Buying, Selling a House: Mortgage, Conveyancing Process
MORTGAGE AND CONVEYANCING IN HOME OWNERSHIP
It is useful to know, if one is buying or selling a house or land, what is conveyancing and what the process involves...
Conveyancing takes place when real estate e.g. a house or a farm is sold or bought -it is the process followed in the sale and purchase of all that is called 'real-estate' (land on its own, or with building on it -whether for business or private use), and it may take up to 6 months to complete, for the transaction to be full and complete in the eyes of the law.
Conveyancing is usually considered to be 'all Greek' to persons who are not formally legally trained but it is easily explainable to lay persons in everyday language -conveyancing is not at all difficult to understand…
All sale and purchase of real-estate must be by written contract, and registered, whether with or without mortgage and irrespective of the type of mortgage -the following explains this comveyancing process, how this is done…
In property conveyancing when the first step is taken to sell real-estate, e.g. a house, and it is agreed with a real-estate property dealer, an 'estate agent', to act on behalf of the seller and advertise the property and find a buyer, all agreements, including the agreed selling price, made with the buyer are only 'in principle' made and 'subject to contract', and so is the 'draft-contract' then made upon that agreement at this stage of conveyancing.
(In Scotland this is rather different in conveyancing; in order to protect against 'gazumping' -the seller's considering higher offers after the buyer has gone to the time and the trouble and the expense in reliance on the agreement in principle, this 'draft-contract' binds the seller not to continue to offer the property to others once he has agreed to sell to the buyer and the conveyancing process begins.)
It is at this 'subject to contract' stage of conveyancing that parties engage their lawyers -although for the seller this is often arranged by the estate-agent, and in England the lawyer instructed is normally not a 'barrister' [a trial advocate] but a 'solicitor' [an attorney who is not normally a trial advocate] or a reputable specialist property conveyancing firm).
The seller's legal representative's job in property conveyancing begins with obtaining the title-deeds to the property to be sold, and all the relevant information from the seller he represents -on the basis of these he prepares a 'draft contract' and furnishes with a copy of it the legal representative of the buyer.
The buyer's legal representative's job then begins by an investigation of the property his client intends to purchase. He uses, normally, a standard and available conveyance form to make the preliminary conveyancing enquiries -the conveyance form contains such standard routine preliminary conveyancing questions as pertain to the legal and physical aspects of that property which his client want to buy, and he sends that questionnaire to the seller's legal representative.
At the same time (important in property conveyancing) he also checks with the appropriate local authority (in England the local Land Charges Register) in order to discover whether there are, for example, any industrialization schemes or road-building schemes intended or proposed by the local authority which may affect that property.
The matter of finance is, of course, almost always in property conveyancing, a consideration on the part of the party intending to buy a house or flat or other real-estate property when the intended purchase is a domestic one, and at this stage the seller's interest necessitates formal confirmation that the buyer has the funds to enable the conveyancing, the money available to make the intended purchase.
The buyer's funds in conveyancing are often a raised loan, such as a bank 'mortgage' -a loan for such purposes. (In some countries, e.g. England, usually such 'mortgagees' [lenders] are Building Societies [as distinct from high-street banks or merchants' banks] which are banks especially in this field lending for real-estate purchasing purposes and mostly to people who save with them and whose such loans, mortgages, are normally repayable over as much as up to three times a longer period of time and with more favourable interest rates for the mortgagor -the borrower).
Begins now in the conveyancing process also the job of the mortgagee (the lender) approached. The mortgagee needs, essentially, to ensure that the security offered for the mortgage by the 'mortgagor' (the borrower -the intending buyer) is good, and that the intending buyer applying for the mortgage can repay it ~it is given authority to make such enquiries as from e.g. the mortgage applicant's employer as to his earnings -and in the case of the Building Societies it carries considerable weight in a decision whether to lend if the applicant mortgagor have been saving with them and in what amounts and how regularly.
Such lenders employ surveyors to ensure that the property offered as security for the mortgage is physically and legally good and of value enough to cover the mortgage needed in conveyancing (that property usually is the property for the purchase of which the mortgage is applied for).
In conveyancing it is considered wise for the intending buyer who has applied for the mortgage to have the property also for and on his own behalf and independently professionally surveyed -often arranged by his legal representatives.
