For the Seller
There are several things that a seller’s solicitor should obtain once a sale conveyancing instruction is received from a property seller. This article explains them in detail.
Obtain title deeds and documents
The seller’s conveyancing solicitor should have access to details regarding the title deeds of the property intended to be sold. He needs to know if the seller is the true owner of the property and is legally entitled to sell it.
The title deed shall be in the possession of the seller or in safe custody of his solicitor in a bank safe deposit vault, or with his lender if the property is mortgaged. The whereabouts of the document should be ascertained from the seller in the initial interview itself.
Properties registered prior to 13th October 2003 shall have land and charge certificates. These documents are no longer required for a transfer to be registered, but it is still important for a conveyancing solicitor to ask for title documents from his client. Certain other documents such as planning consents, guarantees, etc. should also be sought by the solicitor.
Earlier, when the property intended to be sold was under mortgage, it was common for the lender to retain the title deed and other documents, but increasing storage costs has discouraged them from doing so. Hence, they took advantage of S63 of the LRA Act 1925 and requested the Registry to retain the charge certificate. If such documents are in the possession of the lender, the same should be obtained from him, or their whereabouts should be ascertained.
When documents are in the possession of the lender, it is natural for him to be reluctant to hand over the documents without a guarantee that the loan shall be repaid. Under such circumstances, the conveyancing solicitor shall have to produce an undertaking that the money shall be repaid.
When writing an introduction letter to the lender, it is normal for the conveyancing solicitor to expect that the lender shall expect the details about the repayment of his loan, and hence it should include an undertaking that the solicitor shall either repay the loan amount to the lender or return the deed to the lender, at his request. Such an undertaking is found acceptable to the lender, who then releases the deeds to the solicitor.
This undertaking given by the conveyancing solicitor is subject to the condition that it is enforceable by him and hence care should be taken when wording it to ensure that what is promised in the undertaking is an act that the solicitor is authorised to perform.
Amount outstanding on mortgage
The introduction letter should also seek information about the money required to redeem the mortgage. An approximate amount is sufficient at this stage; the exact figures can be determined at a later stage when the deal is nearing completion. When the seller has several mortgages on his property, redemption details must be obtained from each lender. The seller’s conveyancing solicitor should obtain this information to ascertain if the proceeds of the sale is sufficient to redeem the loan and cover all other costs pertaining to the sale, and the remainder if any, is sufficient to pay for the purchase of another property.
Official copies of the register
If the interest in the land that is being sold is registered, the conveyancing solicitor should make an application at the appropriate Land Registry Office & seek official copies of the entries. Such an application is usually made on Form OC1, an application form to request copies of registered entries and filed plan only. Sometimes, additional documents such as restrictive covenants are registered. Copies of these should be obtained on Form OC2.
The application can be sent via post, or a request for the copies can be made on telephone or fax. Land Registry Direct is an online computer service that can be used to gain direct access to the register and enable the solicitor to print copies of the entries. The fee required to be paid to gain access to these entries can be done through a credit account by entering the conveyancing solicitor’s account number in the application form.
Investigation of title
The official copies of the entries should be obtained because:
- It is important to check that the information provided by the seller regarding his title is correct. The official copies are up-to-date official information and hence represent true information about the title of the land intended to be sold. The land or charge certificate or the TID obtained by the conveyancing solicitor might not have been updated in the Land Registry and it is therefore his duty to know about the current entries in the register so as to draft the contract.
- It is important for the seller to prove ownership of land to the buyer. The official copies of the entries are provided by the seller to prove his claim.
Upon receiving the official copies of the entries, it is the duty of the conveyancing solicitor to ascertain if there are issues that were not disclosed by the seller. If there is such information, instructions on this should be obtained immediately. He should take a photocopy of the original and hand over the original to the seller. The photocopy should be filed in the client files to be referred during the course of the transaction.
This process is referred to as investigating title and has to be done by the seller’s conveyancing solicitor at the pre-contract stage.
When the seller is a company, a search should be made to determine if:
a) The company exists and was not struck off the register for failure to file annual tax returns,
b) The Company has the power to buy and sell land,
c) The Company does not have an undisclosed fixed or floating charge that may affect the land intended to be sold, and
d) The Company is not in administration, receivership, or liquidation.
A conveyancing solicitor who acts for a company that does not meet any of the above mentioned conditions shall be liable personally to the buyer or a lender who has suffered as a result of the transaction.
If the land in question is an unregistered land, the seller’s conveyancing solicitor should investigate the deeds to determine if the seller’s claim regarding ownership of the title is true and if third party rights shall be affected as a result of the transaction. The date from which the land became subject should be ascertained from the Land Registry Practice Guide 51 and investigations should be made if dealings have taken place after this date. The solicitor should also obtain the Index Map using the Form SIM to make sure that no caution against first registration affects the land, or the land is not already registered.
Preparation of the pre-contract package
The next stage is to make preparations for the pre-contract package to be sent to the buyer. The package should contain a minimum of two copies of the draft contract, and other details including the seller’s title to the property. Some solicitors strictly follow the protocol that includes:
a) The PIF: This is a document that was handed to the seller for completion before the initial interview.
b) The F&C: This is a document that was handed over to the seller during the initial interview.
c) An Index Map Search obtained from the Land Registry if the land is unregistered. This is to prove to the buyer that the land is indeed unregistered and no interest that is adverse to the seller has been registered.
d) In the case of unregistered land, proof should be submitted that there are no incumbrances likely to adversely affect the property and that there are solvency proceedings initiated against the seller. This is done by obtaining a land charge against the seller and other previous owners.
e) Copies of planning permissions and building regulation consents that are related to the property.
f) Copies of other certificates, consents, and other documents related to the property.
Such a package informs the buyer about all things related to the property and helps him to decide if he would like to proceed with the transaction. Such a complete package ensures that the deal proceeds speedily and without hiccups.
For the buyer
Just as a seller’s conveyancing solicitor has to undertake several tasks to ensure a smooth transaction, a buyer’s conveyancing solicitor too should perform various tasks.
Search applications
As soon as possible, the buyer’s conveyancing solicitor should examine the pre-contract searches that are appropriate to the property.
Mortgage and survey arrangements
Although the seller would have already contacted his lender and submitted a mortgage application form, it is the duty of the property buyer’s conveyancing solicitor to do so, if the same was not performed. In most cases, this step would not be necessary.
The pre-contract package
The pre-contract package sent by the seller should be studied carefully and doubts if any, should be raised with the seller’s conveyancing solicitor. This should be done to make sure that the things offered by the seller match the instructions and the expectations of the buyer.
Also read:
Guidelines to solicitors for taking property sale conveyancing instructions
Photo courtesy: chicagogeek
