The Property Buying Process in Theory

Key Points Despite the endless pitfalls that seem to be placed between agreeing an offer and exchanging it is heartening to know that over fifty percent succeed. It is often the smallest and simplest issues that become the most complex while those that seem insurmountable can be quickly and easily resolved. For the most part many of these hurdles simply cause time delays but as "Time Costs Deals" every extra week is another chance for your property purchase to fall apart. Knowing the way to steer a quick and efficient route through this labyrinth is knowing how to really buy a property. Before you can go there however you will need to understand the state of the market that you are about to try and operate within.

Before you can know what really happens, it is essential to understand what is supposed to happen because sometimes it does! If you are dealing with an Estate Agent, Solicitor or Vendor who is new to the business this is the set of events that they believe should occur.

Once your offer has been agreed with the agent (or directly with the vendor if you are buying privately) there should be no need to have any contact with the agent or the vendor. Each party has a specific number of actions that they must take and theoretically this should all occur via the solicitors. Some solicitors feel so strongly about this that they refuse to accept calls from estate agents! It is how these actions are undertaken and their results that cause disagreement because there is no definitive protocol for buying and selling.

It is because there are such arguments between solicitors that it is often useful to have a second line of communication. This is either via the agent or, in the case of a private sale, directly with the vendor. Nothing that is spoken about here is binding until both solicitors are aware of it and it has been written into the contract but such discussions can be faster and more accurate as questions and answers are passed through fewer parties. It is worth knowing that:

• Agreed offers through agents tend to have a better chance of success because small queries need only be passed via one party for answers. When emotions become heated the agent is the filter who can remove the obscenities and act as an objective go between. A good agent will also remove any comments you make that he feels may be misinterpreted by the vendor before passing messages or queries on.
• Privately agreed offers are more likely to fail for exactly that reason. The buyer talks to the vendor and says things they may not truly mean or make small comments that are taken out of context (and vice versa). You may tell a vendor, for example, that you can�t wait to move in and add a fantastic conservatory. The vendor realises he only accepted your offer because he thought it was the top of your budget. Now he knows you have extra cash he begins to think he has undersold the property and pulls out of the transaction. Innocent comments, profound results.

Lines of Communication (once the sale price is agreed)
You, the Buyer	â–º â—„	The Estate Agent			â–º â—„	The Vendor
	â–º â—„	Your solicitor	â–º â—„	The vendors' solicitor	â–º â—„
	â–º â—„	Private Sales Only			â–º â—„

The parties involved after a sale price is agreed are:

• You, the buyer
• The vendor
• Your solicitor
• The vendors solicitor

You, The Buyer in a property purchase

As a buyer your responsibilities are to:

• Instruct a solicitor to act on your behalf
• Specify an exchange and completion date that can be agreed with the vendor
• Raise the finances to purchase the property
• Organise for professionals to inspect the property
• Sign the contract
• Give your solicitor funds to exchange and complete

Instructing a Solicitor

Once your offer is agreed you will need a solicitor to act on your behalf. This solicitor will need to do two things:

• Check that the paperwork related to the property is satisfactory for the lender if you are applying for a mortgage
• Check there is nothing unusual in the paperwork that should be drawn to your attention

Their exact role is explained in Your Solicitor below.

Finding a good solicitor who can handle the local market is not easy so it is worth taking the advice of your lender (who may have someone in the area that they work with regularly) or the Estate Agent (who know efficient solicitors that they have good relationships with). Do not ask friends or family unless their recommended solicitor passes certain tests (see Choosing a Solicitor or Conveyancer)

Once a solicitor has agreed to represent you they will send you a form to fill in. This is the official instruction. It includes questions on who your lender is and, if you have already chosen the property, what you understand it to consist of (e.g. a private garden, parking space, two bedrooms, kitchen with cooker, etc.) which helps them verify that this is actually what you are getting.

What Can Go Wrong

• You leave it until after having an offer agreed to find a solicitor and have to choose an unsuitable one in a panic
• You choose a solicitor based outside London who does not understand the speed required of the London market
• You choose a solicitor based outside the borough in which you are buying who is not familiar with the leases in that area and asks irrelevant questions
• You choose a solicitor who is incredibly cheap, but then turns out to be incredibly slow because they are incredibly overworked
• You choose a solicitor who uses the conveyor-belt method (see Choosing a Solicitor or Conveyancer)
• You choose a solicitor who is a "one-man-band". He then falls ill or goes on holiday.

Specifying Exchange and Completion Dates

It seems obvious to agree a date for the Exchange of Contracts. This is the moment that you agree to definitely buy the property and the vendor agrees to definitely sell it. Up to this point the sale is only agreed subject to contract and often subject to survey.

Subject to contract means you agree to buy the property only if what you have been led to believe is true. In other words you may think that the garden belongs to the flat because the agent told you that but in fact it is shared with the property upstairs. When you discover this in the contract you decide not to purchase the property.

Subject to survey means you agree to buy the property in the physical state any layman inspecting the property would believe it to be in. If, once it has been surveyed, you find it needs a vast amount of unexpected and expensive work you may decide not to proceed.

Oddly enough even though a sale may be agreed subject to contract you can still decide at any point before exchange not to purchase for any reason you wish. It can have nothing to do with the contract or the survey but could simply be because you don't feel like it. As such the wording is slightly misleading.

Exchange of Contracts is not the date at which you take possession of the property. It is the date which you agree Completion. Completion is the date when the vendor must be out and you can move in, the property legally becomes yours. Completion can take place on the same day as exchange or months afterwards.

