Conveyancing is the act of transferring the legal title in a property from one person to another. The buyer must ensure that he or she obtains a good and marketable ‘title’ to the land; i.e., that the person selling the house actually has the right to sell it and there is no factor which would impede a mortgage or re-sale. A system of conveyancing is usually designed to ensure that the buyer secures title to the land together with all the rights that run with the land, and is notified of any restrictions in advance of purchase.
A typical conveyancing transaction, whether a sale or purchase contains two major ‘landmarks’, which are exchange of contracts (whereby equitable title passes) and completion (whereby legal title passes), plus the three stages: before contract, before completion and after completion.
In England and Wales conveyancing is usually done by a solicitor or a licensed conveyancer Either may employ or supervise an unqualified conveyancer. The domestic conveyancing market is price competitive, with a high number of firms of solicitors and conveyancing companies offering a similar service. It is possible for someone to carry out their own conveyancing.
Under English and Welsh law agreements are not legally binding until contracts are exchanged. This affords both the advantage of freedom before contract, but also the disadvantage of wasted time and expense in the event the deal is not done. To try to address this, Home Information Packs are being introduced from August 2007.
The normal practice is for the buyer to negotiate an agreed price with the seller then organize a survey and have the solicitor (or conveyancer) carry out their searches and pre-contract enquiries. The seller’s solicitor or conveyancer will prepare the draft contract to be approved by the buyer’s solicitor. The seller’s solicitor will also collect and prepare property information to be provided to the buyer’s solicitors, in line with the Law Society’s National Protocol for domestic conveyancing.
It takes on average 10-12 weeks to complete a conveyancing transaction, but some transactions are quicker, many take longer. The timescale is determined by a host of factors; legal, personal, social and financial. During this period prior to exchange of contracts (exchange being the point at which the transaction becomes legally-binding) either party can pull out of the transaction at any time and for any reason, with no legal or moral obligation to the other. This gives rise to a risk of gazumping and its converse, gazundering.
The position in Scotland under Scots law is that the contract is generally concluded at a much earlier stage, and the initial offer, once accepted by the seller, is legally binding. This results in a system of conveyancing where buyers get their survey done before making a bid through their solicitor to the seller’s solicitor. If there is competing interest for a property, sellers will normally set a closing date for the initial offers. The contract is normally formed by letters between the solicitors on behalf of each of the seller and purchaser, called missives. Once all the terms of the contract are agreed, the missives are said to be concluded, and there is then a binding contract for the sale of the property. Normally the contract is conditional upon matters such as the sellers being able, before completion of the transaction, to prove that they have good title to the property and to exhibit clear searches from the property registers and the local authority. The fact that there is a binding contract at a relatively early stage, compared with the normal practice in England and Wales, makes the problem of gazumping a rarity. The disadvantage for the buyer is that they usually have to bear the cost of the survey for unsuccessful bids, though trials have been made of a system where the seller arranges for one survey available to all bidders.
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