Moving House : Frequently Asked Questions

What does "exchange of contracts" mean?
Should I have a survey done?
How long will it all take?
What is a local authority search?
Environmental matters
Is a deposit really necessary?
Why is a written mortgage offer so important?
What should I do about life cover?
How do I check about fixtures and fittings?
Can I take an existing secured loan to my new property?
What do I do about buildings insurance?
When do the agents, lenders and solicitors have to be paid?
Why does completion have to take place on a working day?
How do I sort out the keys?

What does "exchange of contracts" mean?

The legal formalities of domestic house sale and purchase usually fall into two parts

those leading up to "exchange of contracts" and
those following exchange up to "completion" of the transaction

Two identical contracts are drawn up - one to be signed by the seller and the other to be signed by the buyer. When both sides are ready to commit themselves to sell and to buy, the two signed contracts are dated and swapped over between the solicitors. At this point the contract becomes binding which means there is no turning back. At the same time as exchange the date for "completion" is agreed. Completion is the date on which the keys and deeds are handed over in return for the purchase monies and the buyer can move in.

Should I have a survey done?

The old phrase "buyer beware" applies to a house purchase. If there is found to be anything wrong with the property after exchange of contracts the seller is not liable and the buyer will have to pay for any necessary repairs.

If you have a mortgage, a valuer will inspect the property, on behalf of the lender. It is not advisable to rely upon the valuation report alone because it does not cover the condition of the property in detail and offers you no legal protection. However, it is often possible, for an extra fee, to arrange for the same valuer to carry out a more detailed inspection called a "Home Buyer's Report and Survey" or even a full building survey, if the property is very old and needs extensive repairs or alterations.

How long will it all take?

Until contracts are exchanged the answer to this has to be "we don't know". It is impossible to guess how long a sale or purchase will take until all the loose ends are sorted out.

On average, straightforward transactions take 6 to 8 weeks to complete.

It is useful to establish at the outset whether the chain of buyers and sellers is complete and whether all concerned are likely to make satisfactory financial arrangements without undue delay.

PLEASE DO NOT make any financial commitments for moving until contracts have been safely exchanged and a definite completion date has been agreed.

What is a local authority search?

This is an investigation to find out any important information affecting the property, which may be on the local authority's records. For instance, it may reveal that an extension on the property has been in breach of Building Regulations or that the nearest road to your property is not maintained by the local authority, or whether a road-widening scheme will affect the property. It will not give any information about proposals to develop any neighbouring land or property, and if you have concerns in this respect, you should contact the local authority's Planning Officer for advice.

Environmental matters

Environmental factors increasingly influence the decisions of the purchasers, lenders and insurers. In addition, local authorities can now require property owners to clean up any contamination on their property even if the current owner has not caused the contamination and this could prove costly. We will be submitting an environmental search on your behalf as part of the conveyancing process, so that you can check whether or not your new property is clear of such factors.

Is a deposit really necessary?

When contracts are exchanged, a deposit is paid over to the seller's solicitor as a down payment on the property.

If you fail to complete the purchase on time, the seller can ultimately keep this deposit, as part compensation. If you are a first time buyer the seller's solicitor will often ask for at least 5% of the purchase price as a deposit, and if you cannot raise this, you should contact us immediately for advice.

Why is a written mortgage offer so important?

Before we commit you to buying a property (by exchange of contracts) we need written confirmation that your lender will provide the funds you require, and upon what terms. There are often many conditions in the written offer that need to be satisfied before funds are released, such as work to be carried out to the property, or details of new life insurance policies that they require. In addition, you need to be happy with the product you are being offered, and to be able to take advice on it.

What should I do about life cover?

We recommend that you arrange sufficient life cover for your mortgage liabilities to protect your dependents. The type of cover will depend upon the mortgage you take out so you will need to liase with your financial adviser and lender here. Life cover must go on risk from exchange of contracts and some lenders will insist on the policies being assigned or deposited with them.

How do I check about fixtures and fittings?

It is important that you know what is included or excluded in the sale price. It causes great annoyance and trouble if items that you were expecting to be included are removed unexpectedly. The seller will be asked to complete a list which will be sent to you for consideration, but it is still advisable to get together with the seller to discuss these matters in detail before exchange of contracts to resolve any issues.

Can I take an existing secured loan to my new property?

All secured loans outstanding on a property (such as a business overdraft facility, Legal Aid charge or personal loan) must be paid off out of the sale proceeds unless the lender concerned agrees to secure the loan on your new property. This may take some time for the lender to organise, and if you want to do this you should contact the lender for consent as quickly as possible. When the lender gives their approval, they will send written instructions to us.

What do I do about buildings insurance?

A second hand property should be insured by the buyer from exchange of contracts (a brand new property should be insured from completion). Houses should be insured not necessarily for the purchase price but for the estimated cost of rebuilding following a fire or other catastrophe, to include clearing away the damage and architect's fees. This is known as the reinstatement value. Sometimes this is much greater than the actual market value but more likely it will be for a lesser amount. If you have a mortgage, the lender can deal with this if you are happy to use their block policy. If you are not insuring your property under a lender's block policy you will need to make your own arrangements as quickly as possible. We would suggest that you organise this provisionally as soon as you know what the reinstatement value of the property is. Your lender's valuation or survey will often give you the figure you need to insure your property for, if not discuss this with your provisional insurers. Once contracts have been exchanged, or you have moved into a new property bought from a builder, you will need to confirm your provisional arrangement immediately.

When do the estate agents, lenders and solicitors have to be paid?

On a sale, when contracts have been exchanged, the estate agents will send their invoice to us, and in turn, we will then prepare a final completion statement for your approval. This will set out all the figures involved, including the amounts required to redeem any mortgages on the completion date.

On a purchase, a final completion statement will be prepared and sent to you for approval, once all the figures have been agreed, including the net amount of any mortgage advance.

We will then ask you to send us the balance required (if any) to complete the transaction, including the legal fees and out of pocket expenses for the work we do for you and the lender.

Any balance payable by you on a sale or purchase must be received by us at least a week before the completion date if paid by cheque, or the day before if paid by bank transfer.

Why does completion have to take place on a working day?

Completion is effected when the purchase monies are paid over for the property to the seller's solicitor. The buyer and their lender will expect to get a vacant property in return on the same day. At present, the banks only transfer money electronically on a working day, and therefore completion cannot take place at a weekend.

How do I sort out the keys?

Unless special arrangements are made, the keys are handed over on the completion day in exchange for the purchase money - the seller having previously handed them to the estate agents. It frequently happens that this is not convenient and the seller will hand them direct to the buyer. It is important that you find out and agree the arrangements for the keys once contracts have been exchanged. There is nothing worse than waiting outside your new house with the removal van and not being able to get in!