A sale transaction may sound simple and straightforward but there is a lot of work that needs to be carried out by Solicitors. Sale transactions can easily become complicated or prolonged. Not all transactions are the same and this is due to various reasons including whether there is a chain transaction or if unexpected complications arise throughout the course of the sale.
A sale transaction
Initial instructions and documents
Once a Solicitor has been formally instructed on the sale, an initial pack will be posted out to the client enclosing the following documents:
- Identification Documents Request
- Property Information Form
- Fittings and Contents Form
- Overriding Interests Form
- Conservatory Questionnaire
The documents numbered 2-5 make up what is called a ‘Contract Pack’. If the property being sold is a leasehold property, the seller will also need to complete the Leasehold Information Form and this will also be part of the Contract pack.
In sale transactions that involve individuals selling as executors of behalf of someone who has passed away can also cause potential delays. This is because before the sale can proceed, the seller’s Solicitor will need to wait on a grant of probate to be issued (which can take a few months) to ensure the executors can legally sell the property on behalf of the deceased.
Once the Solicitor has satisfactory identification documents and money has been paid on account, the Solicitor can proceed in preparing the Contract pack.
Once the seller’s Solicitor has received the completed documents from their client, the seller’s Solicitor will then be able to issue the Contract pack to the buyers Solicitor. The buyer’s Solicitor will review the Contract pack and will usually request searches on the property. The timescale for searches to come back is around 10 days.
If the property is leasehold, the seller’s Solicitor will also need to request the freeholder pack and management pack from the freeholder and managing agents. These packs will contains details of the ground rent, service charge and building insurance etc. This will then be forwarded onto the buyers Solicitor for them to review.
Enquiries from Buyer’s Solicitors
The buyer’s Solicitor will raise enquiries in relation to the property when reviewing the Contract pack. The legal enquiries will be dealt with by the seller’s Solicitor and specific enquiries relating to the property will be forwarded on to the seller. The number of enquiries that are raised will vary and depend on each property as complex legal issues may arise that may cause a delay and these issues will need to be dealt with before proceeding.
The buyer’s Solicitor will not proceed until all their enquiries are satisfied and more importantly, the buyer’s lender is satisfied if the buyers are taking on a mortgage.
Once the buyer’s Solicitor is happy to proceed, the seller’s Solicitor will arrange to have the Contract and Transfer (this is the document that transfers the property to the purchasers) signed by their client.
Depending on each transaction, there may be additional documents that are sent to the seller’s for their signature.
Exchange of Contracts
The Contract is the document that will commit both the seller and the buyer to the transaction. Once contracts are exchanged, the sale will become legally binding and neither party will be able to pull out of the transaction without becoming subject to heavy financial penalties.
The buyer’s Solicitor will need to hold 10% of their client’s deposit in order to exchange. When contracts are finally exchanged, a completion date will be set. Completion will be the day funds are received from the buyer and keys are released.
If there is a mortgage on the property, the seller’s Solicitor will ensure this is redeemed on the day of completion. In preparation for this, the Solicitor will need to request a redemption statement from the mortgage lender. Each mortgage lender varies on their timescales in providing redemption statements.
Redemption statements are usually requested at the beginning of the transaction for an estimate of how much is due. Once a completion date is agreed, a new up to date redemption statement will need to be requested which can take some time depending on the mortgage lenders timescales.
The seller’s Solicitor will draft a completion statement showing the amount that will be due to the client once their legal fees and disbursements have been deducted.
If the property is leasehold, the seller’s Solicitor will work out the apportionments for the ground rent, service charge and building insurance and forward a completion statement to the buyers Solicitor confirming the amount due on completion.
On the day of completion, the buyer’s Solicitor will send the money over to the seller’s Solicitor and the keys will be released once the seller’s Solicitor lets the agent know that formal completion has taken place. If there is a mortgage on the property, this will be redeemed from the sale proceeds and paid on completion.
Our Conveyancing team here at Emery Johnson Astills can assist you in your sale transactions. Please contact us on 0116 255 4855.