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Conveyancing is the process of transferring the legal title of a property during the buying and selling process. It is possible to do the conveyancing work yourself and save £250-300. However, unless you like that sort of challenge and have oodles of time to spare. I wouldn't advise it.

Having a good solicitor or licensed conveyancer is going to make the whole process much quicker and easier. Solicitors' involvement in the buying and selling of land is historic & goes back hundreds of years.

Solicitor or Licensed Conveyancer?


There are in fact two classes within the legal professional that are capable of carrying out conveyancing work, Solicitor and Licensed Conveyancers. Licensed Conveyancer scope to practice independently only came about in 1987 as a result of the Administration of Justice Act 1985. Prior to 1987 conveyancing could only be carried out by qualified solicitors. As a result, conveyancers were saddled with large legal practice overheads resulting in them charging relatively high fees.

Introduction


The legal process of a buying a property is often shrouded in what seems like a never ending series of: form filling, searches, signatures, delays, contracts and general confusion. I have bought numerous properties and sold quite a few. Each time the process starts I find myself confused! So what's involved?

The Process


In order to buy a property you need to have a number of things in place: a willing seller (vendor), a willing buyer (purchaser), an agreed price and a set of two solicitors representing each of the party's involved in the sale. Assuming all those are in place, how long should things take? The conveyancing which is the legal term for a property transaction, should take between 6-8 weeks; although I have a friend that swears his solicitor can do it in three. The reality is that with so many forms and bits of paper involved; delays almost become an inevitable part of the process. The Government has proposed to reform the conveyancing law so that this should eventually lead to less paper and more 'button pushing'. In theory this should do much to eventually speed things up. Having said that; the system will still be inevitably reliant on somebody pressing the right button at the right time. I am sure that ultimately the process can only get quicker as it becomes more digitised. As things stand now the process can be broken down into approximately 6 key stages.

These are:

1. Searches


2. Document checking


3. Mortgage offer


4. Completion of contract


5. Exchange of contracts


6. Completion

The main stages explained

I now go on to look at the six main stages in a little more detail:

1. Searches


There are a number of different searches that need to be carried out by your solicitor or conveyancer. If you haven't got one already or think yours is too expensive have a look in the Recommended Links for a solicitor or conveyancer that you think is right for you.

These searches are ostensibly to satisfy you and also the mortgage company that the property you intend to buy is not subject to action by the local authority or has been affected by works carried out in the past. All of these could have a detrimental impact on the property's value. The searches are as follows:

Local search
These searches are sent to the Local Authority and should reveal such matters as:

a) Enforcement notices


b) If the property is subject to outstanding conditions in respect of improvement grants


c) Planning permissions


d) If the highway is publicly maintained

The results of these searches can take anything from a few days to several weeks to be returned (dependent on local authority and their workloads). Some authorities now offer an expedited service for a small additional charge and should be able to do the search in a couple of days. Before the purchaser's solicitor can send for the local authority searches they like to have a plan of the property. This comes from the seller's solicitor, normally when they have received the Vendor's Title Deeds. With all these bits of paper floating about, it's easy to see how delays can occur I would therefore emphasise the importance of ensuring that where possible you keep a close watch to make sure that they don't.

Drainage search


This is a separate search carried out with the Local Water Authority or the Local Authority where they act as agents. It's to ascertain where the drains run and who is responsible for maintaining them. Most of the major drains (e.g. the ones running down the road) will be the water company's responsibility, whilst generally the drains on your land will be for you to maintain.

Mining search


If the property is in or close to a current or former mining area, a mining search is carried out with the Coal Authority. These searches aim to provide information on whether mining has occurred around or underneath the property. The main worry is obviously the potential of damage caused through subsidence. This, if you ever bother to read your standard building insurance is normally excluded from cover. It is possible however to take out specialist insurance that covers you against any repair works that have to be undertaken as a result of subsidence. Given the massive contraction of the UK coal industry, this issue is less important now than it was; however if you are in a coal area then it should highlight any potential problems. Whilst the search will indicate whether mining works have been carried out, they won't guarantee that there will not be a problem in the future. Therefore, in the best traditions of caveat emptor or 'buyer beware'; the purchaser will at least be aware of the situation and can then make decisions based on the information at hand. I understand should you have a property that has suffered from subsidence; it is possible to make a claim for compensation with the Coal Authority

Other searches


From time to time it is also necessary to carry out other searches relating to the property. One search now carried out by most solicitors is the environmental search. This is provided by one of the specialist environmental companies such as Landmark Information Group. For about £40 they will collate additional information not required as part of the Local Authority Search about other potential environmental hazards in or around your property. These include proximity to waste disposal sites, likelihood of the property being on contaminated ground, air quality to name but a few. They also provide an assessment of the potential risk of the land being designated as contaminated as defined by the Environment Protection Act 1990. All this has come about to satisfy the lenders that they are aware of the risks associated with the properties that they are issuing loans on. They are concerned that properties could have their value and thereby their security detrimentally affected as a result of a sudden change in approach by Government to land designated as contaminated.