What Can Go Wrong

It seems strange then that someone who agrees to buy something from another person should do so without actually agreeing when they want to do it but this is often the case when purchasing a property. Agreeing exchange and completion dates are often sidelined because:

• Both parties believe it is "obvious". The vendor may, for example, have chosen a solicitor in Wales. His solicitor has told him that it normally takes about twelve weeks to move from agreed offer to exchange. In the meantime your solicitor in London tells you there should be an exchange within three weeks. Both you and the vendor sensibly expect that your respective solicitors will have said the same thing and plan your lives accordingly. Fireworks will occur later!
• Neither party actually wants to talk about it. You may be concerned that if you express a wish to exchange quickly the vendor will perceive you as a desperate buyer in absolute love with their property. This could lead to them being slow or lazy in providing paperwork, relaxed that you are not going anywhere. The vendor may not want to tell you that he wants a rapid exchange because he does not want to appear desperate. He may believe that this will encourage you to attempt a renegotiation of the price before exchange.
• One party is scared to upset the other. This often happens in a market where the Balance of Power is not even. You may be desperately in love with the property or prices may be rising quickly. As such you do not want to upset the vendor by rushing him and so you tip toe round the issue waiting for a sign.

Raising the Finances

There are two ways to buy a property in London. You can purchase for cash or by borrowing. Either way you will need to put down a deposit when contracts exchange and pay the balance on completion. The deposit is normally between five and ten percent of the agreed price although it is possible to exchange with anything from zero to one hundred percent.

The deposit is seen as a way of tying the buyer in and insuring the vendor will have some compensation should you disappear. Zero percent deposits are therefore usually only acceptable if you are carrying out a simultaneous exchange and completion . This is often the case with one hundred percent mortgages or where the property is empty and the buyer wants to get in fast.

If you are raising the funds by applying for a mortgage you will need to find a lender that thinks it is a good idea to loan you the money. The lender is essentially interested in four things:

• Are you a good borrower?
• Is the property worth the money?
• Is the property legally sound?
• Is it really a good idea?

Are You a Good Borrower?

In the first instance the lender will give you an Agreement in Principle (AIP). This is a superficial agreement which basically says, "If what you have told us about yourself is true and the property you choose is worth what you plan to pay for it, we will lend you a specified amount". You can get such an agreement without specifying a property and lenders issue these more as a guide to what you can afford than anything else.

Once you have found the property the lender will go into more depth, not only to find out about the property, but also to dig thoroughly around your financial past.

When a lender looks at you they are really looking at your earnings (that you can afford to pay the loan back on a month by month basis) and your credit history. Your credit history is a track record of previous debts. Every time you pay a credit card or loan on time you get points. The points go to make up your credit score. Every time you apply for credit, such as a loan for a car, you loose points.

This system has some unwelcome side effects. If you apply for a few store cards in a month you may suddenly find it difficult to get a mortgage. This is because your credit history shows you are looking to borrow a lot of money and that might mean you are in financial difficulties. The result is that your credit score goes down and lenders don't want to go near you.

Ironically if you have not been in debt in the past you will also have a poor credit history and a low credit score. This is because there is no proof that you are any good at handling debt. It is the financial angels of life who have never had a credit card or taken a loan that can have the biggest problems securing a mortgage.

How important your credit score is also depends on how much of the property's value you want to borrow. This ratio is known to lenders as Loan To Value (LTV). As an example if the property is worth £100,000 and you want to borrow £95,000 your LTV is 95%. In the lenders eyes that's risky business. You are only putting in five percent and you want them to stump up the rest. In this situation you may have to provide much more proof of your financial stability than a buyer who is prepared to go halves with the lender.

Once the lender is happy that you are going to be a well behaved debtor, and only once this has been established, do they turn their attention to the property.

Is the Property Worth the Money?

If your LTV is very low, say twenty percent, the lender may agree to secure a mortgage on the property without even looking at it. In their opinion most of the risk is with you and the chances of you paying so much for a property that it is not even worth twenty percent of what you lay out are extremely unlikely. If your LTV is high they will organise a survey.

The way lenders organise surveys mean that they can be very fast of very slow. The steps are:

• The lender sends the request out to a panel of surveyors. This status is known as 'sent to panel'
• The panel may have an umbrella organisation that receives this request. This organisation sends a request to the surveyors they believe will be best suited. The status has now changed to 'survey requested'
• The surveyor who receives the request may be too busy. They send a message back rejecting the request.
• The umbrella organisation requests another surveyor until they find one who will accept the work. Once accepted this status is known as 'survey instructed'
• The surveyor calls the agent or vendor to organise access to the property. Once a time has been agreed the status becomes 'survey booked'

The surveyor may either have been instructed to go into the property or just to drive by and make sure it exists (known as a drive by survey). That someone has a trained eye for spotting problems in buildings.

The lender, to some extent, is not interested in this. They only want to know that, should you stop paying your mortgage, they can sell the property and recover the debt. They don't really care if every single window in the building needs replacing so long as, in its current condition, it will sell for the same or more than the amount they are lending you.

The result of the surveyors visit is a valuation. The surveyor will either agree or disagree with the sale price. The latter is known as a down valuation. Most buyers are unaware that, for this visit, the surveyor is not acting for them and can rightly refuse to tell them the result. He has been instructed by the lender (even though you may have paid the lender a fee for the survey) and only the lender can tell you the surveyors conclusions.

It is worth noting that the surveyor will never say the property is worth more than the agreed sale price even if he believes it to be so. He is only instructed to find out if it is worth the same or less.

