Purchase Conveyancing Guide

Guide to Conveyancing on a Purchase

This section is a step-by-step guide to carrying out the conveyancing for the purchase of a property. If you are not a solicitor or conveyancer and you are intending on carrying out your own conveyancing you should give serious consideration to instructing a lawyer to carry out the work before you proceed. I would also recommend that you visit the page DIY Conveyancing Risks

If you do decide to proceed then I would recommend reading this page in full before commencing work in order to get an overview of the steps you will need to take, before working though each section. Please note that if you are purchasing the property with the benefit of a mortgage then the lender will insist that a conveyancer is appointed at your own expense to protect its interests.

If this is the case we can help by providing you with a range of Conveyancing Purchase Quotes here. It is quick, free and simple. There is no obligation and you will recieve quotes from a range of conveyancers specialising in this area.

The Contract Package

Before commencing any of the legal work you will need to receive the contract package from the seller's solicitors. They should issue this once they are instructed by their client and they have your details. As a minimum it should contain the following:

• The Contract (sometimes called the “Agreement for Sale”)
• Official Copies of the Registers of Title for the Property (for registered land) or an epitome of title with copies of the documents referred to (for unregistered land)
• A completed Sellers Property Information Form
• A completed Fixtures, Fittings and Contents Form

In addition, if the property is leasehold, the following should be included:

• The Lease
• Official Copies of the freehold Registers of Title / Epitome of the freehold title with copy documents
• A completed Sellers Leasehold Information Form

There may be other documents such as copies of transfers or deeds which are referred to in the Official Copies/deeds, copies of planning permissions and building regulations approvals, leasehold information pack etc.

You can order most Land Registry Documents from our sister site here.

If the seller is a mortgagee which has repossessed the property, a trustee in bankruptcy or a personal representative of a deceased proprietor then it is unlikely you will receive either the seller’s property information form or seller's leasehold information form. This is because the seller will have no personal knowledge of the property and will therefore be unable to give meaningful answers. The seller may supply its own more basic property information form as an alternative. If the seller is a mortgagee which has repossessed it will also omit the Fixtures, Fittings and Contents Form. The mortgagee will not own the contents and will not therefore be in a position to confirm that any items will not be claimed by the repossessed borrower prior to completion. Usually any unclaimed items will either be cleared by the lender's asset manager prior to exchange or else left in the property. Enquiries should be made of the lender's asset manager directly (the selling agents should have the contact details).

Checking the Contract (Agreement for Sale)

It is now time to go through the papers and perform the “title check”. The first stage of this is to check the contract. Visit the page “Contracts for Conveyancing” which will take you through an example contract and point out the things you need to look out for, then return here when done. In brief you are checking that the details are correct (buyer's name spelled correctly, correct property address, price etc.) and that the special conditions are acceptable.

Checking the Official Copies

This section is only applicable to registered land. If the property you are dealing with is not yet registered with the Land Registry, you will need to read the following module “Checking the Title of Unregistered Land”. When you are done, return to this page and skip to the next heading or, if the property is freehold, skip all the way to “Sellers Property Information Form”. The “Official Copies” is the name given to the printed version of the land registry's electronic register for a particular piece of land (or more accurately, a particular title, which is the name given to the bundle of rights, covenants, charges etc. which affect a particular piece of land). For titles that are registered the land registry's registers exist in place of title deeds and the Official Copies therefore are supplied instead of copies of the deeds.

As mentioned above, where the property is leasehold you should have at least two sets of official copies, one relating to the landlord's freehold title and the other relating to the leasehold title to the individual property you are buying. There may sometimes be a third set, which will also be leasehold. This will happen where the freeholder of a block of flats, instead of granting individual leases of the flats in the block, grants a lease of the whole block to a management company, which in turn grants leases of the individual flats. In this case therefore there will be the freehold title, the superior leasehold title (though in the official copies it will just be described as leasehold) and the leasehold title.

To identify which official copies relate to the individual property you are buying check the first paragraph, headed “Property Register”. This will say whether the title is freehold or leasehold and will give the address to which the official copies relate. Check that you have the leasehold copies relating to the individual property and then check the “Proprietorship Register” to ensure that the registered proprietor named therein is the seller.

Where the property is freehold you may occasionally still have more than one set of Official Copies. This can happen where, for example, an additional parcel of land has been purchased at some point separately to the main property (an extra bit of garden perhaps) which is now included in the sale, or there may be a parking space on a separate title.                                                                                    

Once you have the correct official copies visit “Understanding Official Copies” which will take you through all the things you need to check and how to deal with any entries revealed. Return here when done.

Next we look at the Freehold/Landlord's Official Copies and at the lease. If the property you are dealing with is freehold then you skip to the section headed “Seller's Property Information Form”.

Checking the Freehold/Superior Leasehold Official Copies

It is now necessary to check the freehold (or if applicable, superior leasehold) official copies. In this section references to freehold should be read as superior leasehold where there is a leasehold title between the leasehold title to the individual property and the freehold and unless I state otherwise all references to the leasehold title refer to the title to the individual property.

Checks on the freehold title do not need to be as stringent since (in the vast majority of cases) you will not be purchasing the freehold title however there are some important points. Firstly, toward the back of the freehold official copies, in the charges register, there should be a schedule of leases affecting the title and the lease for the property you are buying should be one of them. If it isn't then you should raise, as part of your pre-contract enquiries of the seller's solicitor, an enquiry asking them to ask the land registry to note the lease on the freehold title and to supply evidence once this has been done.

Next, check that the plan against the plan to the leasehold title to ensure the property that you are buying is wholly within the freehold title. If it is not then there is potentially a serious question as to the validity of the lease and at this point you should seek professional advice.

