Buying/Purchase Guide
This is the basic agenda that we follow for the purchase of a property.
Step1 Preparing and gathering information
When we receive your instructions to act for you on the purchase of a property we contact the sellers solicitor and ask them for a draft Contract pack. This pack details as much information as possible about the property that the seller can possibly give you. The draft Contract pack consists of, Fixtures, Fittings and Contents form, Property Information Form, and where the property is leasehold, a Leasehold Property Information form, copy of the Title Deeds and the contract. By now we should have received from you some money on account to pay for Searches and disbursements.
Step2 Searches and mortgage details
Normally we await the sellers draft Contract pack and mortgage offer before we request any searches. This is to make sure that the seller will be selling to you and that he has the right to sell. We will of course do Searches immediately if that's what you want. We also receive a copy of your mortgage offer and review this together with any further conditions they apply. By now we will have thoroughly inspected the draft Contract pack, made further inquiries of the seller's solicitor, received and reviewed all Searches and will be in a position to report to you.
Step3 Report to you and prepare to exchange contracts
Once we are in receipt of all the documentation, we are in a position to report to you fully. We can either send you a report by post or you can see us in person, the choice is yours. We will go through the draft Contract with you, the property information forms, the results of the Searches and the terms of your mortgage offer. We will also ask you if you have any final queries or inquiries regarding the property or your mortgage conditions and establish a suitable date for completion. You will also be asked to produce your passport or driving licence and a utility bill no more than three months old as proof of identity. We are required to certify to the mortgage company that these documents have been inspected and verified before they will release the funds.
You can now sign the contract. It is at this stage that we usually ask you to bring a Deposit to us for exchange of contracts. The Deposit must be by way of banker's draft to avoid any delay for exchange of contracts. We cannot accept cash payments for the deposit. We will let you know exactly how much Deposit is required. Usually a seller expects at least 10% of the purchase price, especially if he is buying on and needs to use the money towards the Deposit on his related purchase. We can try to negotiate a lower Deposit on your behalf (for example if you are obtaining a 95% mortgage).
You should be aware that, if you cannot proceed to completion after Exchange of Contracts FOR WHATEVER REASON, you are still liable to the seller for the full 10% of the Deposit under the terms of the contract.
You should also ensure that you have dealt with all the requirements of your mortgage lender and let them have details of your buildings insurance, direct debit details and written to accept the mortgage offer formally, should they require this.
Step4 Exchange of Contracts
Hopefully the sellers will be ready and we can now exchange contracts. Exchange is initially confirmed on the telephone between the two solicitors. We then send the seller's solicitor the Contract you signed together with the deposit. They will send us the Contract that the seller has signed.
The buyer is now legally committed to buying the property and the seller is legally committed to selling. Neither party can pull out. The completion must be done on the day agreed in the Contract and the price must be that which is on the contract. If completion does not take place on the day and time (usually between 12noon and 2pm) agreed on the Contract the seller is entitled to compensation and if there is a chain, his seller is also entitled to compensation. It is imperative therefore that completion dates are agreed and prepared for in advance as they cannot be varied subsequently without the agreement of all parties.
After exchange you can not pull out without losing your 10% deposit, all costs incurred and possibly have to pay damages to the other side.
We will now prepare a preliminary Completion Statement which will detail all the costs, fees, disbursements, money so far received by you and the amount expected from the mortgage lender. As we only asked for a small amount of money when we first started your case there will usually be a shortfall that you now have to send to us before completion. The bulk of this is usually stamp duty, commissions and fees.
Step5 Pre-completion checks
The pre-completion Searches are carried out just before completion. They comprise the 94a search which ensures that there have been no other transactions carried out on the property since the Contract package was sent to us. It also gives the Land Registry notification that the property is about to be purchased or mortgaged to your lender. A bankruptcy search is also carried out against the name of each and every borrower. This is done to protect your mortgage lender who would want to ensure that you have not become bankrupt between the time that they have issued a mortgage offer to you and the time of completion.
We will also request the mortgage advance from your bank or building society. We usually request it to arrive the day before the Completion Date so that funds are ready to be transferred first thing in the morning on the contractual completion date. We ask that you let us have the shortfall as soon as possible before completion by CHAPS transfer. You should bear in mind that the mortgage company will start charging you interest from the day the funds leave their account. You should clarify directly with your mortgage lender or broker the first date the mortgage will taken from your bank or building society account.
Step6 Completion and after....
The day before completion day we will check that your mortgage money has come in and prepare your account to make certain that all the monies are in. We prepare the figure that we have to send to the seller's solicitor so that first thing on the morning of completion we are ready to send the money across to them. As soon as they receive the money they will authorise the seller to release the keys to you. If there is a Chain then you might have to wait until the money travels further up that chain. That's it, you've completed. Within the next day or so we will receive the Transfer Deed and Title Deeds from the seller's solicitor together with official proof that the seller's mortgage has been paid back. The Transfer Deed will be sent to the Stamping Office together with the amount of Stamp Duty payable. Once this is returned to us duly stamped we can then register your name and mortgage with the Land Registry. The Land Registry will send us new Title Deeds registered in your name which we have to send to your lender. They will keep the deeds until you pay back the mortgage. If there was no mortgage involved then we will send the deeds to you by special delivery. You must keep the deeds in a safe place like a bank or solicitors.
If you would like more specific information please email your question to info@e-conveyancing-solicitors.co.uk
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