What is conveyancing?

Conveyancing is the process by which the legal title of a property is transferred, usually by a seller to a buyer.

What is involved?

Once a property has been sold, usually through Estate Agents, those agents confirm to the buyer’s solicitor and the seller’s solicitor details of the transaction such as price, parties, property and any other special arrangements. The solicitors then will contact each other and the seller’s solicitor will send details of theproperty to the buyer’s solicitors. This will involve sending them a contract, details of the title, and various information relating to the property. This is more involved if the property is leasehold and usually involves having to obtain further information (for which there is usually a cost) from the managing agents.

Do we need a Trust Deed?

If one party is putting more into the transaction than the other or a third party is injecting money into the property, then a Trust Deed will be needed.

Do I need a Survey?

If you are buying a property then you are always well advised to obtain a survey as to the state and condition of the property from a surveyor. Any faults need to be addressed before exchanging contracts. Afterwards, it is too late.

What about mortgages?

If the Seller has a mortgage, then a figure to pay it off has to be obtained as the property will have to be transferred free of any mortgage. The Seller’s Solicitor has to pay the funds to remove it on completion. If the Buyer has a mortgage, then once a mortgage offer has been received a copy will be forwarded to the Solicitor as he will also have to act for the Lender in obtaining the funds and reporting to them on details of the property. In most transactions, this is fairly straightforward but if there are any unusual aspects relating to the property (such as it being listed) or the transaction (such as where other family members are injecting funds into the transaction) this has to be reported to the Lender.

What happens next?

When the Buyer’s Solicitor has received the contract papers and supporting papers including details of the Title and information about the property and Fixtures and Fittings, he will usually instruct for Searches to be carried out (see below). He will also go through all the paperwork to see whether further enquiries need to be raised and any special instructions (including those required by any Lender) shall be dealt with.

What are Searches?

If you are buying with the help of a mortgage, Searches are not absolutely required but almost always recommended as you do need to know whether any adverse entries are made against the property you are intending to purchase. Once you have entered into a binding contract, it is too late and carrying out Searches is part of the process of ascertaining as much information as possible regarding the property. The usual Searches are:-
(a) Local Search, which reveals anything concerning the Local Authority such as whether a road is a public highway, whether any planning permissions have been granted and whether there are any enforcement orders or whether the property is in a conservation area or a listed building.
(b) Water and Drainage Enquiries – these will reveal whether the property is connected to the mains water or sewerage and whether any mains pipes pass through your land.
(c) Environmental Search – this gives a great deal of information regarding potential contamination of the property either currently or in the past. This can include whether the property is near a landfill site or whether the property has been contaminated by previous owners. This can be important to establish as responsibility for cleaning up contaminated land will lie with the person who caused the contamination in the first instance, but if they cannot be traced it can fall on to the current owner.
(d) Mining Search – this Search is required if the property is in a coal mining area, or in certain other areas of the country where mining has taken place (such as copper or tin mining).
(e) Chancel Repair Indemnity – a Search can disclose whether a property is or was within an area which could be under a responsibility to pay the cost of repairing the chancel of the Parish Church (not necessarily the current Parish Church).
(f) Other Searches can be necessary depending on the locality of the property.


What is Exchange?

When both Solicitors are satisfied that everything has been dealt with satisfactorily and their Clients have been reported to, and they hold signed contracts and all Lender’s requirements have been satisfied, then exchange of contracts may be affected. This is when both parties are bound into the transaction and have agreed to move and complete on a specific date.

What happens on Completion?

THE MOVING DATE. This is what you have all been waiting for and on this day the Buyer’s Solicitors will have collected any money from any relevant sale, the lender, or Clients direct and forward this to the Seller’s Solicitor who will then redeem any mortgage, forward the Transfer document and any other deeds or documents relating to the property. The Seller’s Solicitor will also usually at this stage pay the Estate Agents.

At the same time the keys will have been handed over and the Buyer takes up occupation.

What happens next?

The Solicitor’s job does not end there. They still have to ensure that the mortgage is discharged at the Land Registry if they are acting for the Seller. If they are acting for the Buyer, they have to make a Stamp Duty Return and then register the property at the Land Registry. If the property is leasehold, there are other formalities that have to be observed. Any deeds or other requirements of the Lenders will then have to be attended to as well.