The surveyor may decide that the property is worth the money you are prepared to pay as long as he can be sure that a certain issue is not going to be a major problem. He may, for example, believe the roof is at the end of its natural life and will need to be replaced. This could cost over £10,000 and may affect the property value. He will therefore place a retention on the value. This may say, "I agree the property is worth £250,000 once the roof has been checked. Until this has been done I am not convinced the property is worth more than £230,000"

Is the Property Legally Sound?

The next hurdle is to persuade the lender that there is nothing legally wrong with the property that would affect its value or make it difficult to sell.

Every lender has a different set of things that they want to know. These requirements are collated by The Council of Mortgage Lenders. The result is the CLM Handbook and every solicitor has access to a copy. When your solicitor knows who you are going to be borrowing from they open up the handbook and see what they need to find out.

It is always worth remembering that most of what your solicitor does is actually not for you, but for the lender. The solicitor passes on what he finds to an underwriter who works for the lender. If they are concerned they can decide not to forward you the loan.

Is it Really a Good Idea?

For most buyers the assumption is that once all the checks above have been carried out, they are home-free on the financial side of the purchase. That is because in most cases they are. There is however one more step that often occurs without the buyer even realising it.

The mortgage application is sent to the lenders final underwriters. They will take one more look at the entire set of paperwork before issuing the offer. Every now and then they spot something that has been missed by the previous departments and what you thought was in the bag suddenly becomes dead in the water.

In short nothing is certain until the mortgage offer is in your hands. There are simply greater or lesser degrees of certainty!

What Can Go Wrong
As a cash buyer your issues should be limited but the two most common problems are:

• The cash you are using is in an account which restricts the amount that can be removed at any one time or the timescales in which a withdrawal can be made and so you have to delay exchange and/or completion
  
• The cash you are using is in stocks, shares or investments that decrease in value so you cannot afford to exchange or complete
  

If you are applying for a mortgage there is a great deal more to go wrong.

• You have a low credit score due to a lack of credit history or a default at some point in the past
• Although you are earning enough, you have other debts which result in the bank agreeing to lend you less than you had originally thought
• You do not have all the documents that the lender needs (such as bank statements) which take time to request
• You have not been in the country long enough to have an adequate credit history (usually three years are required, but again it depends on your LTV)
  
• You do not have the right to remain in the country forever
• The surveyor is from outside the area and cannot agree with the price you are prepared to pay for the property
• The surveyor is from the area but is out of touch with the market so does not agree with the price you are prepared to pay for the property
• The surveyor has just been sued for over-valuing a property and so, being unusually cautious, does not agree with the price you are prepared to pay for the property
• There is a problem with the legal paperwork of the property which does not bother you but causes your lender to withdraw their offer
• You have chosen a lender with unusual requirements in the CLM Handbook and your chosen property cannot fulfil them .
• You change lenders but forget to tell your solicitor who then collates the wrong information.
• The lenders final underwriter spots an error in the paperwork which means that they refuse to issue you with a mortgage offer

Organising Inspections of the Property

As a buyer there are certain inspections that you may want to carry out to make sure the property is in the condition that you believe it to be. The most basic and recognised is a survey. As a cash buyer you may simply want to carry out a valuation survey to get a second opinion of the price you think the property is worth. If you are applying for a mortgage the lender will have carried this out for their own records and will make you aware of the results (see above).

You can go into more detail by requesting a homebuyers survey or a structural survey. If you are applying for a mortgage it usually makes sense for the surveyor who is doing the valuation to also carry out the second survey.

A homebuyers survey is the usual choice for those buying a flat. It looks at any defects on the property such as the windows, flooring, plumbing, damp and, if there is access, the roof. A structural survey is usually chosen by those purchasing a house as it includes everything in the homebuyers report as well as an inspection of the structure.

It is extremely important to know that the surveyor is qualified to spot tell-tale signs but cannot actually or absolutely state that something is wrong. He may say, for example, that "the windows are in need of refurbishment and that a qualified contractor should assess the cost" or "there appear to be signs that the property is subsiding to the rear and a qualified structural engineer should survey the property to assess the extent of any movement".

Surveys can be weighty tomes up to one hundred pages long and usually make frightening reading. From it you need to ascertain what is really important and what is expected in a property of that age. For this see What a Property Sruvey Really Means

Once you have sorted the wheat from the chaff you may decide you want to have further inspections. The most common are:

• Damp - a damp proofing company to see if the damp found by the surveyor is significant enough to warrant tampering with the walls.
• Electrics - an electrician to see if there is anything unusual or "unsafe" in the way the property is wired.
• Plumbing - a plumber to check the piping and central heating system (if gas) are sound
• Roofing - a roofer to inspect the tiling, flashings, parapets, rafters and chimney stacks.
• Structure - a structural engineer to make sure that there is no movement in the building beyond the normal amount expected and that none of the walls are bulging.
• Drainage - a specialist company that can place CCTV probes in the drains and create video footage that shows the condition of the pipes.

As a buyer it is generally expected that you will organise any further inspections beyond the survey yourself. Most buyers want to do this anyway rather than let the vendor choose someone. Who pays (although some inspections are free) is usually a thorny issue.

Any good estate agent will hold lists of companies that they have used in the past and can be a good place to find contractors. Any contractor should be given a copy of the relevant part of the survey so they know what it is they are there to inspect.