2. Document checking


I'm sure that conveyancers will be aggrieved by this description. In many ways this is the skilled part of the 'job' as it is this part that makes sure that the vendor gets what they thought that they were buying when they agreed to purchase. This stage involves the solicitor sifting through the key documents in relation to the sale; the contract, title deeds, seller's replies to enquiries.

a) Contract


This is the formal agreement and provides the terms of the sale of the property to the purchaser. It describes the property, purchase price and any special conditions that may be attached to the transaction.

b) Title deeds


The conveyancer will check to see whether there is good title to the property, in other words whether the property is what it initially appeared to be and that the vendor does indeed own it. If the property is registered and most property, particularly residential is; then the solicitors will carry out a search with the land registry www.landreg.gov.uk . This should be able to tell them in the Title Register who owns the property, the nature of their ownership (freehold / leasehold) and any charges (loans) outstanding. They will also be able to provide an ordnance survey plan showing the extent of the land owned outlined in red. If necessary the conveyancer will check the title deeds for any additional information regarding the property's title. They may do these checks for the Mortgage Lender who frequently they also act for. Their responsibility to the lender is to ensure that the mortgage company is fully advised of anything that may affect the value of the property and therefore have an impact on the security of the loan.

c) Replies to enquiries before contract


The seller will have a list of questions about their property. For example, does the seller know of any disputes and are there any alterations to the property requiring planning permission. In addition, the seller will also have to provide a list of fixtures and fittings that state what is to be left/removed from the property on completion. This information is used to form part of the sale contract and therefore it should make clear what is included in the sale. If the property is leasehold, the seller's solicitor will also be asked to provide additional information from the Landlord or Management Company.

3. Mortgage Offer & Insurance


Copies of the Mortgage Offer will normally be sent to the conveyancer, the applicant and the broker if one is used. This offer sets out the amount of the advance and the interest rate payable on the loan, together with any other specific conditions attached to the mortgage. The conveyancer will go through these details and should make the purchaser aware of them prior to signing the mortgage loan agreement that accompanies the Mortgage Offer.

One major requirement of any offer is that satisfactory buildings insurance is in place by the time of completion. Therefore, it is advisable that cover is in place well in advance of the completion date. Property Hawk has managed to negotiate some preferential insurance rates with partners because of the numbers and experience of it's users. Have a look here for not only some of the most attractive rates in the market, but also the most comprehensive terms. The mortgage company will insist that a copy of the insurance schedule with their interest noted is supplied to them before they will release the mortgage.

4. Contract


This is the document that has been drafted by the seller's solicitor. It sets out the terms and conditions of sale. Once the search results have been returned and the Mortgage Offer has been received; the conveyancer will normally expect the buyer to go to their office to sign the contract and the mortgage deed or loan agreement. If the sale is being conducted remotely via the Internet or it is not possible for the buyer to get into the office; the solicitor can advise the purchaser in writing of the findings from the searches as well as providing copies of the contracts and loan agreement that need to be signed. At this stage the conveyancer will require the payment of the deposit. This is normally 10% of the purchase price.

5. Exchange of contracts


The exchange of signed contracts by the buyers and sellers conveyancers is the stage where the sale becomes binding. In other words neither party can simply walk away from the 'deal' without the other party having some legal recourse. Prior to exchange, the parties agree a completion date, which will be worked into the contract prior to exchange. Once contracts are exchanged, the seller's solicitor will normally hold the deposit money until completion.

6. Completion


Following exchange both parties make their final arrangements. The following matters must be satisfied before completion can take place:

a) Transfer Deed and Requisition on Title


The final questions ("requisitions on title") will be submitted to the Seller's Solicitors, together with the Deed of Transfer for approval. The Transfer Deed is the document that transfers the property from the seller to the purchaser and also acts as a receipt for the purchase money paid.

b) Pre-completion searches


A bankruptcy search is carried out against the purchaser's name(s). This shows any matters that may affect the mortgage advance. A clear search is required to proceed to completion. A final search is also made against the seller/ their land. Other searches are necessary in some circumstances and you will be advised of them by your solicitor if this is the case.

c) Prior to completion the mortgage advance monies will be requested from the mortgage lender by your conveyancer. The conveyancer needs cleared funds from the mortgage lender in order to complete. Lenders require anything up to 7 working days notice that the monies are required and this will sometimes influence the completion date

d) Any funds required as part of the transaction, including legal fees and disbursements, including Stamp Duty are requested and will need to have cleared prior to completion

FINALLY – completion and the property is yours. The balance of the purchase price is forwarded to the seller's solicitors by Telegraphic Transfer on the morning of completion and upon receipt the seller's solicitors will send the following to the buyers conveyancers:

a) Transfer Deed, signed and dated by the Seller specifying the date of completion (this is then sent to the purchaser to sign)


b) Title deeds


c) If there is an outstanding mortgage on the property, a promise to repay it with proof of repayment as soon as possible.

