Property purchase or sale can be divided into three major stages. There is the initial agreement here both parties have the option to walk away from their agreement. The exchange stage which commits both parties to the agreement and formalise the deal. The last stage; in any deal, is the completion of the transaction. Below is a detailed list of the entire process which has been broken into 13 individual sub-processes:-
1. The whole process starts with a verbal agreement between a buyer and a seller. The buyer agrees to buy the property in question at an agreed price and the seller agrees to sell it at that price. Clearly, this agreement is not legally binding at this stage because the agreement is subject to contract. Both buyer and seller exchange personal details and pass to one and other details of their respective solicitors to formally start the process of sale.
2. Both parties appoint solicitors to carry out the legal work in respect of the sale. The appointment of the legal representative can be done prior to the agreement of either sale/purchase as in 1 above or after the agreement. The more astute buyer/seller will and can shop around for the best price in the market. There are price differences between firms of solicitors. So shopping around is advised.
3. It is normal practice for solicitors acting for both parties to produce an estimate of costs plus disbursements before they start any work. Once these estimated costs are accepted then the legal work begins in earnest. The seller's solicitor obtains information about the property in readiness to send to the buyer's solicitor.
4. The seller's solicitor sends the first draft of the contract together with the information about property to the buyer's solicitor. If there are any issues; legal or otherwise, they are raised by the buyer's solicitor. An example of a query is the agreed price according to my clients was £123,000 but this draft contract states that price to be £132,000. This error will then be corrected at this early stage.
5. The contracts are only signed when both parties agree with the terms, conditions and the wording of the contract. Each party; buyer and seller, are invited to sign this document and then give it back to their respective solicitor so that the exchange can happen.
6. Pre-contract exchange stage. Contracts can only be exchanged when a completion date is agreed. For example, exchange contracts on the 1st May 02 and complete the transaction on the 24th May 02. There is also a question of deposit which must be paid at this stage. The deposit is normally 10% of the purchase price or another amount agreed by mutual consent.
7. The next stage is exchange of contracts. At this stage, both parties are committed to the agreement and neither can back out. The exchange is done by both parties' solicitors and it is all legal after that.
8. If the seller is buying another house then the seller's solicitor will make sure that the completion for both properties; that is the one being sold and the one being bought, is done on the same day/date as so to avoid homelessness.
9. Post contract exchange stage is for sorting out outstanding matters. The buyer can arrange for his/her removal, pay any outstanding bills, cancel insurance policy if one is in place and amongst other things re-direct mail as well as informing friends of a change of address. The seller does the same in respect of the property that he/she is moving from.
10. The seller signs the transfer deeds document. This document is used to add the buyer's name to the title deed at the land registry.
11. The buyer receives a completion statement. This statement sets out money that are due to be transferred into the account; that amount is stated and the costs are made clear and lastly the amount of money left over after costs.
12. On the morning of the completion, the buyer's solicitor gets the bank to transfer the money into the nominated account held by the seller's solicitors. The buyer gets formal possession of the property once the solicitors have completed the transactions and the money is transferred.
13. The seller receives his money after all the costs have been taken and if there are lenders involved then their money needs to be paid first.
Finally, the transaction can normally take up to 8 weeks from start to finish. If there are lenders involved they may require searches and valuations to be carried out to establish value/equity to secure the mortgage against. But, it is not uncommon to complete the whole process over a matter of a week for cash buyers particularly if they are willing to dispense with searches and such like. Lastly, this template may not fit the transaction process in another country but the principle is the same; there is an agreement, it runs its course and then it is completed.
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