What Can Go Wrong

• The surveyor is overcautious and believes everything needs to be inspected
• The surveyor believes he knows how much needs to be spent and quotes a figure
• The contractors that go in are looking for work and so see issues where there are none
• Neither you nor the vendor can agree who will pay for a specific specialist to check the property. As an example the property may need a structural engineer to assess it. The vendor argues that you should pay for it because it will be a document useful to you when you come to sell (the vendor nearly always assumes the situation is ridiculous and their property cannot possibly be structurally unsound). You argue the vendor should pay because you have already spent money on the survey and it is up to the vendor to prove his property is stable. Both parties have justifiable arguments but it doesn't help the process move anywhere!
• Both you and the vendor have quotes carried out but they vary dramatically so it continues to remain unclear whether or not there really is an issue to be resolved

Signing the Contract

While you are busy making sure the property is as sound as you thought it was your solicitor is busy making sure the paperwork surrounding it is just as solid. Once they are satisfied that they have all the information they will compile a report for you. This will summarise the property you are buying and point out anything the solicitor feels is unusual.

This is the time to check that all the things you thought were there (such as a parking space or the right to use a communal roof terrace) really are! With this report will be a contract for you to sign.

Putting your signature on this paper is not the end of the matter. Your solicitor will usually call you again once he receives it to confirm that you still want to exchange. He will also need:

• To have a deposit in his bank account to give to the vendors solicitor (see below).
• To know the date you want completion to occur on

Once you give the green light he will call the vendors solicitor and effect the exchange of contracts.

What Can Go Wrong

• The contract gets lost in the post and your solicitor did not keep a copy
• There are things in the report which show the property is not what you thought it was (such as there is no parking space when you were led to believe there was one)
• You start to try and understand everything in the legal paperwork and get bogged down checking the work you have paid your solicitor to carry out.
• Your signed contract gets lost in the post causing a delay
• No one can agree the date for completion
• You go on holiday and your solicitor does not exchange because he is waiting for your verbal go ahead

Funds for Exchange and Completion

As discussed in Specifying Exchange and Completion Dates (see above) your solicitor will usually need a cash deposit to give to the vendors' solicitor when exchanging contracts. The only exception is when you are using a one hundred percent mortgage.

The deposit must be in cleared funds.

What Can Go Wrong

• Your solicitor only asks for the deposit when he has received your signed contract and you have to write a cheque which takes five days to clear.
• The cash is in an account which restricts the amount that can be removed at any one time or the timescales in which a withdrawal can be made.
• The cash is in stocks, shares or investments that have decreased in value

Your Solicitor in the Property Buying Process

Once officially instructed by you, your solicitor has a set number of actions to undertake. Most are dictated by the lender you are using via the CLM Handbook (see above) but if you are lucky enough to be a cash buyer you can choose to opt out of certain requirements such as local searches (see below).

Your solicitors responsibilities are to:

• Check the set of paperwork sent by the vendors' solicitor
• Request any further enquiries from the vendors' solicitor
• Apply for searches (if the HIP has timed out)
• Check your mortgage offer
• Issue you with a report
• Exchange Contracts
• Complete

Checking the Paperwork

Your solicitor will receive a set of papers from the vendors solicitor. If the vendor is well prepared these will arrive in one parcel. If not they will be forwarded to your solicitor as soon as the vendor can get hold of them! The documents are as follows:

• The Contract - this is a short document and basically says that you agree to buy and the vendor agrees to sell the property. The contract is only signed by the vendor and you once all the other checks have been made. Once you have signed your part and the vendor has signed theirs the documents are exchanged between the solicitors. Hence this moment is known as Exchange of Contracts or more often as simply the Exchange. It is the moment of no return when you must buy and they must sell even though, usually, no full payment has been made. The first contract that your solicitor receives is usually known as the Draft Contract as it has not yet been agreed.
• The Title Deeds - this document is only held by the person who owns the property. In most cases this is not actually the vendor but the lender that he has his mortgage with. The vendors solicitor will ask the lender to send the title deeds to him. The lender can refuse or place conditions on the request if they are concerned the property will be sold for less than the current mortgage balance and the vendor cannot prove where the shortfall will come from.
• Sellers Questionnaire - this is a list of questions that are answered by the vendor. It includes declarations that there are currently no legal disputes occurring with the neighbours, who is responsible for boundaries, if there are any current guarantees, who is supposed to carry out maintenance work, etc. The vendor is only required to complete it "to the best of their knowledge". As such they can answer "Don't Know". If it can later be shown that they misled you it is possible to claim compensation. This form has many names and could be titled Seller's Property Information Form, Seller's Pack, etc.
• Fixtures and Fittings - this specifies exactly what the vendor intends to leave. It should confirm any agreement you made at offer stage such as including the curtains and carpets. They may also list items which they are prepared to sell to you should you want them. These could be anything from shower curtains to kitchen appliances.
• Building Insurance - your solicitor will want to know that the property is either currently insured or that someone is prepared to insure it. The easiest way to confirm this is to find out who is covering the property at the moment. This is essential if you are applying for a mortgage because, should the structure burn to the ground the day after you move in, the lender will be able to recover the money you have borrowed. If you are purchasing for cash you will still want to have the same piece of mind.
• Guarantees - these are the actual guarantees that have been specified in the Seller�s Questionnaire. Common items that may be covered by guarantees are the roof, damp proofing, structural work, etc.
  