All of this will hopefully take place reasonable seamlessly, but it has to be remembered that a chain of transactions can only move as quickly as the slowest member of that chain and often Solicitors are waiting for other members of the chain to be able to proceed. An average time for a transaction is approximately 12-14 weeks but this varies according to circumstances.

There are various reasons why some properties can be more complicated especially when they are leasehold, and a management company is involved. Your Solicitor will advise you about this as the transaction progresses.

Commercial Property Leases

Can’t I just do it myself?

Many persons take especially short term Leases without taking legal advice. This can have the benefit of getting you into the premises as soon as possible, but there then can be other difficulties arise such as whether the property has planning permission, who is responsible for what (eg structure and insurance), what are the rent review provisions and how can the Lease be brought to an end.

So, who is responsible for what?

With Commercial Leases, this is almost always to be agreed between the parties but, for instance, is it appropriate for the Tenant to be responsible for the structure of the property for short term Leases. This can depend. You also need to consider preparing a Schedule of Condition (usually photographic) which can, at least, avoid future disputes as to the condition of the premises at the start of the tenancy.

What happens at the end of the Tenancy?

Again, this can depend on the Lease, although there is statutory intervention from the Landlord & Tenant Act 1954, which means that the tenancy will continue at the end of the Lease but if conditions are met the Landlord can serve notice and get vacant possession of the property. In certain circumstances, compensation may be payable. Leases can, however, be “contracted out” so that the automatic statutory rights of renewal are excluded.

What happens on the transfer of premises?

Again, this depends on terms of the Lease, but almost always with Commercial Leases, the consent of the Landlord has to be obtained and he will be keen to see that the Tenant is able to make the rent payments and any other payments due under the Lease. He can require a Guarantor (and a Guarantor can be required at the commencement of the Lease) and a rent deposit (again this can be payable at the beginning of the Lease). All of these things have to be negotiated and explained.

Is there anything else?

Yes, lots. For instance, it needs to be checked that the property has the correct planning permission, you need to know whether VAT is being charged (especially important if you are not registered for VAT so can not reclaim it), you may have a break clause in the Lease (enabling you to end it early), there may be rent review clauses and there are lots of other arrangements that can be included.

This all sounds complicated. Do I need proper advice then?

Yes, it is complicated, and a trained experienced Commercial Property Lawyer will be able to help you and explain which matters are fairly standard and which are particularly onerous in respect of the property you are taking a Lease of. The important thing to note is once you have signed the Lease, you cannot get out of it early until it comes to an end unless there is a break clause (see above). There is a lot to consider and advice at the beginning can save you a big bill later on. We know we would say this, but it is always best to take advice when taking a Lease. It should also be noted that for higher rents stamp duty can be payable and for Leases over 7 years, Leases have to be registered at H M Land Registry which also incur a fee.

Property

I have heard of Registered Land and Unregistered Land. What does this mean?

There has been some sort of land registration in England and Wales since 1709 although it wasn’t really properly codified until the Land Registration Act in 1925 when many pieces of property law (The Law of Property Act and Administration of Estates Act and other ancillary legislation) were enacted. It is administered by HM Land Registry which has various offices round the country each of which had its own territory although generally each office deals with anywhere in the jurisdiction these days.

Once the Land Registry have registered land then there is a state guaranteed title and compensation can be claimed if there is an error on the register or someone is prejudiced by an incorrect land registry entry.

Land registration took a long time to get established starting (as you might expect) in the South East and not reaching the country’s second city in Birmingham in the 1960’s. The last tranche, amongst them the Wyre Forest District, became compulsorily registrable in 1990. The Land Registry’s aim is to have the whole country Registered but as the triggers include transfers, mortgages and longer (over 7 years) there are still many properties that are not yet registered.


What Is the form of the register?

The register is formed of three sections - the first is the Property Register which gives details of the property and rights it has. The second is the Proprietorship Register which gives details of the Owner. The third is the Charges Register where details of covenants and mortgages can be found. An important note is that Rights granted, or to which the property is subject, are not an absolute reference to the rights affecting the property. The Register can only generally show those that are specifically granted by deed. Rights can accrue over time and these sort of rights are not often on the Register.

