The conveyancing chain, unravelled

by Mary Simpson

The business of conveyancing - the legal transfer of ownership of the home - is very involved and can often give rise to long, frustrating delays which may leave you plotting dark deeds of revenge against the legal profession, says Charsley Harrison's Mary Simpson.

With the increase in home ownership, many people move by selling one house and buying another. Very often one particular transaction depends on several people buying and selling their houses in chain, usually with a first-time buyer at on end. One of the problems is that the chain is liable to 'collapse' if one of the sellers loses their buyer, or if one of the buyers cannot get a mortgage. This means that everyone else in the chain has to wait for a 'new link' to be found.

If the chain is long, whether you are at the bottom, middle or top, it will take time for every seller and buyer to reach the same stage and be ready to exchange.

If one person is the chain is purchasing a new house, the developer may put a deadline on the purchaser to exchange, even though the new property may not be ready to final occupation for another 2 or 3 months or even longer. This puts pressure on everyone in the chain and it will not be possible to have a fixed completion date. There will have to be a clause in all the Contracts in the chain stating that when the Developers Solicitors serve Notice to Complete all solicitors in the chain will have to serve Notice to Complete. Such Notices are usually 10 to 14 days.

Problems with the Title may occur if consents have had to be obtained for alterations or extensions from the original Builder. If not dealt with at the time the work is carried out retrospective consent will have to be obtained - this takes time and money if a charge is levied by the Builder. If the Builder is not in existence or the company has been dissolved a company search will be required. Also if alterations or extensions have been carried out Planning Permission and Building Regulations consent must be obtained from the Council if the Seller cannot produce the same and a fee will be payable. A Certificate of Completion will also be required. New uPVC windows since April 2002 should have Building Regulations consent or be installed by a FENSA registered Builder. This all takes time and may cause a delay in the chain.

Mortgage offers

Some Building Societies and Banks take longer to produce offers than others and you must have a written offer not just confirmation that status is approved. There may also be conditions on the offer that the Solicitor has to comply with i.e. Building Regulations, Planning Permission etc. This can cause delays again.

Deposits are payable on exchange - In a chain the bottom Purchaser is almost invariably a first time buyer who has a small deposit and it may be necessary for the Purchasers further up the chain to top up the deposit. It was usual for a 10% deposit to be paid but a deposit of 5% is usually but not always accepted. Obviously as the chain ascends the price of the property increases and thus the deposit will be more. The modern practise of offering a small deposit at the point of exchange is to be deplored.

Exchange

When everything is in place in the whole of the chain, then exchange can take place. Everyone has to agree the same completion date and everyone most move out of their existing property and move into their new one on that completion date. Sometimes it is difficult to agree a completion date if there is a long chain due to people being on holiday, working abroad or babies on the way.

Solicitors have been blamed by the media for wanting completion to take place on a Friday -- not true! If there is a long chain and if you are the solicitor at the top of the chain there is every possibility that the monies arrive late in the day or too late to send it out that day. Thus involving your client and those immediately below sitting outside their new properties in their furniture vans waiting to move in. In particular the last Friday of the month is favoured by Sellers and Buyers because interest with some Building Societies and Banks is charged on a monthly basis and thus it is better to complete at the end of the month to save interest charges. Also if a client is renting it is usual for rental agreements to be on a monthly basis, i.e. ending on the last day of the month. Because there is no longer 28 days between exchange and completion as there once was.

Sellers and Buyers have to enquire and provisionally book furniture vans and run the risk of having to pay cancellation charges if exchange and completion do not take place when they wish them. Please do not book removals until exchange has taken place or agree a completion date without checking with your solicitor that it is feasible.

POINTS TO CONSIDER

There are many things to contemplate in a conveyance chain:

1. The length

2. Whether somewhere in the chain there is a developer/new house

3. Problems with the Title

4. Mortgage offers

5. Deposits

6. Exchange

7. Completions - completion dates

The author, Mary Simpson, is one of seven partners at Charsley Harrison Solicitors, a local firm specialising in all branches of the law including conveyancing, commercial work, company law and partnerships, probate, wills, trusts, family law and litigation.

Mary can be contacted by telephone at 01344 627627. The Old Court House, Ascot. SL5 6ER. Or by email at mps@charsleyharrison.com

Web site: http://www.charsleyharrison.com/