• Planning Consents - these are only required if the vendor or some previous owner has made changes to the property that required planning permission. An example might be a two storey extension added to the rear of the property but could even include a skylight added in the loft.
• Building Regulation Approval - again these are only required if the vendor or some previous owner made changes to the property that are deemed to be structural and so should be inspected by the local borough's Building Control department. These can include changes that have been made inside the property and so did not require planning consent. An example could be where two rooms have been made into one and the wall that was removed was a structural part of the property.
• The Lease (Leasehold and Share of Freehold Only) - This comes from the vendors solicitor and defines what the freeholder expects from you as a leaseholder. A fuller description can be found in Chapter Two
• Service Charge Accounts (Leasehold Only) - where you are buying a leasehold property it is important to gain an idea of how much the managing agents charge every year to maintain and run the property. These charges could include lift maintenance, cleaning, lighting, care of a communal garden, even looking after the TV ariel and satellite dish. The most important factor is that these charges are consistent and reasonable with what is being provided. As such your solicitor will ask for at least the last three years accounts to confirm this or spot any trends that you should be aware of. Any debts that the vendor may have with the managing agents are identified here and are extremely important. Service Charge debts are based on the property. If you buy when there are outstanding debts they will become your responsibility.
• Ground Rent Receipts (Leasehold Only) - the ground rent is a charge made by the freeholder. Again the last three years receipts will be sought by your solicitor in order to make sure the premiums are not excessive or rising sharply. Any debts that the vendor may have with the freeholder are identified here and are also extremely important. As with the service charge, ground rent debts are also based on the property. If you buy when there are outstanding debts they will become your responsibility.
• License to Assign (Leasehold Only) - for most purchases this is a formality. It is a document from the managing agents or freeholder saying they accept you as the new leaseholder. There are some blocks, however, where you will have to provide character references, proof of your financial status and sometimes even attend for an interview. They are rare and, more often than not, in the upmarket apartments of Mayfair and Kensington.
• Deeds of Variation (Leasehold Only) - when a lease needs to be changed the freeholder may decide that writing an entirely new lease is timely and costly. As such they will issue a deed of variation to the lease to confirm that something in the lease is not true or to make an addition to the lease.
• Share Certificate (Share of Freehold Only) - where the property you are buying is Share of Freehold you are essentially buying into a percentage of the freehold. The freehold company you are becoming part of is a Limited Company registered at Companies house. As such your part ownership of the freehold must be recognised legally and to do this all the other parties who own a percentage of that freehold must agree to issue you with shares.

What Can Go Wrong
The problems with paperwork fall into issues at the vendors solicitors side and issues that your solicitor will have. The latter are:

• Your solicitor is old fashioned and argues that, despite having some of the paperwork, it is not worth starting work until all the documentation has arrived
• Your solicitor does not believe the contract is legally adequate and gets into an argument with the vendors solicitor over the wording.
• There is no definitive protocol for what a sellers pack should look like and your solicitor believes that the one provided is inadequate.
• There is no definitive protocol for what a fixtures and fittings list should look like and your solicitor believes that the one provided is inadequate.
• The buildings insurance on the property may not be adequate for the lender you have chosen even though it was fine for the vendors lender.
• The guarantees on work carried out on the property are from companies no longer in business
• There has been building work that does not require planning consent but your solicitor is not familiar with the borough's requirements and so asks for documents that are not required and do not exist.
• There has been building work that does not require Building Regulation Approval but your solicitor is not familiar with the borough's requirements and so asks for documents that are not required and do not exist
• There has been building work that requires Building Regulation Approval but the work was carried out before Building Regulation Approval came into force. Your solicitor is not be familiar with when this actually occurred in the borough and so asks for documents that do not exist
• Leasehold only: The managing agents are extremely slow to provide service charge accounts
• Leasehold only: The managing agents have been changed within the last three years and the previous agents are refusing to pass on any documentation.
• Leasehold only: Your solicitor believes the service charge accounts are not adequate but the managing agent refuses to provide any further information
• Leasehold only: The vendor owes the managing agents money but is refusing to pay it because he is in dispute with them. An example may be that he has withheld the cleaning charge because no cleaning has occurred!
• Leasehold only: The vendor owes the freeholder money but is refusing to pay it because he is in dispute with them.
• Leasehold only: The freeholder is absent (has gone missing and no one knows where they are!) and so no ground rent payments have been made. Your solicitor may be concerned that he will reappear and want to claim the outstanding debt from you.
• Leasehold only: Your solicitor does not think a deed of variation is adequately worded and wants a new one drawn up. The freeholder is offended and refuses to do so

Requesting Further Enquiries

With so many pitfalls in the documentation it is not surprising that your solicitor may want to ask further questions of the vendor, his managing agents or his freeholder. Much of this comes from the fact that there are no definitive protocols for the forms and documents that pass between them.

In a perfect world they would ask, the vendors' solicitor would reply, and you could get on with buying the property. Its not a perfect world and solicitors are also a proud race. Taking criticism from another solicitor is not their forte. They also all tend to have their own methods of working and often scorn those of their counterparts.

What Can Go Wrong

• The most common issue is that your solicitor does not believe a document provided by the vendors solicitor is legally adequate. To the vendors solicitor this is a smack in the face and an insult to his professional capabilities. All too often the process can get bogged down in an, "Oh yes it is" - "Oh no it isn't" circular argument. The most fiercely debated are Deeds of Variation, sellers packs and fixtures and fittings lists.
• If your solicitor is not based in, or familiar with, the borough in which you are buying they may not know about local regulations. As such they request documents that do not exist. The vendors' solicitor does not reply for exactly that reason but your solicitor sits and waits for the document that isn't coming. The most common is planning permission. Many solicitors are unaware, for example, that you can build an extension on a freehold house in a conservation area up to ten percent of the volume of the original house or fifty cubic metres (whichever is greater) . As such they waste time swapping letters in an endless attempt to find planning consent on something that requires no approval.
• Your solicitor is lazy (or some might argue clever) and has created a list of enquires that need answered in order to satisfy every lender and client. He does not read the documents that have been sent through but simply sends this enquiry form off. The vendors' solicitor believes your solicitor is simply trying to get him to do all the work by trawling through the documents and extracting the relevant facts. The vendors solicitor only fills in replies to the questions not answered in the original paperwork. Your solicitor claims that he has not replied to all the enquiries. He claims that the remainder of the enquiries are in the original documentation and both sides refuse to do anything!

