Intro and Overview

There are many arguments for which part of the buying process is the most exciting. Some love trawling through online ads for ‘the one,’ others enjoy going to viewings or haggling on price. When all is said and done, we get to the most important part, the legal process. This process transforms your offer into homeownership. By the end of this blog, you should understand the key points in the process. 

When an offer has been accepted on a property, it’s time to start the legal process to change the ownership into your name. 

To do this, the agent will prepare a Memorandum of Sale (MoS). 

This document sets out the key information of the sale, which includes:

• The property address 
• The title number of the property
• The agreed sale amount
• Names of the buyer(s) and seller(s)
• Appointed solicitors and their contact information
• Expected exchange and completion date
• Any special conditions of the sale

Once the solicitor receives this, and usually some money, they can start the conveyancing process.

What is Conveyancing?

Conveyancing is the legal process of changing the ownership of a property. This is carried out by a conveyancing solicitor.

Using the information from the MoS, the buyer’s solicitor is sent the contract pack by the seller’s solicitor.

This will set out all the information about the property sale. This includes some key information such as the fixtures and fittings and property information forms, giving more detail on the property and what is included in the sale.

The buyer’s solicitor will raise enquiries against the pack, seeking to get confirmation on several of the points raised.

While this is going on, they will apply for searches, which provide current and historical information on the property and land it lies on. The main 4 are:

• Local Authority Search
• Environmental Search
• Water and Drainage search
• Land Registry Search.

These can take up to 4 weeks depending on your area but are usually ordered early in the process. Other items are dealt with while the searches are carried out in the background. 

Local Authority Search

This search highlights any potential issues around planning, building control, roads and transport that could have an impact on the property.

It also states if the property is in a conservation area, is listed or if there are any tree preservation orders affecting the property. 

Environmental Search

These searches look at potential impacts of the environment on the property, such as liability to flood, potential for subsidence or landslide and contamination issues.

Water and Drainage Search

This search shows if the property is connected to mains water and drainage. 

It will show the location of the pipework providing the water supply and drainage, and confirm if you’d need permission from your water company to extend your home.

Land Registry Search

This obtains the most up-to-date Land Registry records for the property, through the title register and title plan. 

The title register confirms the legal owner of the property.

The title plan shows the legal boundary of the property. 

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When all the searches are in, the mortgage offer is in and enquiries have been satisfactorily answered, an exchange date is set. 

What is Exchange?

Exchange is the first legal commitment to buying the property.

Contracts detailing the major points of the sale are prepared, setting out:

• The names of the buyer(s) and seller(s)
• The title details
• The level of title guarantee
• Purchase price
• Completion date 

 This is reviewed by both sides and signed.

 The buyer pays a deposit of 10% to their solicitor, to be held on behalf of the buyer. 

In cases where the buyer’s deposit on the property will be lower than 10%, EG a 95% LTV mortgage, a reduced deposit can be taken on exchange.

Should the buyer decide to pull out of the sale after this point, the seller can request to keep the 10% deposit. 

Despite this, exchange is the time to get excited as a buyer! Both parties become legally committed to the transaction and you’re not far from owning a property!

There are some important considerations around exchange and setting the completion date.

Home insurance 

As mentioned in the costs of buying a house blog, this is also the time to get property insurance. You can be held liable for issues in the property from this point, so you should ensure you’re covered!

The reinstatement value of the property would have been provided to you on the valuation done by your lender. 

This is the amount the surveyor believes would be needed to rebuild the property from scratch should irreparable damage occur.

Ensure the home insurance policy covers at least this amount. If you under-insure the property, and an issue occurs, the insurance provider may only pay out a proportion of the claim. You also don’t want to insure the property for more than is needed, as you’d be paying a higher premium then necessary. 

Preparation of Funds

It’s time to get all of your funds together, ready to buy a house!

Before exchange, your solicitor should have confirmed the source of funds and the lead time needed for their withdrawal.

They will use this information when suggesting a completion date. 

Redeeming Financial Instruments

Many first time buyers make use of deposit boosting instruments such as Lifetime Individual Savings Accounts (LISAs) or Help to Buy ISAs. 

To be able to use a LISA to help you buy a home, you cannot withdraw the funds until at least 12 months after your first payment. You need to take this into consideration when setting the completion date if the funds are imperative to you affording to buy! Check the lead times on withdrawals of these instruments with your provider so that you request the funds in good time.

Savings and Other Funds

If you have savings in a fixed-term savings account, there are penalties for withdrawing before the end of the term. Ensure you have factored this date in when you’re setting the completion date.

