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The Sale

Be wary of putting anything in writing when you agree your sale with the purchaser. Instruct a solicitor to act for you as soon as possible. Your solicitor will obtain title deeds and ask you to complete questionnaires concerning the property you are selling and its contents. These will be sent to the purchaser’s solicitors together with evidence proving your legal title. Further information may be needed later to deal with specific enquiries that are raised by them.

If your property is leasehold a licence to sell will be needed from the Lessor. Management accounts and evidence of incorporation will be needed if you live in a flat managed by a company. Matters that arise at this stage include obtaining of consent from any resident adult or spouse who is not party to the sale and obtaining evidence of planning permission and building regulation consent for building works.

“Negative equity" - Ensure that the sale will raise sufficient funds to pay for repayment of any mortgages, legal fees and estate agents fees. The usual procedure is that the seller’s solicitor gives an undertaking to the purchaser’s solicitor that existing mortgages will be paid off from the proceeds of sale. This cannot be given if there are be insufficient funds. If you had a "discount mortgage" you may find that there is a penalty to pay if repayment takes place too soon after the property was bought.

Once preliminary enquiries have been dealt with the draft contract will be signed in readiness for "exchange of contracts". This commits both parties to completion of the sale on an agreed date . You will be giving "vacant possession" on that date so contents must be removed on or beforehand.

Purchasers may ask for permission to make repairs before completion day. This may be a condition of their mortgage offer. On no account should you agree to this before discussing it with your solicitor. "Bricks and mortar" insurance should be maintained until completion.


The Purchase

Be wary of putting anything in writing when you agree your purchase with the seller . Instruct a solicitor to act for you. "Shop around" for the mortgage that is most suitable for your requirements. You should obtain independent financial advice before accepting an offer of mortgage. A survey report must be obtained. If you are taking out a mortgage you should not rely solely upon the valuation report that will be made by the surveyor acting for your bank or building society.

Endowment mortgages involve taking out a life insurance policy which matures on the date agreed for repayment of the mortgage. You pay a monthly premium and the mortgage is repaid when the policy matures. There have been cases of the fund performing too poorly to clear off the mortgage completely. If you already have an endowment mortgage this can be assigned to your new property. Independent financial advice should be taken before taking out or surrendering an endowment mortgage.

A PEP mortgage may be offered and these can be attractive as you can take a short "premium holiday" if there is a temporary cut in your income. The Benefits Agency may regard some PEP mortgages as "capital", rendering you ineligible for state "Income Support" if you found yourself having to claim it.

A repayment mortgage will suit some purchasers. It should be backed by a mortgage protection policy. This is usually a reducing term assurance policy at a monthly premium. The longer the repayment mortgage runs the steeper is the decline in mortgage protection, so an alternative is to arrange level term assurance which gives you flexibility to maintain cover when moving again and taking out a new mortgage, although the premium will be higher.

If you are applying for a capped rate or "discount" mortgage you should check what penalties will apply if you decide to repay early. Most people’s problems with mortgages start when they lose their job or a relationship breaks down. If forced to sell up, there could be a heavy penalty for the early repayment. New borrowers receive no help from the Benefits Agency for the first 39 weeks of any Income Support claim. This applies even where an old mortgage is being transferred to a new property. Thereafter benefit payments for mortgages will be calculated at a standard rate of interest.

The seller’s solicitors will supply your solicitor with proof of legal title to the property you are buying and prepare contracts for agreement. Normally, they will also send the seller’s replies to standard questionnaires concerning the property and its contents. You should satisfy yourself as to whether or not they agree with your own knowledge of the property. A Local Land Charges search and additional enquiry form are sent by your solicitor to the local authority for the area where the property is located. The fee for this varies between authorities,  £106 in the case of Bexley Council.

The search reveals matters such as whether there are any planning proposals, notices, or local financial charges affecting the property. Sometimes the parties are ready to exchange contracts before the local authority has replied. In these circumstances you will be advised to take out local search indemnity insurance. Other searches may be needed, depending on the location of the property.

Once searches & enquiries have been dealt with and the contract has been approved by your solicitor you will be advised on the documents of title and asked to sign the contract. At that stage a 10% deposit is needed. A reduction in this is often agreed, but the seller may be relying on receipt of a full 10% to put towards the deposit on his/her own purchase. After signature, and subject to getting a mortgage offer from your bank or building society, contracts will be exchanged with the seller’s solicitors.

Exchange of contracts commits the parties to the sale at an agreed price, on a specified date. A date is negotiated that hopefully suits both sides. You will be charged a penalty if you are not ready to complete on that date. If you are taking out a mortgage your bank or building society may require improvements to the property before completion takes place. Arrangements must be agreed with the sellers solicitor before exchange of contracts.

Buildings insurance should be obtained, commencing from the exchange of contracts. Usually this is arranged through your bank or building society, but you may find cheaper elsewhere.

After exchange of contracts your solicitor will make additional enquiries and Land Registry searches before completion takes place. If you are taking out a mortgage, a report is sent to your bank or building society who will remit funds to your solicitor in time for completion.

(This is a summary only. Take independent legal and financial advice - before committing yourself to a transaction).


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Bruce Wilkey
Gordon Luckhurst

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Martin J. Shirley

Assistant Solicitor
Sheila M. Oborne LL.B (Hons)

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