Applying for Local Searches

These are usually required by the lender and fall into three parts:

• The Local Search - this is provided by the local borough council and lists all planning applications made in the area immediately surrounding your property since records began. It does not show whether the applications were successful or not. There are three ways to get a local search:
• The Standard Local Search - this is the traditional method and costs the least. Your solicitor applies to the local borough council who find every single planning application there has ever been in the area. It can take, depending on the borough, up to sixteen weeks to process.
• A Hand Search - this is arguably less thorough than the standard search as well as being more expensive. It is however very popular because most boroughs will turn it round within forty-eight hours. It is not accepted by all lenders
• An Agency Search - some entrepreneurial individuals have taken advantage of the fact that borough councils can be eye wateringly slow in processing local searches. To plug this gap they have started agencies that buy searches either from the council or solicitors on a regular basis. They put these on the shelf and then sell them to your solicitor for a profit. Needless to say they are more expensive but it is a very useful way to get hold of a Standard Search in days, rather than weeks.


• The Drainage Search - this is again provided by the local borough council and confirms that your property is entitled to be connected to the local sewerage and drainage systems of the area. It is really aimed at properties in more rural areas that may have their own septic tanks and in London it is almost always no more than a formality.
• The Environmental Search - this is a modern addition and looks at the soil pollution underneath your property. Needless to say in London this is generally pretty bad. It is there to protect you from unscrupulous developers who have not prepared the ground adequately before building.

Once your solicitor has these searches he may want more information. The most obvious is that there is a planning application in the local search that applies to the property you are hoping to purchase. They will then want to know:

• Was the application successful and if so:
• Was the planning consent acted upon and did building work actually take place and if so:
• Was the building work inspected to confirm that it did match the planning consent that was approved and if so:
• Was Building Regulation Approval required for the building work and if so:
• Was the work inspected and Building Regulation Approval given.

They may also want to know, however, if planning consent has been given for something on another property that may affect the value of your property in the future. An example would be planning permission to open a nightclub across the road from your property. The local search would show someone had applied for it but they will need to find out if it was denied. If not they will need to tell you and the lender about it as it may materially change the decision of either of you on whether or not you want to proceed.

A classic example is Highbury Place in Islington. Georgian town houses can sell for up to £2 million yet a few decades ago a planning application was made to tear the whole row down. Thankfully it was rejected but the application shows up on every search so a solicitor must always check that it was rejected. Otherwise they could theoretically be handling the paperwork of a historical pile of rubble!

What Can Go Wrong

• Your solicitor is not familiar with the borough in which you are buying and applies for a standard local search, unaware that it may take four months to process
• Your solicitor is not familiar with agency searches and refuses to use one (often the case with solicitors based outside London where such agencies are rare)
• The local borough is taking weeks to process searches but your lender will not accept a hand search and your solicitor does not understand agency searches
• Your solicitor has no contacts with the borough council and so cannot get clarity on planning applications and has to do everything in writing which adds weeks to the process as they grind through the councils systems.
• Your solicitor is based outside London and believes the results of the Environmental Search are a disaster compared to those that he has seen in the green and pleasant rural location where his practice is based

Checking the Mortgage Offer

If you have applied for a mortgage in order to purchase the property then, all being well, the lender will issue you with an offer. Your solicitor will not want to exchange until you have this and he has a copy. To do so would mean that you would be liable to complete and pay the balance, without any guarantee that someone will lend you the cash.

Your solicitor will check the offer to ensure the bank has not made any errors on the offer which would affect the your ability to complete.

What Can Go Wrong

• The most common is a mistake in either your details or the property details. They may have misspelled your name or got the postcode wrong. They could also have made a mistake with the term of the mortgage, expecting you to pay it back within ten years when you thought you had twenty-five!

Issuing the Report

Once all issues have been resolved to your solicitors' satisfaction they will summarise the mountain of paperwork into a report. This will usually be about five pages long and will repeat the obvious points (such as the address of the property) as well as pointing out the unusual. Solicitors call this reporting to their client. It is as much a way of bringing important facts to your attention as it is a method to cover themselves against any future legal action you might want to take against them so read it carefully.

The report usually arrives with all the other paperwork so you can read the actual lease or view the management accounts yourself. Attached to it will be the contract for you to sign. By doing so you are saying that you accept all the attached paperwork.

What Can Go Wrong

• You become bogged down trying to understand all the documents rather than trust the person you paid to do that job for you.
• The solicitor is extremely slow in putting the report together
• The report and all the documentation gets lost in the post

Exchanging the Contracts

Your solicitor is only able to do this once he has your part of the contract back and signed by you. He will also need to be in cleared funds (see above). With this he is ready so long as the vendor has signed his part and returned it to his solicitor. Despite having all of this he will probably wait for your final verbal instruction before exchanging.

What Can Go Wrong

• You think you have signed everything you need to sign and disappear off on holiday, assuming your solicitor will exchange. He does not have your final verbal instruction and so does not do it.
• Your solicitor goes on holiday or is off ill and there is no one else available to affect the exchange.
• Your solicitor goes on holiday or is off ill but there is some one else available. They check the paperwork and decide there are some enquiries missing that they want answered and refuse to exchange until the vendors solicitor replies.
• The money you gave to your solicitor for him to exchange has not cleared into his account.

Completion

When Exchanging Contracts all parties agree the completion date. Completion is the day that you pay the balance of any money to the vendors solicitor and legally take possession of the property.

