Price |
270,000.00 |
||
Buglear Bate & Co Fees |
1,075.00 |
||
VAT on fees |
215.00 |
||
Land Registry title entries & plan |
6.00 |
||
Buglear Bate fee for CHAPS mortgage-repayment |
30.00 |
||
Total Sale fees |
1,326.00 |
||
PURCHASE |
|
||
Purchase Price |
380,000.00 |
||
Buglear Bate Fees |
1,175.00 |
||
VAT on Buglear Bate fees |
235.00 |
||
Personal Local Search fee |
95.40 |
||
Environmental Search fee (including VAT) |
51.00 |
||
Bankruptcy Search fee (£2.00 per purchaser) |
4.00 |
||
Land Registry Search fee |
7.00 |
||
SDLT (Stamp Duty) |
4,000.00 |
||
Land Registry Ownership Registration fee |
135.00 |
||
Buglear Bate fee for CHAPS completion-payment |
30.00 |
||
Electronic ID (including VAT) |
10.00 |
||
Total purchase fees |
5,742.40 |
||
Timing. This usually depends on the following
factors:
1) How quickly the parties can
prepare the Property Information and Fittings & Contents forms for their
solicitors to send to the other party’s solicitors. If there has been a previous abortive transaction,
then the seller’s solicitors are likely to have the documents immediately
available and this will speed the process up.
2) How long the final mortgage
documentation on the purchase takes.
This is often about 4-5 weeks from the date of application, but times
can vary considerably. The documentation
usually comes out to the purchaser’s solicitor about a week after the mortgage
valuation.
3) How long it takes to obtain
information from the Freeholder as to the management of the estate
4) How long searches are taking
5) Removal companies – they can
get very busy during peak periods such as holiday periods
6) The parties’ requirements –
including all the parties in the chain.
Some maybe constrained by factors such as school term dates, giving
notice on rental property, holidays, etc.
7) How many transactions there are
in the chain. Each additional
transaction gives rise to more uncertainties and risk of delay. These uncertainties and risk can be hard to
manage because we’ll only have direct contract with our own clients and with
the solicitors above and below our clients in the chain.
8) Whether there are issues
establishing a party’s identity or the source of funds being used for the
transaction – this can happen for example where funding is coming from
overseas.
Very roughly, a standard sale
and purchase freehold transaction with no other parties in the chain is likely
to take around 6 – 8 weeks from the date the solicitors are instructed to
completion, provided there are no delays in the above steps. If the transaction is leasehold, then
allow about another 3 weeks or so because there may be delays in obtaining the
freehold estate information.
© Buglear Bate & Co October
2021