"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).
Upon receipt of the documentation we commence our research relating to the property. These searches and investigations usually comprise:
The next step is for us to make enquiries with:
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
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!
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.