Insight

What’s involved in a residential property purchase?

"Most seamless, successful transactions, occur when there is a good two-way understanding"

When meeting property clients, even second or third time house buyers, we often find that there is an incomplete understanding of the legal processes involved in a property purchase transaction. Having practiced in this area for some time now, I have come to notice that the most seamless, successful transactions, occur when there is a good two-way understanding; the legal representative’s understanding of their client’s needs and individual circumstances, and the client’s awareness of the different steps in the transaction. To help you know what to expect, here is an outline of the steps involved in the purchase of a property:


1. Notification of the transaction

Once an introductory meeting has been held with a new client, individual circumstances explored, and any initial informal advice has been given, formal matters usually commence once we receive notification of the transaction from the estate agent. This notification identifies the seller’s and buyer’s lawyers, the agreed price and the tenure of the property (Freehold, Flying Freehold or Share Transfer). We will ask you to provide copies of your photographic ID and proof of your current address so we can satisfy our obligations under local anti-money laundering legislation.


2. Draft contract of sale

We then request a draft contract of sale and a location plan from the seller’s lawyers. Under usual circumstances we would suggest aiming for completion of the transaction about four to six weeks after we receive the draft contract. We might expect a longer transaction time should our initial research and enquiries uncover material deficiencies in title (something amiss that needs further investigation or action).


3. Research

Upon receipt of the documentation we commence our research relating to the property. These searches and investigations usually comprise:

  • An investigation of title carried out at the Public Registry. We need to ensure that the seller has the right to sell the property and establish whether the property is subject to a mortgage. If there are one or more mortgages over the property we will obtain an undertaking from the seller’s lawyers that the mortgage(s) will be repaid out of the proceeds of sale so that our client receives ‘clean title’ to the property.
  • A review of the contractual rights and obligations in title to the property to ensure the property has the benefit of all rights required and to identify any rights enjoyed by any third party. For example, rights of way, drainage rights across the property, access or maintenance rights on to the property or a neighbour’s property are very common. It may be that the property does not have the benefit of a contractual right, in which case we may ask the seller to approach a third party to arrange for that right to be formally granted.
  • A review of the boundaries of the property together with any restrictions on enclosures (the height of a wall, for example), as well as any other restrictions that may apply to the property. Restrictions on the number of houses that may be built on a plot or any restrictions on the use of a property (no guest houses, factories or inns is common) are also researched.
  • A visit to the property to thoroughly cross-reference its boundaries against those described in the draft contract and/or ascertained by our research. If any issues are uncovered, we then notify our client and advise on options, and, may request that the seller’s lawyers arrange for any defects to be rectified. This may not always be possible however, and sometimes a purchaser will be asked to make a commercial decision as to whether the issue is sufficiently important to withdraw from the purchase.

5. Enquiries

The next step is for us to make enquiries with:

  • The relevant Parish to enquire whether any road widening schemes of any adjoining parish roadways are forecasted.
  • Jersey Electricity, Jersey Water and Jersey Gas to assess the route of current functioning mains services into the property (the service companies often do not have a record of older pipes that have been disconnected).
  • The Department for Infrastructure to ascertain the route of the drains serving the property and any road-widening schemes for any adjoining main road.
  • The Planning & Environment Department to request any details of any Planning Applications made in relation to the property and whether or not they have been advised of such works having been completed. Here, a client may wish to also make their own enquiry, either directly with Planning and/or through the Planning Department website, for information regarding any other current approved or submitted applications for developments in the vicinity. The Planning & Environment Department’s response will also state whether or not the property includes a historic or listed building, and is within a controlled or protected zone (green zone and water protection zone being common examples)

We usually receive responses to these queries within two weeks of our request letter, but all responses must be received and any queries resolved prior to completion.


6. Share transfer

Where the property is held by a share transfer company, we will also review the company books and records and make a number of enquiries of the company secretary. Sometimes it is necessary for the company to hold a short meeting to formally rectify any historical omissions or faults in the records.


7. Draft completion settlement

When all enquiries are complete and loan documentation has been received, we meet with the client to go through the papers relating to the purchase. A draft completion statement will be provided and the client will need to arrange the transfer of the deposit and costs to our client account. Loan documentation is explained and signed, and a Certificate of Title provided to the bank. This is the stage at which any problems or defects in title are disclosed to the bank. It should be noted that even if the client is willing to proceed, a bank may take a more cautious view on any defect.


8. Freehold or flying freehold

If the property is freehold or flying freehold the contract is passed before the Royal Court. Clients can appear personally or sign a power of attorney to allow a member of this firm to appear on their behalf. The Royal Court session is a formal occasion and clients must dress appropriately – gentlemen must wear smart trousers (no jeans) and a jacket, shirt and tie, and ladies should be dressed smartly. The Court has refused to pass contracts for clients who are not appropriately dressed!


9. Completion

Once the contract has been passed before the Court, the transaction is complete and the client will have full ownership of the property.

Share transfer properties are completed on the exchange of the sale agreement and transfer of funds. Again, once that procedure is complete the buyer has full ownership of shares.


While we always aim to complete all transactions smoothly, it is not uncommon for issues to be uncovered during the research phase. Any issues that arise will be explained to you and you will always be welcome to ask questions or seek clarification if needs be. Our role is to help you make informed decisions about your transaction and to provide you with timely and clear information based on an understanding of your circumstances.