Check that any financial charges registered against the freehold title rank in priority behind the leases, or that the lender's consent was obtained for the grant of the leases. If a freehold property is split into flats and then leases of say 99 years are granted for the flats then until those leases expire the value of the freehold interest is obviously greatly reduced. For this reason a mortgage lender who lent money on the property on the basis that it was free from other incumbrances may seek to set aside any leases to which it did not consent. If you find yourself in a situation where there is a charge that potentially has priority over the leasehold interests then consult the land registry to enquire whether this is a genuine risk.

Finally, check the name of the registered proprietor. You will during the course of the transaction be raising a number of enquiries with the landlord (via the seller's solicitors) and you should ensure that the person/company giving the replies is the same as shown here (save that the landlord will very often employ a firm of managing agents who will answer the enquiries on the landlord's behalf). Sometimes you will see that the freeholder is the seller himself. This will usually only happen either when the property is a leasehold house and at some point the tenant has purchased the freehold, or when it is in a small block of, say, two or three flats and the original developer decided that as well as being the landlord he would keep one of the flats.

Checking the Lease

The next step is to check the lease. There is no such thing as a "standard" lease as such but our example lease of a house and of a flat are fairly typical. For each clause described I will refer to the corresponding clause in one of our example leases. Flat leases are generally more complex than house leases therefore I have indicated which of the sections refer to houses and flats and which refer to houses only or flats only.

Of course you should read the lease in full as each one is different but there are certain things which you should check for in all cases and they are as follows:

• Rights of support and shelter from other parts of the building (flat)
• Rights of access to other parts of the building for the purpose of performing maintenance and repair (flat)
• Covenant to insure (house/flat)
• Covenant to maintain the common parts (flat)
• Covenant by landlord to enforce covenants against other lessees (flat)
• Forfeiture clause (house/flat)
• Assignment requirements (house/flat)
• Rights of way over common parts (flat)
• Rights of services (flat)
• Covenant for quiet enjoyment (house/flat)
• Ground rent (house/flat)
• Service charge/maintenance charge provisions (house/flat)
• Parking arrangements (house/flat)
• Term and start date (house/flat)

You can order a copy of the lease associated with the property here if you do not have a copy. 

Rights of support and shelter from other parts of the building (Flat only)

Corresponding clause in example lease: Clause 8 of the Second Schedule

It is essential that the lease contains rights in favour of the lessee of support and shelter from other parts of the building. What they mean is that the parts of the building surrounding the subject flat must remain intact and structurally sound. It might seem fanciful to think that they may not but the presence of rights of support in the lease is required by the Council of Mortgage Lenders and the lease would be considered defective and potentially unmortgageable without them.

Rights of access for maintenance and repair (Flat only)

Corresponding clause in example lease: Clause 9 of the Second Schedule

There will be a covenant in the lease obliging the lessee to keep the subject flat in a good state of repair and to do so it may be necessary to access other flats, or common parts of the building. The lease should therefore contain rights of access for the lessee to the other parts of the building.

Covenant to insure (House or Flat)

Corresponding clause in example lease: Clause 2 of Part One of the Sixth Schedule (flat) or Clause 7 of Fourth Schedule (house)

The arrangements for a house and flat are generally different. If the property is a flat, the lease must contain an obligation upon either the landlord, Management Company or one or more of the lessees to insure the property. If the obligation is upon the management company (and it does not own the freehold or it is not made up of the lessees) then the lease must contain a covenant by the landlord to take over responsibility for insurance (the same applies to maintenance, which we will cover later) should the management company fail.

If it is for the lessees to insure their own flats then the lease must include a covenant by the landlord to enforce covenants against the other lessees at the request of the lessee. Also, you will need to establish whether there are any parts of the building (outer walls, landings, foundations etc.) which do not form part of any of the flats. If there are then the lease needs to make provision for these parts to be insured and if it does not then it is defective and will need to be varied.

For houses there should be a covenant by the leaseholder to insure the property. This will often include a right for the landlord to see a copy of the policy on demand and where the insurance is insufficient, or is not in place, to obtain his own insurance at the leaseholder's expense. Older leases may state that the leaseholder must insure with an insurance company nominated by the landlord however in respect of a house (as opposed to a flat or maisonette) such an obligation is no longer enforceable.

Covenant to maintain and repair the common parts (Flat only)

Corresponding clause in example lease: Clause 1 of Part One of the Sixth Schedule

If the building has parts which are not included in the lease of any of the flats, such as the roof, foundations, landings, staircases, driveway etc. (collectively known as “common parts”) then the lease must impose an obligation upon somebody to repair them. If the block is made up of just two or three flats and the only common parts are the roof and foundations (though these may be included in the leases of the upper and lower flats respectively) then the obligation will often be upon the tenants. If this is the case then the lease must contain an obligation upon the landlord to enforce the other lessees' covenant at the request of the lessee.

In a larger block it should be up to either the landlord or a management company to maintain. If the latter then, unless the management company now own the freehold or it is made up of the lessees, the lease must contain a covenant by the landlord to take over responsibility should the management company fail.

Covenant by landlord to enforce covenants against other lessees (Flat only)

Corresponding clause in example lease: Clause 4 of the Fifth Schedule

The lease should contain a covenant by the landlord to enforce covenants against other lessees at the request of the lessee. This is because the lessees cannot enforce the positive covenants (to maintain, insure etc.) directly.

If the lessee is not obliged to maintain any common parts or to insure then the lack of this covenant is not so important. The clause will usually state that the lessee requesting that the landlord take enforcement action must indemnify the landlord against any costs and losses suffered as a result of the action.