The reason for this is that, while in conveyancing any defects which may affect the value of the property can be taken into consideration and the purchase can be withdrawn from or the 'draft-contract' and the sale-price re-negotiated at this stage, once the conveyance, the purchase, has been fully completed in law, except in case fraud, if the buyer has relied on the lender's survey, he has no remedy in law against any defects found in the property later.
(In England the government in 2000 considered proposals to require the seller [at cost to the seller which may be reflected in the selling price] to provide the purchaser, in advance, with an information-pack containing also a report of a formal and professional survey of the property, usually a house, to be sold. In 2007, with only half of mortgages as fixed-term debts and the rest capable of actually costing one-third as much more depending on interest rates, it having been decided to make compulsory a Housing Information Pack [HIP] containing proof of ownership and normally expected also to contain a professional survey of the property at cost to the seller, and many having been trained specially to supply that service, it is now a legal requirement that in the case of houses with 4+ bedrooms an Energy Report must at least have been applied for by the seller and (at the sellers option) a Home Condition Report be included in the HIP.)
Here is reached, all the above having been done, the 'exchanging-contracts' stage of the property conveyance, before what is called in conveyancing 'completion'.
Having been amended as may have been considered necessary the 'draft-contract', now a proper contract is drawn up in the form that is intended by both parties to be legally binding on them.
The law requires all contracts for sale of property to be in writing and to incorporate all of the terms which have been expressly agreed between the parties as having been clearly understood and intended to be legally binding on them ~all of the terms of the real estate sale must be contained in one single document (in English law this requirement is Section 2 of the Law of Property [Miscellaneous] Provisions Act 1989) -although it is not essential for the signatures of both of the parties to the conveyancing to be on one and the same document and (in English law in Section 3 of that Act) it is permissible for each independently to sign the identical copies of it when copies are exchanged.
There is a specific 'exchange of contracts' procedure in conveyancing that is normally followed. Once both of the parties sign the identical copies of the contract, the legal representative of the purchaser of the real estate first delivers the copy signed by his client to the legal representative of the seller.
There is involved in the process at this stage of conveyancing also the matter of the 'deposit' of the buyer, and this is attended to at the same time as the purchaser's legal representative delivers the copy signed by his client ~the purchaser's 10% deposit as a sign of good will and reasonable commitment to completing the purchase -this deposited 10% of the agreed selling price is forfeitable by the seller if the buyer without legal justification after all the processes above changes his mind and does not proceed to the conveyancing stage called 'completion'.
The 'exchange of contracts' is not the final stage of conveyancing, and there are yet other matters to be attended.
But, now, the property is insurable by the buyer, and he can take out an insurance policy on the property if he wishes, although conveyancing is not yet complete he has not yet in law full possession of it, such as would entitle him legally to e.g. re-sell it.
In preparation for the 'completion' of conveyancing, the buyer's legal representative now has to ensure that the seller has in law a good, legal, title to the property and is entitled in law to transfer by sale that title to the buyer. The buyer's legal representative does so by now further investigating and also examining the title-deeds -e.g. from the Land Registry Office.
From the Land Register he checks such matters as any restrictions or mortgages or other third-party rights in law on the property to ensure in conveyancing that the purchase will pass on to his client a full title to the ownership of that property.
This is important to the buyer because, if there is e.g. a second-mortgage on the property and it is not redeemed by the seller in the course of conveyancing (usually from the proceeds of his sale of that property), any and all such rights of others on the property otherwise, unless fraud or forgery has been involved, become the buyer's liability, if he does not take such a step reasonably seeking to discover them, and if, for example, there is a life-tenancy (where the law allows it) on it the buyer can not lawfully evict such a tenant by virtue of his being the property's new owner.
In conveyancing it is normally for the buyer's legal representative to prepare the title-deed of the transfer at 'completion'.
'Completion' in conveyancing takes place on the day, previously agreed by the parties, when the buyer (or the lender for and on behalf of the purchaser if purchase is by mortgage)pays to the seller the remainder of the purchase price, and the seller gives to the buyer the title deed -and e.g. the keys.
The property, though, is still in law not the buyer's. After the 'completion' in conveyancing he may take possession, e.g., if a house or a flat, he may move in, but subject to 'registration'.
Once the conveyancing process is ;complete' and the buyer or his legal representative registers the title in the Land Register, then, but only then, it becomes in law his, so long as lawfully he does so, to enjoy to his heart's content.
