Property Purchase Conveyancing Transaction Process

October 1, 2012

The Key Conveyancing Phases Involved in a Property Purchase Transaction

The property purchase transaction is in-depth and procedural, with numerous stages that a conveyancer adheres to in order to ensure that the transaction is legitimate. The slightest oversight can leave a purchaser vulnerable, and so it is essential that the conveyancer who oversees the purchasing of a property possesses not only the necessary legal knowledge, but also the necessary industry experience. The process can be carried out by either licensed conveyancers or conveyancing solicitors, either of which have the skill set and experience to handle the property purchase conveyancing process.

There are two key phases involved in a property purchase transaction, each of which contains several imperative steps: each of which is essential to ensuring a legally binding transaction that occurs with as little hindrance as possible.

Phase 1: Instruction Through to Exchange

The first phase of a property purchase takes the buyer from the moment when they first find their new home and subsequently instruct a conveyancer to proceed with contacting the seller, through to the exchange, where both buying and selling parties sign and exchange contracts. The amount of time needed to complete the various steps of this first phase depends on various factors. Some of these factors are unforeseeable, whilst others are the consequence of poor conveyancing. Either way, the purchaser can expect phase one to take anything between four-ten weeks. Five steps that make up the first phase:

Step 1: The Instruction and the Offer
Once the prospective purchaser has instructed their conveyancer that they want to put in an offer on a property, the conveyancer contacts the seller’s conveyancer, requesting a contract pack (containing a draft contract, title deed, property information form, fixtures and fitting form, building guarantees, planning consents, etc).

During this step, the purchaser will typically put in an offer on the property and, subsequent to its approval, arrange for all necessary property surveys.

Step 2: Searches and Insurance

During step 2, the conveyancer will arrange for the implementation of local authority searches (necessary for ascertaining whether anything on local council registers pertaining to planning permission, road proposals, environmental health, tree preservation, compulsory purchase orders or highway adoption, serves to inhibit any future intentions of the purchaser). In addition, the conveyancer obtains a copy of the purchaser’s mortgage offer.

At this stage, the purchaser will make arrangements surrounding building insurance. The importance of this, given that the purchaser becomes responsible for their property upon the exchange of contracts, cannot be underestimated.

Step 3: Reviews and Negotiations

Step 3 sees the conveyancer liaising with the purchaser to review the results of the local authority searches, along with the appropriateness of the contract pack. The conveyancer ensures that everything is in order with the mortgage offer, and negotiates a completion date (the date upon which the seller receives full payment for the property).

It is at this point that the purchaser scrutinises anything that they are not happy with, and has their conveyancer explain any facets of the transaction that are not clear. Additionally, the purchaser will sign their contract and post it to their conveyancer.

Step 4: Initiation and Deposit

Step 4 involves the conveyancer expressing the purchaser’s willingness to proceed with the transaction. The purchaser typically sends their deposit to the conveyancer, who facilitates its payment to the seller. (Usually, the deposit equates to 10% of the total value of the property.)

Step 5: Exchange

Step 5, the final step of the first phase, sees the conveyancer of the purchaser signing and exchanging contracts with the conveyancer of the seller. The seller receives payment of the deposit and there is an exchange of contracts. This ‘point of no return’, marks a stage in proceedings whereby no party can back out without being liable to pay damages.

Phase 2: Exchange Through to Completion

The point of exchange is always a relief for the purchaser, as it signals that the property has legally become theirs; however, the conveyancer still has to implement the second phase of the purchase. This second phase deals with the completion statements and pre-completion searches, and takes the purchaser right the way through to receiving their official ownership documents from the land registry. This second phase typically takes up to 28 days, and consists of seven steps:

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Step 1: Completion Statement and Pre-Completion Searches

Step 1 involves the conveyancer preparing a completion statement, outlining a financial breakdown of the property purchase, plus all associated costs. The completion statement confirms how much money the purchaser needs to release to the conveyancer, in order for the transaction to be completed.

The use of pre-completion searches at this stage confirms that the purchaser has not become bankrupt since the approval of the mortgage offer. The pre-completion search also guarantees that the seller still owns the property.

During this stage, the purchaser arranges move dates with a removals firm, contacts various utilities providers to arrange a connection date and notify various concerned parties of a change of address.

Step 2: Preparation of Transfer Deed
During step 2, the conveyancer prepares the transfer deed for the purchaser. The transfer deed is a document (signed in the presence of a witness), that transfers the property’s ownership from the seller to the purchaser.

Step 3: Request to Mortgage Lender
Step 3 is a formality that involves the conveyancer contacting the mortgage company of the purchaser in order to request the funds necessary for the property purchase.

Step 4: Payment
At this stage, the conveyancer sends full payment to the seller’s conveyancer. Upon receipt of payment, the conveyancer receives (on behalf of the purchaser), title deeds, transfer deeds and proof that the seller has paid the cost of the mortgage redemption settlement figure.

It is at this point that the purchaser is able to pick up their keys, and that the transaction is officially considered completed.

Step 5: Dealing with Stamping Office
Step 5 sees the conveyancer sending the transfer deed to the stamping office for stamping hence official legitimisation. In addition, the stamp duty payable is paid, the cost of which is a percentage dictated by the value of the property (the higher the value of the property, the higher the percentage).

Step 6: Registration of Ownership
At this point, the conveyancer registers the ownership of the property with the Land Registry. This is necessary for proof of ownership, and helps to protect the purchaser if someone tries to make a false claim of ownership on the property or land. It also makes it easier to implement future changes in ownership.

Step 7: Receipt of Title Deeds
The final step simply involves the conveyancer receiving the title deeds back from the land registry. If the purchaser buys the property outright then possession of the deeds is theirs, otherwise the mortgage provider retains the deeds until payment of the mortgage

The multiple complexities of a property purchase transaction, along with the potential calamitous ramifications of error, necessitate the services of dedicated property law solicitors. It is therefore essential that any person purchasing a property opt for an experienced team with a reputation for delivering outstanding conveyancing services.

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Category: Conveyancing Guide

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