Forfeiture Clause (House or Flat)

Corresponding clause in example lease: Clause 7.1 (Flat) or Clause 2 of the Sixth Schedule (House)

Somewhere in the lease there will be a clause which sets out the circumstances in which the landlord can apply for forfeiture of the lease. This is where the landlord brings the term to a premature end so that the flat is in the sole ownership of the landlord.

The only circumstances which can give rise to forfeiture should be non-payment of rent or other breaches of the lease covenants. Some old leases will state that the lease can be forfeit if the lessee becomes bankrupt. Such a lease would be unmortgageable (since the lender would not be able to repossess if the borrower became bankrupt and so would lose its security) therefore it would need to be varied prior to exchange of contracts or else the seller's solicitors would have to undertake to deal with this upon completion.

Assignment requirements (House or Flat)

Corresponding clause in example lease: Clause 17 of Fourth Schedule (Flat) or Clause 15 of Fourth Schedule (House)

The requirements that must be followed when transferring, or “assigning” the property will be set out in the lease, usually in the “tenants covenants” or “covenants by the lessee” section, but you should still enquire of the landlord or managing agent (via the seller) prior to exchange of contracts to ask what their requirements are and what fees are payable. Failure to comply with the assignment covenants could mean that the transfer cannot be registered and could ultimately lead to forfeiture.

In our example flat lease it is necessary to obtain the landlord's consent to the assignment, for the buyer to enter into a deed of covenant with the landlord, to pay an “assignment fee” of 0.075% of the sale price and for the buyer to serve notice of assignment following completion.

The following section explains the most common requirements. Usually the tenant of a house will only need to serve notice of assignment on the landlord but theoretically all of the below could apply equally to houses and flats:

Licence to Assign/Consent to Assignment

Sometimes there will be an obligation on the seller to obtain the consent of the landlord to any transfer in the form of a licence. Usually the landlord will not be able to withhold consent unreasonably however he may ask for references for the new owner or it may be that the property can only be occupied by persons over a certain age. It may be that you simply need to pay a fee.

Check the lease for a statement along the lines of the following: “Not to assign, underlet or part with possession of the Property without the prior consent of the landlord”. The key words being "prior" and “consent”. If you suspect that a licence to assign is required then request that the seller's solicitors enquire of the landlord to obtain their precise requirements.

Transfer a Share in the Management Company

It will sometimes be a requirement that each tenant holds a share in the company which is responsible for managing the development (the management company). If this is the case then the share (which has no commercial value) will need to be transferred when the lease is assigned. Look out for the following or similar wording: “Not to assign the property without ensuring that that the lessee's share in the management company is simultaneously with the assignment transferred to the assignee”. If a share does need to be transferred you will need to hand over to the management company following completion the existing share certificate together with a Stock Transfer Form signed by the seller (see “Completing a Stock Transfer Form”). Request that the seller enquires of the management company to ascertain whether they have any other requirements, or fees.

Become a Member of a Management Company

Sometimes it will be a requirement that each tenant becomes a member of the company which is responsible for managing the development (the management company). This is similar to taking a share in the company except that it applies to companies limited by guarantee rather than by shares. If tenants do need to become members then the new owner(s) will usually need to complete a membership application form which will need to be obtained from the management company and returned to them, completed and together with the existing membership certificate, following completion. Look out for wording such as: “Upon the assignment of the lease the lessee must procure that the assignee becomes a member of the management company upon assignment”. If there is such an obligation then enquire as to what the management company's procedure is and what fees will be payable.

Deed of Covenant

It may be that the new owner needs to enter into a Deed of Covenant with the landlord and/or management company. A Deed of Covenant is a legally binding agreement whereby one party covenants with the other to perform certain obligations (to pay rent and service charge, to deal with assignment requirements etc.) and/or observe certain restrictions (not to cause nuisance, obstruct common parts etc.). Look out for something similar to the following: “Not to assign, underlet or otherwise part with possession of the property without first ensuring that the assignee or underlessee enters into a direct covenant with the lessor to observe and perform the covenants on the part of the lessee contained herein”.

If a Deed of Covenant is required then as part of your enquiries you should ask what the landlord/management company's requirements are and what fees are payable. They may have their own form of Deed which you must use or they may require you to draft your own. If the latter then follow this link and you can download a specimen deed. There will often be a fee payable to the landlord/management company for drafting or approving the Deed. Note that the landlord/management company will not usually need to sign the Deed.

Notice of Assignment

It will almost always be necessary to serve a Notice of Assignment upon the landlord following completion of any transfer and the landlord will usually charge a fee for accepting the notice. Indeed even where there is no requirement in the lease, it is a CML requirement notice is served where the purchaser is buying with the aid of a mortgage. Look out for the following clause “Within one calendar month of any assignment or underletting the lessee will give to the lessor and will pay the lessor a registration fee of [£]”.

As part of your enquiries you should ask the seller to find out where to send the notice and unless the lease specifies a fee, what fee is payable. Sometimes the lease will say, regarding the fee, something like “£X or such reasonable sum as demanded by the landlord from time to time”. If this is the case then you must ask the fee – do not simply assume that the figure quoted in the lease is correct.

 To download a specimen Notice of Assignment click on the link.

