There is nothing wrong with the conveyancing process, but a number of different people and agencies have to be co-ordinated to ensure that, in ‘chain’ cases, several people can all move house on the same day. A key part of this process involves all the funds hitting the right accounts on the same day.
Take for example Dave, who decides to sell his deceased father’s house to Brian, who is selling his house to Mary, a first-time buyer with an 100% mortgage. Both Brian and Mary have mortgages, with the former having a mortgage to discharge. There are around 17 parties – and sometimes more – to co-ordinate to ensure that the transactions can all happen on the same day.
But why is this all necessary? The answer is simple – it boils down to money.
A buyer needs to know what they are buying, and that whoever is selling it has the right to sell it (lawyers call it having ‘good title’). If they buy a secondhand lawn mower from an ad in the paper, they would probably take a risk on both issues, as the loss, if it goes completely wrong, will be small. If they buy a new wardrobe from a well-established store, the loss could be higher, but the buyer has the benefit of implied warranties under the Sale of Goods Act from someone with the means to meet their claim. A house purchase will be the biggest deal of a borrower’s life and their departed vendor is unlikely to be worth suing.
Dealing with a purchase, a lawyer will make many enquiries about the property (called ‘searches’). First, they send off a local search which consists of standard enquiries of the local council about the property, such as checking against planning breaches, looking at whether there are roads to be built near it, checking the sewerage arrangements, ensuring it is not subject to compulsory purchase and so on. The lawyer should also check whether non-standard enquiries should be made, based upon their knowledge of the area or of the property. A fee will be paid to the council for this search and it will take time to get the result. The buyer should not sign a contract without a satisfactory search.
The lawyer will also send a number of enquiries to the vendor about the use of the property. These will ensure that both parties know exactly what is being bought, should highlight risk areas and provide information about, for example, boundary disputes, heating maintenance and builder guarantees. If the title is registered at the land registry, a lawyer will obtain copies of and review the register entries relating to the property to ensure that the description in the sale contract matches the register, and that the client is buying the property they thought they were by checking it against the filed plan at the registry. If the property is not registered, the lawyer checks this out by looking through the deeds for the property.
Finally, the lawyer will review the contract for sale and ensure that it matches the deal. These searches and enquiries will also reveal whether other people have rights (such as rights of way) over the property or ownership rights which could mean that the seller cannot sell the property to a buyer free of other peoples’ interests. The lender will want to be clear on all this as well.
Once this is all done, the buyer is ready to sign the contract and that is when the fun really starts.