There can be schedules to the Register, for instance, giving details of leases that are granted out of the registered properties (for shopping centres these can be very long!)

There is attached to the Register a plan of the property. It should be pointed out however that these are not meant to be absolutely relied upon to identify boundaries, as is often mistakenly thought to be the case. They generally follow existing boundary features which may or may not be the actual boundary.

There are also different classes of title depending on whether the property is freehold or leasehold, absolute or possessory - see below.


What about possessory title?

This is a complex area but trying to put it simply if you occupy land for a period of time (10 or 12 years depending on circumstances) you can try and claim ownership of it. Your occupation has to be without force, payment or resistance from anyone else. This can be for instance where your garden has extended slightly over the years or in more extreme circumstances. It usually has to be fenced off.

It can also help where unregistered deeds have been lost. You will generally be granted what is called “Possessory Title” which can be upgraded to full (or Absolute) title after another 12 years.


But what is unregistered land?

This is the system that was in place before Land Registration and where you have to refer to the actual deeds of the property. There is nothing wrong with an unregistered title but there are fewer and fewer solicitors about who are used to dealing with unregistered titles. They have to be looked at closely and there may need to be new plans prepared.

The other difficulty is that the whereabouts of those deeds can be difficult to track down especially where people are under the impression properties do not need deeds anymore because of the Registered system.


Can I have my land registered?

You can now apply for voluntary first registration for any unregistered property. We sometimes get asked why a particular property is not registered. Before 1990 you couldn’t register a property that wasn’t in a compulsory registrable area. Since then there has only been a need on change of ownership or mortgage (and then not on all until 1997).


What are the advantages of registered land?

The main advantages are that your title is state guaranteed and now held in electronic form so there is no need for title deeds. They can however be useful to retain in case of boundary disputes and for keeping other documents such as guarantees and copy planning permissions etc which can be useful when you come to sell your property. It can also be more straightforward if your title is registered which can, but often doesn’t, make things quicker when you sell. Also a registered title has elements that help combat fraud if someone tries to fraudulently claim your property.


How much will it cost to get my land registered?

The first thing to say is that if you are buying a property (or mortgaging or taking a longer lease) your solicitor will have to register anyway (it is usually the Buyer’s responsibility to register) and there isn’t generally a separate charge although the transaction may cost you an extra amount as there is additional work for your solicitor to do in having the property first registered.

For a fairly straightforward property our charges will usually be £350 plus VAT and disbursements. We would need to know the value of the property and may need a plan, particularly for rural properties.

In addition there are land registry fees which are based on the value of the property being registered. At the moment there is a 25% discount on Land Registry fees on a voluntary first registration application. An application for a property valued at, say £275,000.00 would be £200.00

Leasehold

What are leases?

If you are the owner of Freehold property you simply own it. If you are the owner of a leasehold property then your landlord (or lessor) owns the Freehold and then lets it to the tenant (or the lessee) for a period of years and for an annual rent. There are usually obligations (called covenants) limiting what you can do with the property.


Are leases such a bad thing?

For residential properties (leases for commercial properties are in fact quite popular as firms usually don’t want to have freeholds but shorter term arrangements) some grasping landlords have created problems by doubling rents every few years, which when calculated forward can give horrendous annual payments. Also service charges can seem unfair if managed in certain ways. For this reason the Government are stopping new sales of leasehold houses.


What is the term?

Leases often used to be for a period of 99 years. The problem is that lenders usually want a reasonable period at the end of the mortgage term so they can sell it if things go wrong. So leases granted, say, in the 1970’s (when they were popular) are around half way through and have become increasingly unmortgageable.


How do lease extensions or enfranchisement help?

So there have been various statutory interventions. These are complex so very generally for a house you can usually buy the Freehold but for flats you can get your lease extended. Both of these come at a price but this is usually worth paying as they will probably increase your property’s value.


What about flats and service charges?

There almost always have to be leasehold arrangements for flats as insurance has to be arranged for the whole block (you can’t really insure flats separately) and common areas and the building have to be managed and maintained. Money spent by the landlord, or management company, are reimbursed by the tenants.