 Landlord/Management Company Restriction

If there is a restriction on the title to the property in favour of the landlord or management company then a “certificate of compliance” may be required. The requirements for obtaining such a certificate will either be set out in the wording of the restriction or else it will refer to a particular clause in the lease which sets them out. The requirements will vary from lease to lease. You will generally be required to perform one or more of the steps detailed above but whatever the requirements you should ensure that they can be met upon completion as without a certificate of compliance it may not be possible to register the purchase. The landlord or Management Company (or their agents) will generally have their own form of words for the certificate and a fee will usually be charged for providing it. You should ensure that anyone offering to supply a certificate of compliance actually has the authority to give the consent according to the wording of the restriction. For example the restriction may say that consent must be given by “High Street Management Company or their legal representatives”, but the freehold may now be owned by “New Street Management Company”. If this is the case then you should ask the seller to contact the land registry with a view to varying the wording of the restriction. You should ensure that this is completed prior to exchange of contracts.

If the restriction says that the certificate must be given by the management company or their conveyancers, but it is the managing agents that are offering to supply it, then you should insist that enquiries be raised of the management company directly or of their solicitors as the managing agents' certificate may not be acceptable to the land registry. There will generally be a fee payable in return for a certificate of compliance.

Rights of way over common parts (flat only)

Corresponding clause in example lease: Clause 1 of the Second Schedule

The lease must contain a right in favour of the lessee to use any common parts of the building (landings, staircases etc.) and any external roads or footpaths leading to the public highway for the purpose of access to the property. Without such a right the flat is land locked.

If no such right exists then the incoming mortgagee (as well as the purchaser) should be advised which will probably result in their insistence that the lease be varied. If the purchaser is paying cash then he should be warned that as well as the possibility that he might be denied access, he might have difficulty in selling the property in future.

Even where the lessees jointly own the freehold, whether directly of via a management company, the mortgagee should still be informed since it is possible the freehold could subsequently be sold.

Rights of services (flat only)

Corresponding clause in example lease: Clauses 2 & 3 of the Second Schedule

These are rights to use any water or waste water pipes, cables, and gas mains etc. which are connected to the property and which pass through other parts of the building. Without such rights the landlord can technically block off the services to the property. It is a defect in the lease and from a practical point of view, even if the current purchaser is prepared to accept it, a future purchaser might insist that the lease be varied. There would most likely be substantial legal costs involved in this and so the matter should be reported to both purchaser and mortgagee.

Covenant for quiet enjoyment (House/flat)

Corresponding clause in example lease: Clause 1 of the Fifth Schedule (Flat) or Fifth Schedule (House)

This is a clause which should be found in every lease and is a covenant by the landlord not to enter the property or interfere with the lessee's enjoyment of it during the term of the lease other than to comply with his own covenants or in the event that the lessee commits breaches of covenant. In fact, even where this covenant is not expressed in the lease it is implied at common law.

Ground rent (House/flat)

Corresponding clause in example lease: Clause 1 of the Fourth Schedule and the Particulars (Flat) or Clause 2 (House)

The ground rent is an annual rent payable to the landlord. It is sometimes collected along with the service/maintenance charge payments but is separate to these. It can be either a fixed sum throughout the term of the lease or the lease can specify “review dates” on which it can be increased. If the lease does contain provisions for reviews then the formula by which it is increased must be specified in the lease. Usually, if it does increase throughout the term, it will be either be by pre-determined amounts (for example £100 for the first 25 years then £150 for the next 25 years, £200 for the next 25 years etc.) or by reference to the retail price index (RPI) (so that it would increase on each review date by the percentage by which the RPI has increased since the last review date, thus keeping the rent in line with inflation).

A review provision should never be accepted that simply allows the landlord to charge whatever rent he chooses without reference to some reasonable formula. For example a provision which simply says “The ground rent will be reviewed after the first 5 years of the term and will be increased to such a sum as the landlord in his discretion deems reasonable” is far too open and leaves the lessee vulnerable to a large increase in expenditure which besides the obvious financial implications could damage the value of the flat. Such a clause may even render the lease void for uncertainty.

Service charge/maintenance charge provisions (House/Flat)

Corresponding clause in example lease: The Particulars, the Definitions, Clauses 7.2.1 and 7.2.2, Clause 16 of the Fourth Schedule and the Sixth Schedule (Flat) – there is no corresponding clause in example house lease

The service charge is the sum paid by each lessee to the landlord (or Management Company) to cover the cost of insuring and maintaining the building and grounds. This topic will be covered in more detail later in this section but in terms of what to look out for in the lease, just check that the landlord/management company covenants to maintain and insure all of the common parts of the building and grounds in return for payment of service charge. The lease will sometimes list all of the items covered by the service charge and if it does then check that there are no unreasonable items. Check also that the lessee is not obliged to pay a disproportionate part of the whole cost.

It may be that there is no provision for collection of service charge (this is often the case with a maisonette for example) – this is fine as long as there is no covenant by the landlord to maintain, repair or insure. There will not usually be any provision for service charge in a house lease.

Parking arrangements (House/flat)

Corresponding clause in example lease: First Schedule (Flat) – there is no corresponding clause in example house lease

Most buyers will be interested to know what arrangements are in place for parking when they are purchasing a flat and they will often receive misinformation from the sellers or their agents where the position on the ground is not immediately clear. It is necessary therefore to check the provisions in the lease to see whether they accord with any assumptions made in the agents' particulars of sale. If there are any discrepancies these should be pointed out to the buyer and in any event the actual facts should be set out in the report to the buyer.

The lender's valuation should be checked also and if any incorrect assumptions have been made by the valuer these should be reported to the lender.

Some leases will include an exclusive right to use a specific parking space, rather than including the space within the title to the property. This can lead to enquiries being raised by the purchaser's solicitor following the ruling in Batchelor v Marlow – a case where the High Court decided that an exclusive right to use a parking space could not be classed as an easement since it left the servient owner with no reasonable use of the land and therefore amounted to exclusive possession by the dominant owner. As the “easement” was in fact a mere licence, it was personal and did not run with the land.