Following completion other outstanding issues will be dealt with, these will include:

a) Stamp duty


If the purchase price is over £125,000 the Transfer Deed will have to be submitted to the Inland Revenue and the respective stamp duty paid


b) Registration


When the Transfer Deed is received from the sellers' conveyancer duly stamped, it will be submitted to the Land Registry, together with the Title Deeds, the seller's previous mortgage discharge form (that is proof of repayment of previous mortgage) and the Mortgage Deed for registration. Once the completed registration is received the deeds will be scheduled and sent to your Mortgage Lender.

What is the best way to maximize your real estate profit and reach your investment goals?
Real estate is a solid investment that offers both short-term and long-term gains. People have been investing in real estate since land and homes were first bought and sold. If you have interest in becoming a real estate investor, there are several things to consider as you move forward. The main point is to determine why you want to purchase the property—Is it for long-term gain? Is it for short term investment? It may be for both. By clearly thinking your strategy through on before you invest, you will likely maximize your efforts as you proceed. Before you purchase a property, you will have to determine if it is best to flip the property - make improvements and sell it fast - or rent it out. Markets do fluctuate, and even people who are not involved in real estate investing know the terms "buyer's market" and "seller's market." Which decision you make depends on what is happening in the market, how much the property costs, and how your choices fit your overall investment strategy.

How to Know When to Flip a Property


Flipping a house can provide huge profits if you do it right. It has become popular and common over the last several years, and there even a number of television shows dedicated to showing people how it is done. Key factors in making the decision to flip include the initial purchase price, the location and condition of the property, and the prices of similar home sin the area. This last point also includes whether the properties have sold and how quickly they sold. Remember, a price is only truly valid when the property has a buyer willing to pay that price!

Generally speaking, if you plan to purchase a more expensive home, the best idea is to turn it around quickly in order to limit your expenses and gain from the current market. Expensive homes come with big mortgage and property tax payments, which usually mean that renting for the cash flow is out of the question. It can also be difficult to find renters for higher priced homes, and if they miss a rent payment for one or several months, your profits will quickly disappear and you may even start to have a significant loss.

If you find a great property that requires mostly cosmetic changes, you should be able to flip it easily for a meaningful profit. A property with major structural problems can be a "money pit," especially if the price was too high to begin with. Before you commit to any major changes in the property, assess not only your own cash resources (this is very important!), but also your work force resources. Do you have relationships with contractors, landscapers, and other skilled labor professionals? Will those people be reliable in terms of time and price? These are critical questions to answer before you begin.
How to Know When to Rent a Property

Renting your investment property can provide you with monthly positive cash flow while you build equity through your payments and the appreciation of the property price. Renting also allows you to take advantage of tax breaks for any improvements you make to the property as a tax deduction. Again, key factors are the price of the home, if the market has growth potential, and the condition of the property.

A lower-priced home translates to a lower monthly payment, property taxes and insurance. Remember, you don't need to make a big monthly profit. In order to succeed over the long run, the idea here is to own more properties and make your profits over time. When you rent a property out, you are building equity using your tenant's money. Add up the costs related to the property, including a small amount for repairs and any utilities you plan to pay for. This is a safer way to invest in real estate and can net you very high profits. There will always be good tenants to rent good properties!

Another way to determine if you should flip or rent is if the market is growing. Does the area have a lot of new construction? Are there new industries moving in? Is the location near an urban area, with plans for an existing public transportation system to the city? Properties located in these "growth" areas almost always net the largest gains over time. This is especially true in areas where there are new people moving in. They often are moving from areas where they have sold their homes for larger process, and are looking to spend that money on new properties, thus driving up existing prices.
In a growth market, you can make money flipping a house, but you may be able to make considerably more money over a long period of time if you rent it out, build equity, and sell it for an even higher price at the optimum time. Even if you buy yourself a vacation home, you can make money down the road if you hold on to it, and you can rent it out as a vacation home or to tourists when you do not plan to live there.

It's Not Just About the Bottom Line


When deciding whether to flip or rent out a property, assess the market, do the math, and then consider your own interests and abilities. The perfect flip is not so perfect for those who have no construction or renovation experience, and being a landlord may not be a role you wish to take on. In the end, it's about what's best for your pocketbook, what's best for your investment strategy and what's best for you.