Buying UK real estate legal issues
Buying real estate in the UK, you must find a lawyer
Zupreme real estate legal consultant Joanne Chung Zhong points out the things that everyone should pay attention to when buying a house:
Once you have directed a lawyer and told them you wish to use their services, you should receive a Power of Attorney or Affirmation of Terms of Business. You should sign and return the documents with your passport/ID as soon as possible so they can start working. You'll also pay a land search fee, which is usually around £350 depending on the area you're buying from.
If you and your family are jointly buying a property, you should let your attorney know how you want to hold the property. You can jointly own the property in two ways:
Joint Tenants: This is where all parties have equal rights in the property, and if one of you dies, the other owners will automatically own the property.
Tenants-in-Common: You each own a specific share of the property, and in the event of your death, your share can pass to anyone under your will or intestate succession rules.
You will need to notify the estate agent of your attorney so they can send the "Memorandum of Sale" and "Property Details" to all parties.
Your solicitor will then write to the seller's solicitor to confirm that they have been instructed to request a draft sale and purchase agreement, accompanied by standard forms and questionnaires that must be completed by the seller regarding property ownership information; if the property is For rental properties, a copy of the lease will also be included.
You will also need to let your lawyer know if you are selling another property and instruct them to make the related sale and use the sale proceeds to pay the price.
After receiving the draft contract, your attorney will examine the contract, title deeds, and forms completed by the seller and, if necessary, raise any questions with the seller's attorney.
Your solicitor will then also conduct a search, which may take 2/3 weeks depending on the workload of the local authority.
If the property you are buying is a rental property, your solicitor will send the seller's solicitor a standard Management Company Questionnaire, which will then be sent to the relevant landlord/management company/resident association to complete and return.
If you need a mortgage, your attorney will receive a copy of the mortgage deed and conditions. Your attorney will usually also do legal work on behalf of your lender.
Once all search results have been received and the seller satisfactorily answered the enquiry, your solicitor will invite you to sign the contractual documents, including the mortgage deed. You will also be required to pay your solicitor's deposit in exchange for the contract including the mortgage deed, which is usually 10% of the purchase price (unless the deposit is from the proceeds of your sale).
🤝Sign and exchange contracts
Your lender will require you to purchase homeowners insurance before exchanging contracts. All parties involved need to agree on a deal closing date.
Once contracts have been exchanged between lawyers for each party (usually over the phone), you are legally obligated to buy and the seller is legally obligated to sell the property. If either party withdraws, the other party will be entitled to compensation for breach of contract.
When exchanging contracts, your lawyer will release your deposit to the seller's lawyer. This provides a guarantee to the seller if you change your mind or for some reason cannot pay the balance by the closing date. If this happens, the seller will be entitled to keep your deposit, and if the deposit is insufficient to cover the breach of contract damages, the seller may take you to court. Likewise, if the seller breaches the contract and refuses to complete the contract for any reason, you can either apply to the court for an order to force the seller to complete the contract, or return the deposit and sue the seller for damages. Therefore, once the contract is exchanged, the transaction will be completed.
⚜️between exchange and completion
Your attorney will draw up a deed of assignment for you to sign so that title can be registered in your name after the transaction is complete. Your solicitor will also conduct some final searches at the Land Registry on behalf of your lender.
In the interim, you should (if you have not already done so) receive a final statement from your attorney setting out all expenses and providing a final figure that you will need to make sure to deposit in your attorney's bank account before closing the transaction . If you are buying with the help of a mortgage loan, your lawyer must receive the loan in time to complete the transaction, and in most cases, the lender requires at least 5 business days' notice.
🤝Seal the deal
Your lawyer will wire the required amount to the seller's lawyer, and when the seller's lawyer has received the required payment, they will release the keys to the house.
🔰After the transaction is completed
Your solicitor will pay the stamp duty for you, and when the seller's solicitor returns the completed and signed assignment deed, your solicitor will register your title with the Land Registry. Once the registration is complete and the land registration certificate is received, your solicitor will mail the certificate to you (or your lender). The lender keeps the land registration certificate until you have paid off all the loan.