In Moncrieff v Jamieson however the House of Lords took a different view, ruling that an exclusive right to park could qualify as an easement using the following test “does the servient owner retain possession and, subject to the reasonable exercise of the right in question, control of the servient land?”. If the answer is yes then the right can exist as an easement. Although the Lords did not overrule Batchelow v Marlow a subsequent Law Commission consultation paper (No 186) supported the view that an exclusive right to park a vehicle even in a space only large enough to accommodate one vehicle could qualify as an easement and suggested that the question to ask is not “What can the servient owner not do?” but rather “What can the dominant owner do?”, the rationale being that if the dominant owner is only entitled to use the land for parking and nothing else he cannot be said to have control. The paper went on to say that such an easement could only be defeated where it gave rise to an even greater interest, such as a lease.

In summary, it is my view that despite the excitement initially caused an easement to park in a single defined space granted by a lease is valid.

Term and start date (House/flat)

Corresponding clause in example lease: Particulars (Flat) or Definitions and Interpretations (House)

The term of the lease is the length of time for which the lessee is entitled to possession of the property. Generally the term will be either 99, 125, 150 or 999 years (though 999 year terms are rare for flats and are more common for houses (or maisonettes)). The start date will be stated in the lease and will not always be the same as the date of the lease. This is because the date of the lease will be the date of completion of the first sale. Obviously not all the properties in the development will be sold on the same day but the landlord will want to ensure that all of the leases expire on the same day and so he will usually choose an arbitrary date prior to completion of the first sale and it is from this date that the term is calculated.

Obviously as the term of the lease diminishes so does the value of the property and mortgage lenders set minimum terms in their CML handbook part 2 instructions on which they are prepared to lend. The minimum term varies from lender to lender but will usually be between 55 –70 years. The remaining term should be reported to the purchaser and the consequences of a diminishing term explained. It is possible to vary the lease to extend the term, usually for a premium payable to the landlord.

Sellers Property Information Form

The Seller's Property Information Form is a Law Society standard form and it contains a list of pre-contract enquiries to be answered by the seller. The form is largely self-explanatory and should be forwarded to the purchaser at the start of the transaction so that he may request his conveyancer to enquire further about any points of interest. For a more detailed explanation of the questions in the form follow this link:-seller’s property information form third edition.

The purchaser's conveyancer should note that where the seller answers "not known" or "not to my knowledge" or some variation on those words, then it means exactly that, and does not imply that the seller has made any investigations or enquiries before completing the form. This should be made clear to the purchaser.

 Sellers Leasehold Information Form

 This is supplementary to the property information form where the property is leasehold. It is also completed by the seller and asks questions about such things as the identity of the freeholder, the amount of the service charge payments etc. For more, see Sellers Leasehold Information Form.

Fixtures, Fittings and Contents Form

This form should be completed by the seller and forwarded via the conveyancers to the buyer at the earliest stage possible, so that the buyer can check that it accords with what was agreed with the seller at the time the offer to purchase the property was made. Conveyancers should note, and should advise their clients, that regardless of any other negotiations or agreements that may have been made, it is only what is contained in this form which is binding on the seller as regards what is to be left and what is to be removed.

Sometimes the seller will list certain items which are offered for sale to the buyer. If the buyer does not comment on whether he wishes to purchase the items then it cannot be assumed that he has agreed to do so. For clarity however the buyer's conveyancer should specifically advise the seller's conveyancer in writing, after of course taking his client's instructions, which items (if any) the buyer would like to purchase.

Any alterations made to the Fixtures, Fittings and Contents Form should be initialled by the seller. The form must be signed by all sellers. A copy should be attached to the contract on exchange. An example Fixtures, Fittings and Contents Form can be found here. Note that this example is not in a form approved by the Law Society. The Law Society TransAction forms, which are used by most conveyancers, are subject to copyright and I cannot therefore reproduce them here.

Drafting the Transfer Deed

The Transfer Deed is the document which is presented to the land registry following completion of a property purchase to enable them to register the purchaser as the new owner, and it is the responsibility of the purchaser's conveyancer to draft it. Though in the past the transfer deed would have been drafted following exchange of contracts it is more common these days for it to be done at this stage. This because in the past there would be a gap of probably a month or more between exchange of contracts and completion, which is ample time for the purchaser's conveyancer to draft the deed, the seller's conveyancer to approve it and all parties to sign it so that the seller's conveyancer was holding a signed copy on completion. These days however it is rare to have much more than a week between exchange of contracts and completion and this is often not enough time, particularly if the first draft is not approved. Some seller's conveyancers will now even draft the transfer deed themselves and issue it with the contract package. There is no real reason why the seller's conveyancer cannot prepare the transfer deed but some of the more traditional conveyancers may object.

Follow the link for a detailed explanation of the transfer deed together with a precedent form.

Raising Pre-Contract Enquiries

Having gone through the contract papers the purchaser's conveyancer will usually have a list of points on which he requires clarification or additional information, and perhaps a list of documents he requires copies of. He should therefore list these enquires in a letter to the seller's conveyancer. You may wish to view the chapter Example Pre-Contract Enquiries for some examples of the more commonly raised pre-contract enquiries.

In addition, if the property is leasehold, enquiries will usually need to be raised with the landlord/management company. These are covered in the next section.

If the purchaser's conveyancer wishes to request amendments to the contract for sale, this is usually done by amending both copies (the seller's conveyancer will usually supply two copies of the contract for sale but if not it can simply be photocopied) in ink and returning one to the seller's conveyancer along with his other enquiries. This copy is sometimes referred to as the "travelling draft".