Details of conveyancing vary from country to country, state to state; these are basic guidelines.
It is useful to know, if one is buying or selling a house or land, what is conveyancing and what the process involves...
Conveyancing takes place when real estate e.g. a house or a farm is sold or bought -it is the process followed in the sale and purchase of all that is called 'real-estate' (land on its own, or with building on it -whether for business or private use), and it may take up to 6 months to complete, for the transaction to be full and complete in the eyes of the law.
Conveyancing is usually considered to be 'all Greek' to persons who are not formally legally trained but it is easily explainable to lay persons in everyday language -conveyancing is not at all difficult to understand…
All sale and purchase of real-estate must be by written contract, and registered, whether with or without mortgage and irrespective of the type of mortgage -the following explains this comveyancing process, how this is done…
In property conveyancing when the first step is taken to sell real-estate, e.g. a house, and it is agreed with a real-estate property dealer, an 'estate agent', to act on behalf of the seller and advertise the property and find a buyer, all agreements, including the agreed selling price, made with the buyer are only 'in principle' made and 'subject to contract', and so is the 'draft-contract' then made upon that agreement at this stage of conveyancing.
(In Scotland this is rather different in conveyancing; in order to protect against 'gazumping' -the seller's considering higher offers after the buyer has gone to the time and the trouble and the expense in reliance on the agreement in principle, this 'draft-contract' binds the seller not to continue to offer the property to others once he has agreed to sell to the buyer and the conveyancing process begins.)
It is at this 'subject to contract' stage of conveyancing that parties engage their lawyers -although for the seller this is often arranged by the estate-agent, and in England the lawyer instructed is normally not a 'barrister' [a trial advocate] but a 'solicitor' [an attorney who is not normally a trial advocate] or a reputable specialist property conveyancing firm).
The seller's legal representative's job in property conveyancing begins with obtaining the title-deeds to the property to be sold, and all the relevant information from the seller he represents -on the basis of these he prepares a 'draft contract' and furnishes with a copy of it the legal representative of the buyer.
The buyer's legal representative's job then begins by an investigation of the property his client intends to purchase. He uses, normally, a standard and available conveyance form to make the preliminary conveyancing enquiries -the conveyance form contains such standard routine preliminary conveyancing questions as pertain to the legal and physical aspects of that property which his client want to buy, and he sends that questionnaire to the seller's legal representative.
At the same time (important in property conveyancing) he also checks with the appropriate local authority (in England the local Land Charges Register) in order to discover whether there are, for example, any industrialization schemes or road-building schemes intended or proposed by the local authority which may affect that property.
The matter of finance is, of course, almost always in property conveyancing, a consideration on the part of the party intending to buy a house or flat or other real-estate property when the intended purchase is a domestic one, and at this stage the seller's interest necessitates formal confirmation that the buyer has the funds to enable the conveyancing, the money available to make the intended purchase.
The buyer's funds in conveyancing are often a raised loan, such as a bank 'mortgage' -a loan for such purposes. (In some countries, e.g. England, usually such 'mortgagees' [lenders] are Building Societies [as distinct from high-street banks or merchants' banks] which are banks especially in this field lending for real-estate purchasing purposes and mostly to people who save with them and whose such loans, mortgages, are normally repayable over as much as up to three times a longer period of time and with more favourable interest rates for the mortgagor -the borrower).
Begins now in the conveyancing process also the job of the mortgagee (the lender) approached. The mortgagee needs, essentially, to ensure that the security offered for the mortgage by the 'mortgagor' (the borrower -the intending buyer) is good, and that the intending buyer applying for the mortgage can repay it ~it is given authority to make such enquiries as from e.g. the mortgage applicant's employer as to his earnings -and in the case of the Building Societies it carries considerable weight in a decision whether to lend if the applicant mortgagor have been saving with them and in what amounts and how regularly.
Such lenders employ surveyors to ensure that the property offered as security for the mortgage is physically and legally good and of value enough to cover the mortgage needed in conveyancing (that property usually is the property for the purchase of which the mortgage is applied for).
In conveyancing it is considered wise for the intending buyer who has applied for the mortgage to have the property also for and on his own behalf and independently professionally surveyed -often arranged by his legal representatives.
