There are many stages within the process of purchasing a house, but it is only after the exchanging of contracts that you are under a legal obligation to purchase the house and will be required to pay for any costs which were incurred by the home-seller. By exchanging contracts, the buyer and seller both commit themselves legally to the sale of the property, and failure to complete by the agreed date can be costly.
By the time you reach the stage of exchanging contracts, your conveyancing lawyer should have carried out three main searches for your new home.
Local Authority Search
This search usually consists of two parts:
-Checking the local land charges register – This will inform you as to whether your desired property is a listed building, has trees with a preservation order, or is in a conservation area or a smoke control zone.
Searching for cautionary elements about the property – Elements such as compulsory purchase orders, proposed tree preservation orders, plans to build a motorway near the property, or disputes over the land or boundaries.
2. Water Drainage Search
-This search will provide details such as whether your desired house is connected to: a public or private water supply, private disposal facilities, a septic tank, or a public sewer. It will also outline how the property is billed for its water supply and wastewater disposal – either rateable value or water meter. If the property is near to or affected by water mains or public sewers, the report will also confirm this.
3. Environmental Search
-This is carried out by a specialist company that will check whether the land is likely to be contaminated (as defined by the Environmental Protection Act 1990) and that there are no known environmental hazards to the property, e.g. flood risk.
It is imperative that you have searches carried out on your desired property because you are duty bound to know of any restrictions and planning issues which relate to the property. When your property lawyer returns to you their findings, if you are content with the information they provide, they will draw up a contract and you will be able to arrange dates for the exchanging of contracts and for completion.
Before contracts are exchanged, it would be a good idea for you to obtain an independent survey on your property in order to reveal any fundamental problems with its structure (such as woodworm or damp). Although your mortgage lender will expect you to pay for a mortgage valuation, you should not view this as sufficient for ascertaining the condition of your desired home because this valuation only allows the lender to know whether it will get its money back if you default on the mortgage payments.
You should consider having an independent survey from a RICS chartered surveyor, and here at movelawyer.co.uk, we can provide you with instant survey quotes from reliable surveyors in the Midlands who have been accredited by the RICS.
If there are any issues raised by your surveyor, you will need to discuss them with the seller of the property. There are two conventional routes available: they either agree to accept a lower offer price from you, or they carry out the necessary repairs as a condition of the sale. If you both choose the latter, it is a good idea to have this agreement confirmed in writing as part of your legal contract.
So long as your lender is happy with their mortgage valuation, you can expect to receive a formal mortgage offer, and this will include the full details of the loan. There is a lot of technical terminology in the terms of agreement, and your conveyancing lawyer can help you read through the contract and explain any areas you don’t understand.
At the point of exchanging the contracts, you will also need to pay your deposit on the property – this is usually 20-25% of the purchase price. After the contracts have been exchanged and the deposit paid, you are legally committed to purchasing the property and to the agreed terms of the seller. At this stage, your conveyancing lawyer will also help to arrange buildings insurance for the property as you are now legally responsible for it.
There is also additional information available from Land Registry.