Buying and selling your home

Buying a house is one of life’s top five stressful events, right up there with bereavement and divorce.  Your offer for the house of your dreams has just been accepted.  Why, you think, can’t I just pay over the money there and then and move in?  When you buy a washing machine you don’t have to pay a solicitor to conduct seemingly endless negotiations with the shop.  You just arrange for the shop to deliver it to you.

That is the big difference - a household appliance is moveable while a house is firmly rooted to the ground.  When you buy a house, you buy the land it stands on.  And because land is a finite resource, it often has to be shared with other people.  When you buy a washing machine, you won’t find that someone else has a legal right to come and wash their clothes in it once a week.  But you may find that your neighbours have a right to empty the water from their washing machine through the drains that run under your lawn - and a right to dig up your lawn if the drain needs repair.

Rights to use shared sewers pipes and cables are commonplace on most modern housing developments and rarely cause problems - everyone’s legal rights and obligations are set out in the transfers from the developers to the first purchasers - but you need to know about them.  Sometimes the drains from a house run through the neighbours’ garden but there are no legal rights to use the drain.  If you fell out with the neighbours they would be within their rights to block your access to their drain.

Then there is the gate at the bottom of the garden which appears to lead into next door’s garden.  We’ll have to block that up when we move in, you think.  Then your solicitor finds out that the neighbours have a right to use that gate to walk through your garden as often as they wish.  This is a common arrangement in many older suburbs, but you might not realise it until your solicitor starts to make enquiries.

Although you may think that the deal is done when your offer is accepted by the seller of the house, neither party is legally bound to the deal until formal exchange of contracts a few weeks later.  Although this can leave the buyer exposed to gazumping, there are very good reasons for a delay before you become legally committed.  Your solicitor needs to find out about the rights and obligations that affect the house, make sure that the seller really does own it and has disclosed all outstanding mortgages which will have to be repaid just before the house is transferred to you (investigating the title, as it is called). Solicitors also check whether the local authority has anything recorded that might affect the house - for example, does it have the right planning permission?  Unless the house is less than ten years old, you should have a survey to make sure that it is structurally sound.

Most importantly, you need to make sure you have the money to pay for the house.  Unless you have just won the lottery, this means borrowing money on mortgage.  Although a mortgage lender will tell you how much you can borrow before you start househunting and may take up references from your employer, they are legally required to have an independent valuation of houses they lend money on and therefore they cannot complete the processing of your application until you have agreed a purchase in principle.

All these procedures can be carried out simultaneously and generally take three or four weeks.  You are now ready to exchange contracts.  The contract for the sale of a house is prepared in duplicate; the seller signs one copy and the buyer signs the other.  The deal becomes legally binding when the parties’ solicitors have swapped the two signed copies of the contract. 

You might be ready to exchange but if the sellers are not ready you will not be able to go ahead straight away.  This usually happens because the sellers are buying another house and need to synchronise the two transactions so that they can move from one house to another on the same day.  If their sellers in turn are buying another house then there is yet another transaction to be synchronised with your purchase.  This is called a chain and all the deals in a chain can only move at the speed of the slowest link.

When contracts are exchanged the solicitors agree the date for completion, usually two weeks ahead.  Completion is the day on which the money and the legal ownership changes hands and, if you are buying, you can move into your new home.  The delay between exchange of contracts is to allow time for the mortgage lender to come up with the money and so that your solicitor can make final searches to ensure that the seller has not taken out a second mortgage which he has not previously disclosed.  If all is well (and it nearly always is) then your solicitor will send the purchase money through the banking system to the seller’s solicitor; in return the seller’s solicitor will send the transfer deed, charge certificate and other deeds or documents relating to your house.

After completion, your solicitor will pay the stamp duty land tax on the purchase (the tax charged by the government on all house purchases over £125,000) and then register you as the new owner at the Land Registry.  The Land Registry issues a a title information document which shows who owns the property and which lender has a mortgage on it.