Process Of Conveyancing

A Straightforward Guide

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• Publisher: Straightforward Publishing Digital
• Year: 2015
• Print ISBN: 9781847165619
• eBook ISBN: 9781847166357
• Topic: Law
• Subtopic: Property Law
• Index: Law

This latest publication in the Straightforward Guides Series (Straightforward Publishing), A Guide to The Process of Conveyancing, is a comprehensive guide to the various processes underpinning the conveyancing of residential property. It is clear and concise and is ideal for anyone who wishes to buy or sell a property without the use of a solicitor or licensed conveyancer and can be used by those who want a practical guide or by those who wish to learn more about the processes of conveyancing generally.

1

CONVEYANCING IN CONTEXT

Conveyancing, or the practice of conveyancing, is about how to transfer the ownership of land and property from one person or organisation to another. Land and property can include freehold property, leasehold property (residential) or can include business leases. It is principally the conveyance of residential property that this book is concerned with.

Essentially, the process of conveyancing lays down clear procedures for the conveyancer and also sets out each party’s position during the sale or acquisition.

Before understanding the process of conveyancing, however, it is essential to understand something about the legal forms of ownership of property.

Legal ownership of property

There are two main forms of legal ownership of property in England and Wales If you are about to embark on the sale or acquisition of a house or flat (or business) then you will be dealing in the main with either freehold or leasehold property.

It is very rare indeed to find other forms of ownership, although, with the advent of the Commonhold and Leasehold Reform Act 2002, which became law in May 2002, the government introduced a form of ownership called ‘common hold’ that in essence, creates the freehold ownership of flats, with common responsibility for communal areas.

Freehold property

In general, if you own the freehold of a house or a piece of land, then you will be the outright owner with no fixed period of time and no one else to answer to (with the exception of statutory authorities).

There may be registered restrictions on title, which we will be discussing later. The property will probably be subject to a mortgage so the only other overriding interest will be that of the bank or the building society. The responsibility for repairs, maintenance and general upkeep will be the freeholders. The law can intervene if certain standards are not maintained.

The deed to your house will be known as the “freehold transfer document” which will contain any rights and obligations. Usually, the transfer document will list any “encumbrances” (restrictions) on the use of the land, such as rights of way of other parties, sales restrictions etc. The deeds to your home are the most important documentation. As we will see later, without deeds and historical data, such as the proof of title, it can be rather complicated selling property. This is why the system of land registration in use in this country has greatly simplified property transactions.

Any person owning freehold property is free to create another interest in land, such as a lease or a weekly or monthly tenancy, subject to any restrictions the transfer may contain.

Leasehold property

If a person lives in a property owned by someone else and has an agreement for a period of time, usually a long period, over 21 years and up to 99 years or 125 years, and in some cases 999 years, then they are a leaseholder. The conveyancing of leasehold property is potentially, far more problematic than freehold property, particularly when the flat is in a block with a number of units.

The lease is a contract between landlord and tenant which lays down the rights and obligations of both parties and should be read thoroughly by both the leaseholder and, in particular, the conveyancer. Once signed then the purchaser is bound by all the clauses in the contract.

It is worth looking at the nature of a lease before discussing the rather more complex process of conveyancing. Again, it has to be stated that it is of the utmost importance that both the purchaser and the vendor understand the nature of a lease.

The lease

Preamble

The start of a lease is called the preamble. This defines the landlord and purchaser and also the nature of the property in question (the demise). It will also detail the remaining period of the lease.

Leaseholders covenants

Covenants are best understood as obligations and responsibilities. Leaseholder’s covenants are therefore a list of things that leaseholders should do, such as pay their service charges and keep the interior of the dwelling in good repair and not, for example, to alter the structure. The landlord’s covenants will set out the obligations of the landlord, which is usually to maintain the structure and exterior of the block and light common parts etc.

One unifying theme of all leasehold property is that, notwithstanding the landlord’s responsibilities, it is the leaseholder who will pay for everything out of a service charge.

Leases will make detailed provisions for the setting, managing and charging of service charges which should include a section on accounting. All landlords of leaseholders are accountable under the Landlord and Tenant Act 1985, as amended by the 1987 Act and the 2002 Commonhold and Leasehold reform Act. These Acts will regulate the way a landlord treats a leaseholder in the charging and accounting of service charges.

In addition, the 1996 Housing Act and the Commonhold and Leasehold Reform Act 2002 have provided further legislation protecting leaseholders by introducing the right of leaseholders to go to Leasehold Valuation Tribunals if they are unhappy with levels and management of charges and also to carry out audits of charges.