Enquires of Landlord/Management Company/Managing Agents

Where the property is leasehold and unless the seller also owns and is transferring the freehold title or the landlord is insolvent or cannot be traced then it will be necessary to raise enquiries of the landlord or management company (often via a managing agent). If the property you are dealing with is freehold then you can skip to “Conveyancing searches”. Often the seller's conveyancers will raise their own enquiries as soon as they start work on the file in order to save time. However, if they do not then the purchaser's conveyancer needs to pass a list of enquiries on to the seller's conveyancer to be passed on to the relevant party. There will usually be a fee payable to the landlord or agent for providing the replies, for which the seller should be responsible.

Most firms will have a standard set of enquiries and the following example set should cover most eventualities (though you should always consider whether they need to be tailored for a particular transaction, particularly for leasehold houses where most will be irrelevant) – example enquiries of landlord/managing agent

Most are self-explanatory; however there are a few points to note:

Ground rent receipt- As well as showing that the rent is up to date, a clear receipt is evidence (unless he expressly states otherwise) that the landlord is not aware of any current beaches of the lease.

Buildings Insurance- Where the property is a flat it is usual for the landlord to insure the building as a whole, so that tenants do not obtain buildings insurance for their individual flats. It is necessary to check that insurance is currently in place and that it meets the lender's requirements (where there is a mortgage) as detailed in the CML Handbook. These include checking that the required risks are covered and that the limit of cover is sufficient. To check the limit of cover, as well as asking how much cover is attributable to the particular property, you can divide the total cover by the number of flats in the block to get an indication. The cover needs to be equal to or greater than the “reinstatement value” which should be given in the valuation report.

Service charge/maintenance charge- Where the landlord is responsible for insuring and maintaining the building this will be paid for by the tenants through regular contributions of service charge. This is usually charged annually in advance, though it is often possible to spread the payments throughout the year in quarterly or monthly instalments. The amount demanded will be based on the anticipated expenditure in the coming year. As such it will be a variable figure.

Once the final accounts are produced for a particular financial year (which can be up to 10 months after the end of the financial year) the landlord will calculate whether the amount collected in advance was equal to the amount actually spent. Where there was a shortfall (i.e. expenditure was greater than income) the landlord will either make up the shortfall from a reserve fund or will demand a “balancing charge”, that is an additional payment from each tenant to make up the shortfall.

If there is surplus this will either be credited to the tenants' accounts so as to reduce the amount that needs to be paid for the following year or be placed into a reserve fund (also called a sinking fund).

By its nature the service charge payment will vary year on year, and where major works are required for which there is no reserve fund it may vary dramatically. This is why it is important to check whether any major works are anticipated, or have been done but not yet charged to the tenants.

Failure to pay service charges is a breach of the covenants in the lease and can give the landlord grounds to apply for forfeiture. Any arrears owed by a seller will become the responsibility of the purchaser following completion. The purchasers may be able to sue the sellers for breach of contract if arrears are not paid however success is not guaranteed and often the amounts involved are not worth the risk of incurring further costs if litigation is unsuccessful therefore it is vitally important to ensure that full details of any arrears are known before completion and an undertaking to settle them is received from the seller's solicitor.

It is quite usual for the seller's solicitor to hold a “retention” from the sale proceeds, so that when the final accounts are produced for the previous year (after completion has taken place), if there is a balancing charge to pay which relates wholly or partly to the seller's period of ownership the seller's liability can be paid from the retention and the balance can then be returned to the seller. If there is no balancing charge then the whole retention can be refunded.

It is a CML requirement that the last 3 years' service charge accounts are obtained and inspected to check for any obvious irregularities and to gain a clearer perspective on what the “average” annual service charge is. Looking at past accounts is also a good way to check whether a retention is required. If there has been a surplus in each of the last 3 years and the results of your enquiries do not lead you to believe the current year will be any different then it will be difficult to justify a retention being held, though it is still possible there could be a shortfall.

Where a retention is held it will need to be dealt with via an undertaking and a clause in the contract. Some solicitors will just put a clause in the contract; however this would be binding on the seller only, not the solicitor. An undertaking should be worded something like this: “We hereby undertake to retain from the sale proceeds the sum of £X which is to be held in accordance with the terms of clause X of the contract”

The contract clause could be something like this: “The Seller agrees that his solicitor will hold a retention from the sale proceeds in the sum of £X pending production of the final accounts of Some Flats Management Company Limited for the 2010/2011 financial year. On production of the accounts and in the event that a balancing charge is payable the Buyer will, via his solicitor, calculate what proportion is due from the Seller and will provide the Seller's solicitor with a completion statement. Provided the Seller's solicitor agrees with the Buyer's solicitor's calculation the Seller irrevocably instructs his solicitor to release the amount due to the Buyer in accordance with the completion statement. In the event that the retention is insufficient to meet the proportion due the Buyer will accept the full retention in full and final settlement. In the event that no completion statement is produced by [a date by which the final accounts should have been produced and the buyer's solicitor should have had time to produce a statement] the Seller shall not be liable to the Buyer for any monies that would otherwise have been due and the retention shall be released to the Seller in full”.

It will sometimes be the case that when completion takes place, the accounts for the previous year will not have been finalised as well as for the current year therefore there is potential the seller could be liable for the whole of the next balancing charge and a proportion of the one after that. If this is the case the contract clause should be varied accordingly.

Where the seller is not represented by a lawyer any retention that is agreed should be held by the buyer's lawyer.

It should be noted that where the seller is a mortgagee in possession it is extremely unlikely that a retention will be agreed. This is because the total loss needs to crystallise on completion of the sale for insurance and debt recovery purposes.