The reason for this is that, while in conveyancing any defects which may affect the value of the property can be taken into consideration and the purchase can be withdrawn from or the 'draft-contract' and the sale-price re-negotiated at this stage, once the conveyance, the purchase, has been fully completed in law, except in case fraud, if the buyer has relied on the lender's survey, he has no remedy in law against any defects found in the property later.
(In England the government in 2000 considered proposals to require the seller [at cost to the seller which may be reflected in the selling price] to provide the purchaser, in advance, with an information-pack containing also a report of a formal and professional survey of the property, usually a house, to be sold. In 2007, with only half of mortgages as fixed-term debts and the rest capable of actually costing one-third as much more depending on interest rates, it having been decided to make compulsory a Housing Information Pack [HIP] containing proof of ownership and normally expected also to contain a professional survey of the property at cost to the seller, and many having been trained specially to supply that service, it is now a legal requirement that in the case of houses with 4+ bedrooms an Energy Report must at least have been applied for by the seller and (at the sellers option) a Home Condition Report be included in the HIP.)
Here is reached, all the above having been done, the 'exchanging-contracts' stage of the property conveyance, before what is called in conveyancing 'completion'.
Having been amended as may have been considered necessary the 'draft-contract', now a proper contract is drawn up in the form that is intended by both parties to be legally binding on them.
The law requires all contracts for sale of property to be in writing and to incorporate all of the terms which have been expressly agreed between the parties as having been clearly understood and intended to be legally binding on them ~all of the terms of the real estate sale must be contained in one single document (in English law this requirement is Section 2 of the Law of Property [Miscellaneous] Provisions Act 1989) -although it is not essential for the signatures of both of the parties to the conveyancing to be on one and the same document and (in English law in Section 3 of that Act) it is permissible for each independently to sign the identical copies of it when copies are exchanged.
There is a specific 'exchange of contracts' procedure in conveyancing that is normally followed. Once both of the parties sign the identical copies of the contract, the legal representative of the purchaser of the real estate first delivers the copy signed by his client to the legal representative of the seller.
There is involved in the process at this stage of conveyancing also the matter of the 'deposit' of the buyer, and this is attended to at the same time as the purchaser's legal representative delivers the copy signed by his client ~the purchaser's 10% deposit as a sign of good will and reasonable commitment to completing the purchase -this deposited 10% of the agreed selling price is forfeitable by the seller if the buyer without legal justification after all the processes above changes his mind and does not proceed to the conveyancing stage called 'completion'.
The 'exchange of contracts' is not the final stage of conveyancing, and there are yet other matters to be attended.
But, now, the property is insurable by the buyer, and he can take out an insurance policy on the property if he wishes, although conveyancing is not yet complete he has not yet in law full possession of it, such as would entitle him legally to e.g. re-sell it.
In preparation for the 'completion' of conveyancing, the buyer's legal representative now has to ensure that the seller has in law a good, legal, title to the property and is entitled in law to transfer by sale that title to the buyer. The buyer's legal representative does so by now further investigating and also examining the title-deeds -e.g. from the Land Registry Office.
From the Land Register he checks such matters as any restrictions or mortgages or other third-party rights in law on the property to ensure in conveyancing that the purchase will pass on to his client a full title to the ownership of that property.
This is important to the buyer because, if there is e.g. a second-mortgage on the property and it is not redeemed by the seller in the course of conveyancing (usually from the proceeds of his sale of that property), any and all such rights of others on the property otherwise, unless fraud or forgery has been involved, become the buyer's liability, if he does not take such a step reasonably seeking to discover them, and if, for example, there is a life-tenancy (where the law allows it) on it the buyer can not lawfully evict such a tenant by virtue of his being the property's new owner.
In conveyancing it is normally for the buyer's legal representative to prepare the title-deed of the transfer at 'completion'.
'Completion' in conveyancing takes place on the day, previously agreed by the parties, when the buyer (or the lender for and on behalf of the purchaser if purchase is by mortgage)pays to the seller the remainder of the purchase price, and the seller gives to the buyer the title deed -and e.g. the keys.
The property, though, is still in law not the buyer's. After the 'completion' in conveyancing he may take possession, e.g., if a house or a flat, he may move in, but subject to 'registration'.
Once the conveyancing process is ;complete' and the buyer or his legal representative registers the title in the Land Register, then, but only then, it becomes in law his, so long as lawfully he does so, to enjoy to his heart's content.
Details of conveyancing vary from country to country, state to state; these are basic guidelines.
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