Collect all the pennies from the sofa, and call in those debts that you’ve been putting off, because you need to prepare to complete! 

Completion

Completion is the final stage of the buying process. 

On completion day, the full purchase price will be transferred to the seller via their solicitor and the documents to register you as the new owner should be submitted to The Land Registry.

Conveyancing Report

Your solicitor will usually provide a report of all information uncovered during the conveyancing process. 

You should take your time to read this, and ask any questions, then sign.

Funds

Next, you need to ensure all funds will be ready for the completion day. They typically come from two sources, your mortgage provider, and you. 

Mortgage Funds

Your solicitor must inform your lender of the intended completion date and request funds. 

Funds can take up to 5 days to arrive, so are typically requested just under a week before the big day. You can become liable for the mortgage interest from the day the funds are received, rather than when the mortgage is used, so you don’t want them sitting around! This is also why your first mortgage payment can sometimes be slightly higher than the others.

Your lender will provide a statement of net-advance. This sets out the total loan size, including any fees added, minus any cost that were to be deducted. Costs could be the electronic transfer fee, for example. The final figure on this statement will tell the solicitor exactly how much they will receive. Using this information, they will send you a completion statement.

Funds for Deposit, Fees and Taxes

Now, it’s time to part with your cash!

Your solicitor will issue a completion statement, setting out the funds needed to complete.

This shows:

This leaves you with a balance, which you will need to transfer to your solicitor. 

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Below, we’ve added some figures to the completion statement to demonstrate what this might look like for a first-time buyer buying a house for £500k using an 80% LTV mortgage.

Gear up, you’re about to own a house!

Completion Day

Documents have been prepared, ready for completion. 

Funds are collated and are sent to the vendor’s solicitor.

They will confirm receipt of funds and send off registration documents to make you the new owner!

Your solicitor will call or email you to confirm that you have completed your property purchase!

You should also receive a call from the agents, congratulating you, and letting you know how to gain access to the property.

You just bought a property!

Time to celebrate. Dance, shout, whatever you fancy. It’s a pretty big deal so treat it as such!

What if I Don’t Complete?

Typically, the solicitors will speak to each other to ascertain why completion has not taken place and aim to do so. There could be a number of legitimate reasons, and you may have a few day’s leeway to get it over the line. 

Should there not be an agreement, there are different actions available to the buyer and the seller. These should be set out in the ‘conditions of sale’ in the sales contract. 

Seller Pulls Out

Unfortunately for buyers, the rules favour the current property owner. 

If the seller pulls out, the buyer may be able to bring a claim for damages and request the repayment of their deposit. 

In some cases, they might be able to pursue specific performance, which would demand the seller completes the sale as per the signed contract.

The reasoning for the change of mind could also come into play, although this may be dealt with on a case by case basis if the matter reached court.

Buyer Pulls Out

If the buyer pulls out, the seller would usually issue a notice to complete. This gives the buyer a set number of days to complete the purchase, with interest being charged for each day they have not.

If the transaction has still not been completed, they can make a claim to retain 10% of the property value, which is usually the deposit paid on exchange. 

Should the seller take the property back to market and sell for a lower price, they could bring a damages claim against the buyer for the shortfall.

Summary

There is a set process when transferring the legal title of a property in England, starting with a Memorandum of Sale being sent to your solicitor, and ending at completion.

You should be prepared for twists and turns as you navigate the stages. The standard timeline from having an offer accepted to becoming the legal owner is 3-6 months, depending on the property type and responsiveness of each party. There are extremes, with auction properties typically completing in just 4 weeks, and some more complex transactions running for up to 12 months, or more. 

It is important to pick a good conveyancing solicitor. They should be responsive, while being personable and contactable, especially if you’re a first time buyer or anxious about the purchase.

The first legal tie in happens at exchange, so it’s imperative you keep driving the process forward. Answer queries as quickly as possible, chase agents and solicitors when you have not heard anything, and have funds ready to transfer as soon as your solicitor requests them.

Exchange is the first legal tie-in to a sale. It’s a huge milestone in the property buying journey and you should celebrate as such. The completion date is set and you can start planning what you plan to do with the property.

Completion day is perhaps the most exciting, as you’ve just bought a property! 

Make sure to visit the property, take meter readings and pictures of how it’s been left. If anything has been left at the property that should’ve been taken, or has been taken but should’ve been left, make sure to report it to the agent and your solicitor as soon as possible.

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