It is vital when buying a leasehold property that you read the lease. Leases tend to be different from each other and nothing can be assumed. When you buy a property, ensure that the person selling has paid all debts and has contributed to some form of “sinking fund” whereby provision has been built up for major repairs in the future. Make sure that you will not be landed with big bills after moving in and that if you are, there is money to deal with them. After a lease has been signed then there is little or no recourse to recoup any money owed.

These are all the finer points of leases and the conveyancer has to be very vigilant. In particular read the schedules to the lease as these sometimes contain rather more detail.

One of the main differences between leasehold and freehold property is that the lease is a long tenancy agreement which contains provisions that give the landlord rather a lot of power to manage (or mismanage) and it is always a possibility that a leaseholder can be forced to give up his or her home in the event of non-compliance with the terms of the lease. This is known as forfeiture.

Under the Commonhold and Leasehold Reform Act 2002 referred to earlier, a new ‘no fault right to manage’ has been introduced. This will enable leaseholders who are unhappy with the management of their property, to take over the management with relative ease. The Act will apply to most landlords, with the exception of local authorities.

These new powers will go a long way to curb the excesses or inefficiencies of numerous landlords and will provide more control and greater security for leaseholders.

Check points

There are key areas of a lease that should be checked when purchasing. Some have already been discussed.

• What is the term left on the lease?

• Is the preamble clear, i.e. is the area which details landlord, tenant and demised (sold) premises clear?

• Is the lease assignable, i.e. can you pass on the lease without landlords permission or does it need surrendering at sale or a license to assign?

• What is the ground rent and how frequently will you pay it?

• What is the level of service charge, if any, and how is it collected, apportioned, managed and accounted for?

• What are the general restrictions in the lease, can you have pets for example, can you park cars, do you have a designated space?

• What are the respective repairing obligations? As we have seen, the leaseholder will pay anyway but the landlord and leaseholder will hold respective responsibilities. This is an important point because occasionally, there is no stated responsibility for upkeep and the environment deteriorates as a consequence, diminishing the value of the property.

Business leases

Generally, the Landlord and Tenant Act 1954, part 2, provides the framework for those occupying premises on the basis of a business lease. There are a few exceptions to this such as mining leases and agricultural leases. The average business lease will be shorter than a residential lease and will contain periodic rent review clauses. The typical business lease may be for ten years with a rent review after the fifth year.

The whole process of conveyancing business leases, although similar to residential in some respects, is rather more complex. For example, maintenance rights and responsibilities are often an issue between the parties concerned and it is essential that there is a clear picture at the outset. Those coming to the end of the term of their leases can find themselves faced with a significant repair bill, based on a schedule of dilapidations undertaken by a surveyor.

As with all leases, it is very important to ensure that those managing have a firm and comprehensive grasp over the whole process. If they do not then this can affect the value of the property when you wish to sell or buy a lease. It is not advised that an individual undertakes this type of conveyancing, but employs a solicitor well versed in the finer points of business tenancies. ‘A Straightforward Guide to Managing Commercial Property’, deals with business tenancies in more depth.

Two systems of conveyancing

After gaining an understanding of the nature of the interest in land that you are buying, it is absolutely essential to understand the two systems of conveyancing property in existence, as this will determine, not so much the procedure because the initial basic steps in conveyancing, such as carrying out searches, are common to both forms of land, registered and unregistered, but the way you go about the process and the final registration.

Registered and unregistered land

In England and Wales the method of conveyancing to be used in each particular transaction very much depends on whether the land is registered or unregistered land. If the title, or proof of ownership, of land and property has been registered under the Land Registration Acts 1925-86, as amended, then the Land Registry (see below) will be able to furnish the would-be conveyancer with such documentation as is required to establish ownership, or third party rights etc. If the land has not been registered then proof of ownership of the land in question must be traced through the title deeds.

Registered land

All conveyancing falls within the remit of the Land Registry, because it is compulsory to register land throughout England and Wales. The Land Registration Acts of 1925 established the Land Registry (HM Land Registry). The Land Registry is a department of the Civil Service, at its head is the Chief Land Registrar. Anybody can obtain information which is held on the register of a registered title by going to www.landregistry-search.com. There is a list of fees on this site for the various searches.

There is specific terminology in use within conveyancing, particularly within the Land Registry:

a) A piece of land, or parcel of land is known as a registered title.

b) The owner of land is referred to as the registered proprietor.

c) A conveyance of registered land is called a transfer.

d) A transaction involving registered land is known as a dealing.

The main di...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Introduction
• 1. Conveyancing in context
• 2. The key steps in the process of conveyancing property
• 3. The structural survey
• 4. Conveyancing unregistered land
• 5. Conveying registered land
• 6. The contract for sale
• 7. Post completion-registered and unregistered land
• Conclusion
• Glossary of terms
• Index
• Appendix