In order to complete successfully your solicitor will need to have the cleared funds to do so. This may either be the cash from you or the loan from your lender. If the money is coming from you any cheque must have cleared by this day. If it is coming from your lender the solicitor traditionally has to give them five days notice. This is known as drawing down the mortgage.

In this modern day and age there is probably no need for it to take this long but tradition is a powerful thing and everybody accepts it.

Your solicitor will send the money to the vendors' solicitor via an electronic cash transfer system. This process can take anything from a couple of minutes to a few hours depending how busy the wires are. Your solicitor will be able to tell you the time the money was sent but this does not mean anything until the vendors' solicitor confirms it has been received at his end.

What Can Go Wrong

• Your solicitor forgets to ask you for funds in time for a cheque to clear or a bank transfer fails due to technical problems
• Your solicitor forgets to draw down your mortgage (unusually common) so no funds are available for completion
• Your solicitor is off ill on the day of completion and it is difficult to find someone else to handle the transaction
• Your solicitor sends the money too late for it to be received by the vendors' solicitor
• Your solicitor sends the money but it is not received by the vendors solicitor due to technical difficulties
• Your solicitor sends an inadequate sum of money to the vendors solicitor and this only becomes clear too late in the day to organise another transfer.

The Vendors' Solicitor in the Property Buying Process

Once officially instructed by the vendor the role of this solicitor is to:

• Send the standard set of paperwork to your solicitor
• Reply to any further enquiries your solicitor has
• Send the approved contract to your solicitor and to the vendor
• Exchange Contracts
• Complete

Sending the Paperwork

The vendors solicitor has to collate the paperwork described in Your Solicitor above. These are sourced from various parties and so tend to arrive at different times.

• The Contract: Every solicitor usually has their own version of a contract on file. They will fill in certain details and send it off as a Draft Contract as they expect your solicitor will want some changes.
• The Title Deeds: These will either come from the vendor or the lender (if there is currently a loan secured on the property). If it is the latter the solicitor will need the mortgage lenders name and account number as well as written permission to apply for them.
• The Sellers Questionnaire: From the vendor (see below).
• Fixtures and Fittings List: From the vendor (see below).
• Building Insurance: From the vendor or if he does not have it, from the insurance company once the vendor provides him with the company name and policy number.
• Guarantees: From the vendor (see below).
• Planning Consents (where applicable): From the vendor or, if he does not have them, from the local borough council.
• Building Regulation Approval (where applicable): From the vendor or, if he does not have them, from the local borough council.
• The Lease (Leasehold and Share of Freehold only): From the freeholder or freehold company.
• Service Charge Accounts (Leasehold only): From the managing agents or from the freeholder if he has not appointed managing agents.
• Ground Rent Receipts (Leasehold only): From the freeholder.
• License to Assign (Leasehold only): From the freeholder.
• Deeds of Variation (Leasehold and Share of Freehold only, where applicable): From the freeholder or the freehold company.
• Share Certificate (Share of Freehold only): From the freehold company.

What Can Go Wrong
With paperwork to come from so many different sources it is little wonder that it can take time and sometimes even prove impossible.

• The vendors' solicitor has only just been instructed and it takes weeks for all the documentation to be collated and forwarded to your solicitor
• The vendors solicitor is old fashioned and refuses to send on any paperwork until he has the full set of documentation
• The title deeds are with a lender who has lost them which causes weeks of delay. It is surprisingly common!
• The sale price is too low and the lender, not convinced the vendor can cover the shortfall between the outstanding debt secured on the property and your offer, refuses to release the title deeds
• The Vendor has the title deeds but cannot find them or has lodged them with a solicitor who has since gone out of business or closed down
• There has been building work that required planning consent but none has been applied for
• There has been building work that required Building Regulation Approval but the work has not been inspected and there is no certificate
• Leasehold only: The managing agents are extremely slow to provide service charge accounts
• Leasehold only: The managing agents have been changed within the last three years and the previous agents are refusing to pass on any documentation.
• Leasehold only: The freeholder is extremely slow to provide ground rent receipts
• Leasehold only: The freeholder is absent (has gone missing and no one knows where they are!) and so no ground rent payments have been made.
• Share of Freehold Only: Some of the parties who own part of the freehold are absent and cannot be found so it is not possible to issue a share certificate
• Share of Freehold Only: The company has been very badly run and accounts are missing so it is not possible to see how much the running costs of the building have been

Replying to Enquiries

As described in Your Solicitor this should be straight forward but for the disagreements over:

• What the vendors solicitor thinks has already been answered
• What the vendors solicitor thinks is important to answer

The vendors' solicitor always starts the transaction as the most relaxed party. He hopes that he will send off the paperwork that he believes your solicitor requires and wait for a call to exchange contracts. Ask a vendors' solicitor if he is ready to exchange and, so long as he has sent out the original set of paperwork, the answer is always, "Yes!"

This is a natural response as he actually does not have to collate any answers in any format for either his client or a lender. It does sometimes, however, lead the vendor to believe that the buyer is being awkward.

Imagine if every time you called your solicitor and asked what the situation was he always said, "Well I'm ready, but the buyer wants to know X". You would begin to wonder what the problem was with the buyer!

What Can Go Wrong

• The two solicitors become deadlocked on a disagreement over the wording of a document
• The Vendors solicitor refuses to answer enquiries that he claims are already covered by the original paperwork and a stalemate follows
• The Vendors solicitor tells the vendor some enquiries are "not relevant" or "too picky" and persuades the vendor to instruct him not to reply
• The Vendors solicitor winds the vendor up by stating how ready he is to exchange every time the vendor calls

Sending the Approved Contracts

Once the arguing has subsided and both sides have agreed that all enquiries have been cleared up the vendors solicitor will produce the final contract and send it to your solicitor

What Can Go Wrong
For once this is a procedure that moves as smoothly as the postal service, or hopefully the DX system.