Memorandum& Articles of Association- Where the buyer will become a shareholder in. or member of, the management company following completion the memorandum & articles of association (or “memo & arts”), which set out the rules of the company and state what it can and cannot do, need to be inspected to ensure there will be no onerous obligations and the tenant and to ensure that the company is entitles to carry on the business of a management company. This is a CML requirement.

Decorations- Most leases will impose an obligation on the landlord to decorate internally and externally at regular intervals throughout the term. The cost of this will be charged to the tenants via the service charge and could lead to a larger than usual demand for the year in which the works are completed, so if decoration is due the buyer should be told to anticipate this.

Assignment requirements- Sometimes, particularly where a standard information pack is used (see below) the landlord will say that certain things, such as deeds of covenant and licences to assign, are required even where they are not provided for in lease. These are sometimes just stock responses and should be challenged before exchange. Unless there are exceptional circumstances it is the lease that is definitive.

Standard management information packs- Even though you may raise specific enquiries most of the large firms of managing agents (the likes of Mainstay, CPM Asset Management, Leasehold Property Management etc.) will have their own standard pack which is designed to cover all the points that are required to be covered in accordance with the CML handbook. Provided nothing essential, or which the purchaser has specifically asked you to raise, is omitted then these packs are acceptable.

Conveyancing Searches

What are "conveyancing searches"?

Conveyancing searches are a set of standard enquiries raised with a particular authority, for example a local authority search is raised with the local council, a drainage & water search with the water authority etc. It should be remembered that searches are intended only to cover the legal aspects of a property purchase - a conveyancer will not requisition a survey and will not report on the physical state of the property.

Who pays for the conveyancing searches?

The purchaser pays for the searches.

What conveyancing searches do I need?

All purchasers should obtain a local authority search, certainly if purchasing with a mortgage you are obliged to the lender to do so. A drainage & water search is also advisable. Additional searches are required in certain areas, for example a coal mining search may be required in Yorkshire or a tin mining search in Devon or Cornwall.

Additional Information

There is much to consider with regard to searches and therefore the chapter "Conveyancing Searches", which is dedicated to the topic, is strongly recommended.

The Mortgage Offer

When acting for a purchaser who is buying with a mortgage the conveyancer will, on the vast majority of occasions, also act for the lender. It should be noted that no commercial (as opposed to private) lender will allow the purchaser to carry out his own conveyancing. If the purchaser chooses not to appoint a solicitor then the lender will appoint their own and the purchaser will be expected to pay the fees.

The purchaser's conveyancer must check the offer to ensure that he is complying with the lenders' instructions and that details such as the purchase price, property address, borrower's names etc. are correct. He must also satisfy any special conditions.

Where the property is leasehold all lenders will state, in their CML handbook part 2, the minimum number of years which must be remaining of the lease term in order for them to lend. This figure should always be checked and if less than the minimum term is remaining this should be reported to the lender immediately and contracts should not be obtained until the lender's further instructions are received.

The mortgage offer will state how much the purchaser is borrowing, and how much the conveyancer will actually receive (though this is not always completely clear and care should be taken). This figure is obviously required to calculate the balance which will be required from the purchaser prior to completion. For a full tutorial on the subject of mortgage offers, visit the Mortgage Offers page.

Reporting to the Purchaser

Once the purchaser's conveyancer has received satisfactory conveyancing search results and satisfactory replies to his pre-contract enquiries, and if required a satisfactory mortgage offer, then he should be in a position to report to his client. This is sometimes done in person and sometimes through the post; however in either case a written property report should be prepared.

The property report should contain information on the title to the property, point out all the covenants and rights which affect it, it should include copies of any planning permissions affecting the property and should comment on the results of the conveyancing searches. It should point out anything adverse which has been revealed and which will not be resolved prior to or on completion and should also comment on the implications of taking a mortgage on the property, if applicable.

Purchasers should read this property report very carefully, and speak to their conveyancer about any issue that concerns them or that they do not understand. If an adverse matter is disclosed in this report and a purchaser having been presented with it instructs his conveyancer to proceed regardless then the conveyancer is entitled to assume that the purchaser understands the implications and is happy to proceed. It is unlikely therefore that the purchaser will have any claim against his conveyancer if in future the matter causes him loss.

If the property report is posted, the contract for sale, transfer deed and a power of attorney in relation to the SDLT1 (see the section on stamp duty) are normally enclosed, or if reporting in person these documents are normally signed in the interview. A completion/financial statement is normally given to the purchaser at this stage (see below).Look at this example property report if you wish.

Completion/Financial Statement

When reporting to the purchaser a financial statement should be produced, which breaks down the incomings and outgoings in respect of the purchase and includes a bottom line figure showing how much money is needed from the purchaser in order to complete. Producing the statement prior to exchange of contracts ensures that any errors with the figures or any queries the purchaser has can be resolved prior to exchange of contracts, at which point the purchaser is of course committed to proceed.

It gives the purchaser another opportunity to check the purchase price, if he is expected to pay extra money for any chattels it will be shown on the statement, or if he has agreed an allowance which his conveyancer was not aware of it should come to light if the purchaser checks the statement correctly etc.

It is a good idea to put the firm's bank details on the completion statement in case the purchaser wishes to pay the money by electronic transfer. It also makes sense to attach a sheet offering some standard advice on the various methods of payment, detailing clearance times etc., as well as pointing out that the purchaser should not attempt to pay cash, cheques or banker's drafts directly into your account (this is a common tactic of money launderers).

