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What Legal Fees and Business Stamp Duty are payable?

You will need to appoint a solicitor or a Property Conveyancer to deal with all the conveyancing and legal formalities of the property transfer process. Some solicitors will charge their fees as a percentage of the value of the property and others as a fixed fee. When appointing a solicitor to deal with the legal side of the purchase you must always ask for a quote and look for recommendations. Some solicitors that specialise in conveyancing offer an online service. Following your acceptance of the formal offer, your solicitor will make all pre-sale enquiries if any between your self and your vendor; he/she will then take you through the exchange and close of the sale. Your solicitor will do several ‘local searches’. In addition to this you should carry out a search yourself, for example by researching on what is going on in your surrounding area. You may ask your local planning department, if there are any applications been or being made to build or develop any properties adjacent or relevant to your likely acquisition. You could also ask other people in the neighbourhood questions like what life is like when living in the area and what is going on in the area. Usually about two weeks prior to ‘moving in day’, your solicitor will call you in, this is known as the ‘exchange date’, you will exchange contracts. Your mortgage offer should be in place when you exchange contracts. Then on completion, your name will be registered with the Land Registry and you will have to pay Stamp Duty and Land Tax. Your solicitor will arrange this for you. At this point in time, you will also have to pay any money transfer fees for transferring from your solicitors account to your sellers solicitors account. If your property is worth over £125,000 then you will be subjected to paying stamp duty on the property purchase. This will be between 1%-4% of the value of the property. What do you need to know about it? The process can be broken down into 5 sections: Pre-contract stage, Exchange of contracts, Post-contract or pre-completion stage, Completion, Post-completion stage. Both the buyer and the seller should be represented by a solicitor or licensed conveyancer. References to the 'buyer' or 'seller' will usually mean that side's representative. Pre-contract stage. This is the stage in which most of the work is done. The seller: Will usually prepare a draft contract, giving the terms on which they are prepared to sell the property. Needs to produce evidence of the ownership of the land. They will need to prove that they do in fact own the land they are attempting to sell, and give the exact description and extent of what they own (see below under registration of land).A new regime is being brought into force for residential property. The seller will have to supply a survey as well as other basic information about the property.

The buyer:

Needs to check all of the information provided by the seller carefully. It is the buyer's responsibility to ensure that there are no defects concerning the land they are buying. It is likely that searches against the property will have to be made. These pre-contract searches can be made with public bodies such as the HM Land Registry or the local authority, and can reveal further information about the property. They are usually applied for by the buyer, not the seller. The buyer should ensure sufficient funds are in place to purchase the property. Often a mortgage will be involved. Once all the information has been gathered and assessed, and the contract agreed between the parties, a final contract will be prepared for the signatures of the buyer and seller.

Exchange of contracts

The next step is the exchange of contracts between the parties. This marks the stage when a binding agreement is formed. Before this time, either party can withdraw from the transaction without penalty. However, once the contracts have been exchanged, a party cannot pull out without making themselves liable for damages for breach of contract. There will usually be a deposit payable by the buyer at this point. This will often be a percentage of the purchase price (commonly 10%).

Post-Contract Stage

This stage usually involves preparing for the specific technicalities of completion.

The buyer:

Will usually send the seller a list of queries (sometimes referred to as 'requisitions') on a standard form. This might ask, for example, for confirmation of the exact amount of money still owed, and where and how completion will take place. Will usually need to send a draft purchase deed to the seller although this is sometimes agreed in advance and attached to the contract. Although a contract will already be in existence, this deed will put what was agreed in that contract into practice. It will therefore need accurately to reflect the provisions of the contract and cannot add anything new to the transaction. If the buyer is taking a mortgage in order to finance the sale, preparations for it must be made at this stage by the lender. For example, the same types of checks must be made to assess the ownership of the property as were made by the buyer's solicitor, and credit checks must be made against the buyer (in practice the steps are usually taken before exchange). If you would like a no obligation quote for a mortgage.

The seller:

Will need to respond to the requisitions made by the buyer, as well as (if necessary) checking and approving the deed prepared by the buyer. The seller must then sign a good quality copy of the deed. If this is not done, the legal estate in the land will not pass, and the transaction will not be completed. Preparations also need to be made concerning any mortgage that the seller has on the property, as this will need to be paid off or transferred. Just before completion, final searches and checks will need to be made on the property to verify that there has been no change in the situation.

Completion

The precise details for completion will have been arranged before the allotted day. At completion the buyer will hand over the money in return for the deeds to the property. While this can be done in person by the buyer's solicitor, it will usually be done by post. The transfer of money can be done with a bank transfer. Once this has been confirmed the keys will be released to the buyer and the deeds sent to the buyer's solicitor.

The clients themselves will not normally be present for completion. They will be instructed as soon as it has taken place, and the new buyer can take ownership of the property.

Post-completion

There will still be a couple of loose ends to tie up after completion. The seller will usually have to confirm the discharge of any mortgage over the property. Once this has been done the receipt will need to be transferred to the buyer to be sent to HM Land Registry to prove that it has been discharged. The buyer's solicitor will need to deal with the stamping of documents if stamp duty applies to the sale. They will also need to register the sale with HM Land Registry.

Registration of land

HM Land Registry is a government department that keeps a central register of land for England and Wales. This records the ownership and any other interests which people may have in the land registered. When a transfer of land is completed, it is registered with HM Land Registry and the details recorded on the register are updated. Registration was not compulsory when the system was first introduced, but since 1990 it has been compulsory to register all freehold land sales. However, large areas of the country remain unregistered. The seller has to prove that they have title to the land in question, that they own the land and thus have the authority to sell it to the buyer. The method of proving the title differs depending on whether the land is registered or not.

Registered Land:

For registered land, good title can be demonstrated by proving that the seller is recorded on the register as the owner. The register will also have a description of the land and details of any restrictions on the title to the land that might affect the sale.

Unregistered Land:

For unregistered land the position is different. In order to demonstrate good title, the seller must show the buyer documentary evidence relating to the land, for example past conveyances. This evidence must show undisputed ownership of the land from a point 15 years previously up to the present day.

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