Exchanging

When your solicitor has your signed contract and funds for the deposit, and the vendors solicitor has the vendors signed contract, exchange of contracts can take place. The money is sent electronically between the solicitors and they verbally agree that exchange has taken place at a specified time (say 3.45pm).

What Can Go Wrong

• The vendor thinks he has signed everything he needs to sign and disappears off on holiday, assuming his solicitor will exchange. He does not have the vendors final verbal instruction and so does not do it.
• The vendors solicitor goes on holiday or is off ill and there is no one else available to affect the exchange .

Completion

There is very little for the vendors solicitor to do on the big day and it is not that essential that he is present as long as there is someone in the office that can confirm the balance of funds has arrived. In many larger law firms the matter is dealt with by clerks as it is simply a yes or no answer.

What Can Go Wrong

• There is no one available to confirm funds have been received
• The vendors solicitor does not receive the payment sent by your solicitor due to technical problems

The Vendor in the Property Buying Process

Once the vendor has agreed to accept your offer for their property his responsibilities are to:

• Sign the Estate Agents Terms and Conditions (if using an agent)
• Instruct a Solicitor
• Agree to an exchange and completion date
• Reply to any enquiries raised
• Sign the Contract

Signing the Estate Agents' Terms and Conditions

This is actually an action that the vendor should carry out the moment he decides which agent or agents are going to market his property. For Estate Agents it is a risky business to show or advertise a property without this document being signed because the property owner could sue for wrongful representation or damage to the property caused, even accidentally, when a prospective buyer is shown round.

Despite this many agents may be keen to get a property onto the market either because it is extremely busy or because the property will be "easy to sell" and so waiting for signed terms and conditions may give another agent the opportunity to get good buyers through the door first.
The Terms must be signed before solicitors are instructed or the agent may risk loosing their fee. The vendor could argue he never agreed to pay the agent anything and with the two solicitors talking, there really is no need for the agent anyway.

What Can Go Wrong

• The Vendor has agreed to your offer but is not in the country at the time so delays occur while terms are sent, signed and returned
• The Vendor gets into an argument with the agent over the fee and decides not to accept your offer after all (usually because he thought the fee was lower)
• Although the vendor has agreed to your offer and a fee, he decides that he has not been impressed by the agent and wants to renegotiate this fee first.

Instructing a Solicitor

A vendor will have many of the same problems as you do in finding a solicitor. Once the vendor has found someone they are comfortable with that solicitor will send out documents for them to complete. The vendor must return:

• Details of where the Title Deeds are or the Title Deeds themselves
• A Sellers Questionnaire
• A Fixtures and Fittings List
• A copy of the current buildings insurance
• Any guarantees he has concerning work that has been carried out on the property
• Copies of planning consent or building regulation approval if structural changes or additions have been made to the property
• Leasehold only: Who the managing agents are and who the freeholder is
• Share of Freehold only: The last three years accounts
• Share of Freehold only: A share certificate

Details of these documents can be found in Your Solicitor above

What Can Go Wrong

• The vendor has not instructed a solicitor and it now takes three weeks to find one and furnish him with the necessary paperwork to start the process. They did not do this earlier because:
  
  • they were not convinced the property would sell at the price they wanted and so they did not want to incur any costs
  • they had put their property on the market for both sales and lettings and were waiting to see who would bite first
  • they were badly advised by the agent not to do so
  • they were selling privately and did not realise they could do so
  
  
• The Title Deeds are with a lender and even after the vendor has completed the necessary paperwork it takes two weeks for the lender to send them to his solicitor (so long as they can find them and lenders loosing title deeds is surprisingly common)
• The Title Deeds were lodged with a solicitor who has since closed down or gone out of business. Delays are inevitable while the vendor tracks down what happened to the documents held by the solicitor
• The vendor has kept the Title Deeds but can't remember where
• The vendor is unsure about questions on the sellers' questionnaire and it takes time to find the answers (such as, for example, who is responsible for the garden fence which borders his property with his neighbours)
• The vendor and their partner take days to agree what should be included on the fixtures and fittings list.
• The vendor cannot find details of his current building insurance and has to ask the insurance company to send him a copy of the current certificate.
• The vendor has told you something is under guarantee but cannot find the certificate. It takes time to get a copy.
• The vendor has carried out building works on the property which required planning consent but he has not apply for it
• The vendor has carried out building works on the property but does not have a copy of the planning consent that was given
• The vendor has carried out building works on the property which required Building Regulation Approval but he has not had the work inspected and so has no certificate
• The vendor has carried out building works on the property which required Building Regulation Approval and has a Building Regulation Approval certificate but cannot find it.

Replying to Further Enquiries

Once your solicitor has been through the first batch of paperwork sent by the vendors' solicitor he is likely to have some extra questions that are either required by the particular lender you are using (if you are applying for a mortgage) or because he believes you should know.

These enquiries are sent to the vendors' solicitor who may be able to answer some of them from the existing paperwork (where he thinks your solicitor has missed or not read certain documents) but there may be other points which only the vendor can answer. These may, for example, be with reference to a legal dispute with one of the neighbours or missing guarantees.

What Can Go Wrong

• The vendor does not know the answer to a question and is not aware that he simply has to reply "I do not know". He spends days trying to find the answer
• The vendor does not unders