In leasehold transactions it will usually be necessary for the seller to apportion the ground rent and service charge (see below). As the apportionments cannot be calculated until the completion date is known they are usually worked out following exchange. It is therefore a good idea to warn the purchaser on the statement that additional monies may be required prior to completion, as we have in our example.

Exchange of Contracts

Once the purchaser has signed the contract, transfer deed, SDLT1 (see stamp duty) and mortgage deed (strictly the last three do not need to be signed until after exchange, however the conveyancer must be in possession of them on completion), has paid the deposit (which must have cleared the conveyancer's account) and is happy with the property report, then the conveyancer is ready to exchange contracts. A completion date should now be agreed between the seller and buyer. This can be any week day provided there is enough time between exchange of contracts and completion for mortgage funds to be requested, final searches to be completed etc.

Once a completion date is agreed contracts should be exchanged. For a tutorial see exchange of contracts

Pre-Completion

Apportionments of Ground Rent and Service Charges

On leasehold properties where there is ground rent and/or service charge payable this will usually demanded either annually, bi-annually, quarterly or monthly. Depending on whether it is demanded in advance or in arrears this means that unless completion takes place on the last day of a particular period the seller will either have paid the charges up to a date beyond the date of completion or will be in arrears at completion.

The landlord will not generally refund any overpayment and will not pursue the seller for any arrears relating to his period of ownership (responsibility passes to the purchaser on completion) therefore the seller's conveyancer must calculate what is owed to/due from his client and the buyer's conveyancer should check the figures on behalf of his client.

It is a good idea for the seller's conveyancer to contact the landlord and obtain an up to date statement following exchange of contracts even where the figures he has already go beyond the date of completion and the buyer's conveyancer should insist on this. This is in case any amounts have been paid by the seller to the landlord since the figures were produced or any additional amounts have been debited to the account (balancing charges, late payment fees etc.).

To calculate the apportionment you must first establish the period to which the most recent demand relates and count up how many days are in that period, and then divide the amount demanded by the number of days in the period to which it relates to get a daily rate. If the demand has been paid and the period to which it relates goes beyond the date of completion then count up how many days are left following completion to the end of the period (the day of completion itself is the responsibility of the seller) and multiply that by the daily rate to get the additional amount (the apportionment) which the buyer will need to pay on completion along with the purchase price.

If the account is in arrears then an allowance will need to be made in favour of the buyer, meaning that on completion he will need to pay over the purchase price minus the allowance. First check if there are any arrears relating to periods which have ended or will end prior to completion. If so then the whole of these arrears will be the responsibility of the seller and will be part of the allowance. Next, work out a daily rate using the method explained above and count how many days will have elapsed from the start of the period up to and including the day of completion. Multiply this by the daily rate and add the result to any older arrears (if any) to get the total allowance figure.

If the rent is demanded in arrears then an allowance will have to be made for the current period plus any older arrears. If the service charge is demanded in arrears then it is a little more difficult since unlike rent it is not a fixed sum and you will probably not know at completion how much the demand will be for. In this situation there are two possibilities. Firstly you could calculate an allowance based on the most recent demand (if you have reason to think the demand will increase from the previous period and you have an indication as to the percentage it will increase by then you can take this into account) or secondly you could ask the seller's conveyancer to hold a retention (see the “Enquiries of the Landlord/Management Company/Managing Agents” section above for an explanation of retentions) until the demand is received and it can then be properly apportioned.

Requesting Mortgage Funds

Immediately following exchange of contracts the mortgage funds should be requested. Funds are requested by submitting the Certificate of Title to the lender. This document is found in the mortgage offer and is the document which confirms to the lender that the conveyancer is satisfied with the legal title. See the topic Mortgage Offer for more.

The certificate of title will ask for the date of completion, which is the date that the funds will be transferred to the conveyancer. It is advisable to request the mortgage funds for the working day prior to completion. This is because the lender will usually transfer the funds by CHAPS which means that they can only guarantee that the funds will arrive before close of business, not necessarily in time to actually complete. You should check with the lender first however - some will automatically release funds the day before.

Each lender will require a period of notice from receiving the certificate of title to releasing funds which can be from 2 to 7 working days - you should ensure that enough time is allowed between exchange of contracts and completion to account for this notice period. It is definitely worth contacting the lender a day or two after submitting the certificate of title to check that they have received it and that there are no outstanding conditions. Obviously this section can be ignored if the buyer is not obtaining a mortgage.

Pre-Completion Searches

When acting in the purchase of a registered property it is necessary to carry out an OS1 (when buying the whole of the title) or an OS2 (when buying part of a title). If the property is unregistered then a Land Charges Search (K15) is needed. If the purchaser is buying with a mortgage a bankruptcy search (K16) is also required.

The searches should normally be carried out as soon as possible, however it should be borne in mind that the bankruptcy search, which must be valid on the day of completion, is valid for 3 weeks from the date of the search and the OS1/OS2, which must be valid when the application for registration is submitted to land registry, is valid for 6 weeks. A Land Charges Search is valid for 3 weeks but need only be valid on the day of completion.

Completion

On the day of completion the buyer's conveyancer will forward the funds required for completion to the seller's conveyancer by CHAPS (same day transfer). Provided that the funds arrive with seller's conveyancer by the completion time stated in the contract (which unless the contract contains a special condition varying that time will be 2pm) then the seller must vacate by the completion time. Problems on the completion day are rare but they can happen and there are established procedures in place for dealing with them. For more about completion see Completion Day Order of Events.

Post Completion

Following completion, first the Stamp Duty Land Tax return (SDLT1) must be submitted and the duty paid and second the application for registration (AP1) must be lodged with Land Registry. For more see Stamp Duty Land Tax (SDLT) and Application for Registration.