Before Exchange of Contracts
This page details what happens in a conveyancing transaction from the point that an offer is made but before exchange of contracts occurs.
1. The buyer’s solicitor contacts the seller’s solicitor. Once the sellers have accepted the buyer’s offer, we will exchange both parties’ solicitors’ details. The buyer’s solicitor will then contact the seller’s solicitor and receive the draft contract.
2. The buyer’s solicitor receives and negotiates the draft contract The draft contract contains details of prices, the two parties, other information about the transaction such as deposits, and information from the seller’s title deeds.
3. The buyer’s solicitor makes pre-contract enquiries
4. The buyer’s solicitor should send the buyer a property information form or a copy of the draft contract for the buyer to check. A property information form may be included if the solicitors are operating the TransAction Protocol. This is a Law Society scheme which is used by many solicitors in the conveyancing process. If your solicitor is operating this scheme, the seller’s solicitor provides a package at the beginning of the process which includes:
- the draft contract
- copies of previous title deeds
- a property information form, giving key property information (this saves the solicitor from many of the preliminary enquiries)
- fixtures, fittings and contents form, telling you what fixtures, fittings and other items are included in the price and which will be removed. The buyer should agree with the seller what is to be included, and make sure everything is included in the form.
5. The buyer’s solicitor will check the details of the draft contract and negotiate it with the seller’s solicitor. It is a good idea to check through the draft contract yourself in case anything has been missed out, such as any agreements made between the buyer and the seller, so ask your solicitor for a copy if you have not been sent one.
- The buyer’s solicitor applies to the local council for local searches, checks the title, contract and papers, and raises queries with the seller’s solicitor. It is the solicitor or conveyancer’s job to make all the necessary enquiries to ensure that there is no reason why the buyer might want to change his or her mind about buying the property. For example, it is vital to guarantee that the seller really owns and has the right to sell it. The main standard searches are:
- Local Authority Searches : Enquiries are sent to the local authority such as whether there are any plans for a major road to be built nearby, or whether there are any problems with the property which the buyer would need to rectify. The buyer’s solicitor should also get checks done on nearby buildings or empty land – do they have planning permission for more buildings or development?
- Enquiries To The Seller’s Solicitor (the ‘preliminary enquiries’) The buyer’s solicitor will send a standard set of enquiries to the seller’s solicitor which will include:
Disputes: whether there are any disputes relating to the property, such as disputes with neighbours.
Boundaries: what exactly are the boundaries of the property and who has responsibility for the maintenance of hedges and fences. Arguments over boundaries sometimes even escalate to court cases between neighbours, so it is important to establish this now.
Planning constraints and permissions: whether any additions or alterations that have been made to the property have met local planning requirements and that building regulation consent was received.
Rights of way: checking that there is no right of way or footpath through the property, and on shared rights of access with a neighbour such as a garden or driveway.
Restrictive covenants: whether the deeds specify that certain things are forbidden, for example keeping pets, or specifying that the house cannot be painted a different colour from other houses on the street.
Guarantees or insurance policies: for example whether the property is covered by the NHBC guarantee or the woodrot treatment guarantee
Services: whether the property’s utilities (gas, water, electricity) reach it via a neighbour’s property or are shared with a neighbour
List of contents included in the sale: the buyer must make sure that he or she has reached a clear understanding with the seller about what is and what is not to be included and listed it clearly.
If it is a leasehold, they will ask who the managing agent is, who the freeholder is and whether the seller is up to date with ground rent and services charges.
The buyer may want to consider asking your own additional enquiries via his or her solicitor, these might include questions such as whether the property has been burgled, additional questions about the neighbours or more information about any known building works.
- Other Searches A set of standard questions is also sent to the water authority. There are additional searches which may be carried out if necessary, for example commons searches, coal mining searches and so on. If the property is a newly built house there are particular checks which must be carried out by the buyer’s solicitor.
The buyer’s solicitor will then check through the draft contract and send anything that needs changing to the seller’s solicitor.
The contract is negotiated and agreed. A completion date is agreed. There is often a fair bit of correspondence between the two solicitors so finalising the draft contract can take some time. The buyer should make sure his or her solicitor knows about any agreements he or she has made with the seller. The day for the completion of the transaction (ie the day when the deal is finalised) must be agreed upon before the contracts are exchanged. It normally takes about two weeks from exchange of contracts to completion day, although it can be more or less. Some people arrange for exchange of contracts and completion to take place on the same day, but this is not always possible. Note that if you are part of a chain of sales, the completion date will probably need to be agreed with more than two parties.
The buyer gets a formal mortgage offer (if he or she is getting a mortgage) on this property, not just an agreement in principle. The buyer’s solicitor will send you a mortgage deed to sign. The formal mortgage offer for this particular property which the buyer obtains at this stage is distinct from an agreement in principle (which the buyer should have obtained earlier). At this stage the buyer also needs to have received the results of its survey if it is having one done, and accepted these results. If he or she is not satisfied with the results of the survey, the buyer needs to address any problems at this stage, not after the exchange of contracts when he or she is legally bound to buy the house. The two parties should ensure they have agreed all the terms of the contract and that any disagreements or any matters that are unclear have been resolved.
Pre-Stage Two Check List
Before exchanging contracts, check that all is in order:
The buyer has received and is satisfied with the survey report
The buyer has received its formal mortgage offer, and is happy with it
The deposit sum has been agreed and the buyer has the money available
The buyer has arranged life and property insurance and they are ready to begin on completion
The completion date has been agreed with all parties
The terms of the contract have been checked and finalised by all involved
