Breaking down the sales process step-by-step.
The sales and purchase process for a property can be confusing and lengthy. This may not always be avoidable, but with some preparation of what the process entails – you as a buyer or seller can play a part in ensuring the sale completes successfully within a reasonable amount of time.
What are the various stages you must go through? Where do the bottlenecks commonly appear? We break it down for you below.
Sold Subject to Contract (STC)
An offer has been accepted by the owner of the property. This does not make the sale legally binding, but both seller and buyer will provide the estate agent with details of their solicitors.
Know Your Customer (KYC) and Money Laundering Regulations 2017
Before entering into any business with a Seller or Buyer, the Estate Agent is required to conduct KYC checks, this is the mandatory process of identifying and verifying the client/s. Estate Agents are subject to the Money Laundering Regulations 2017. This means that we have to obtain and hold identification and proof of address for all customers/clients. Additionally, Estate Agents are required to obtain proof of ownership and to establish whether there are any beneficial owners.
Memorandum of Sale (MOS) Subject to Contract
Once the agent has the solicitors’ details, they will send out a memorandum of sale (subject to contract). This usually happens within a few days after the offer has been accepted and KYC & AML checks have been conducted by the agent. All depending on how swiftly they receive the details of the solicitors, and the other required documents.
Subject to Contract means that the (MOS) is not a binding document and further clarity needs to be undertaken. This includes, but it is not limited to the solicitors checking the lease or freehold contract documents and survey, etc.
The memorandum of sale is a document simply outlining the details of the sale such as;
- Full address of property
- Agreed sales price
- Names and details of buyers and sellers
- Names and details of buyer’s and the seller’s solicitor information
- Freehold/leasehold information (to be confirmed by solicitors)
- Energy performance certificate (EPC) copy,
- Property Particulars,
- Any special conditions agreed
Contract Pack & Searches
Once the memorandum of sale has been circulated, the seller’s solicitor will send the ‘Contract Pack’ to the purchaser’s solicitor.
The Contract Pack includes the Property Information Form’, ‘Fittings and Contents’ form and any relevant deeds and documents that the Seller is holding. These include documents on leasehold and any planning and building regulation consents, or reports relating to the central heating and electrics.
Commonly, upon the receipt of the Contract Pack, the buyer’s solicitor will order searches to find out any information about the property and its surrounding areas. This includes, but not limited to;
- Flood risk search
- Drainage and water search
- Local authority search
- Environmental search
- Planning search
As this process relies on multiple different entities, it can sometimes take some time. We have experience of searches taking anything from 1 to 6 weeks. Although, the Searches can be expedited at an additional cost.
In the case of a leasehold property, a ‘Building Management Pack’ needs to be obtained by the Vendor’s solicitor from the Buildings Managing Agent (acting for the Freeholder). As this can take a good three weeks to obtain, we advise Sellers to place their solicitor’s in funds to purchase the pack as soon the sale is agreed.
If anything particularly concerning is uncovered by the searches, or from the Building Management Pack then this is a stage where a sale can fall through or require renegotiating. This is assuming that the survey report is reasonably favourable and that there are no major issues with the property.
Enquiries
In most cases, the initial enquiries will be raised after the searches come back. This is completely normal as the buyer’s solicitor will want to know further details or the buyers may generally have questions about the property.
This stage is reliant on both sides communicating clearly and answering questions promptly. The more enquiries that are raised, the longer this stage can take.
Mortgage Valuation
If you are buying with a mortgage, then a mortgage valuation will take place alongside the legal process.
If the mortgage valuation down-values the property, this means the lender does not believe the property is worth what the buyer has offered. In this case, a re-negotiation must take place, or the sale could fall through.
If the mortgage surveyor does not find any cause for concern – the mortgage will be approved and proceed to mortgage offer.
Exchange
Once all the enquiries are satisfied and the mortgage offer is ready – the exchange of contracts will take place. As the name implies, this is the stage where the buyer and seller will sign, exchange contracts and the buyer will normally transfer a deposit – the sale is now legally binding and Completion date will have been agreed.
Buildings insurance will need to be put in place from the date of exchange.
Completion
Completion takes place a few days or a week after the exchange has happened, this is the day where the sale finalises. The buyer or their lender will transfer the outstanding funds and keys can be released. The property is now legally owned by the buyer and the seller will have vacated the property.
Appointing an Estate Agent and a Solicitor
Both selling and buying a property can be a daunting process and purchasing a property usually involves one of the largest financial commitments you are likely to make throughout your life. It is therefore important to ensure that you are appointing;
(A) an experience and knowledgeable Estate Agent who can guide both sides through the transaction and will be able to help move the file along by ensuring that all parties are communicating and if there are any issues, they should also have the knowledge to advise on possible solutions.
(B) solicitors/conveyancers who can attend to your file both diligently and efficiently. Otherwise significant delays may be experienced. With a purchase, guidance should include advising you on the title of the property, information provided by the Seller along with advising as to any potential issues or risks that may need to be considered in relation to the purchase.
N.B. Please note that the above information is a general guide only and does not constitute legal advice. We recommend seeking specialist legal advice on your own particular circumstances.