Property Q&A

Your legal questions

answered...

Q. Just what is conveyancing?

Many of you who have bought or sold property will have certainly heard of conveyancing. However, how many people actually understand what the process involves, or, for that matter, what solicitors actually do for our part?

In its simplest terms, conveyancing is the process of transferring ownership of property or land from one person to another. In reality it is a little more complex and a lot more bureaucratic. There are many, many standard forms and documents to contend with.

For a comprehensive look at the conveyancing process - from start to finish - please take a look at our Conveyancing Guide

Q. Thank you for your advice on Conveyancing but I'm still confused about the costs involved in buying a home. Please can you help?

The cost of conveyancing can essentially be divided into two parts; the legal fee, which is the actual fee the solicitor charges for doing the work and the disbursements, which are the expenses incurred on your behalf, and are paid to third parties, such as Land Registry fees, Stamp Duty Land Tax if applicable and searches.

There are very clear rules as to what is a legal fee and what is a disbursement, make sure that there are no additional 'legal fees' tucked away in the disbursements. I can only speak for my firm here but we will always provide a clear and transparent quote before you instruct us. This will include a breakdown of all fees, including the standard disbursements for your transaction based on the information we have at the time. By way of example, at Fosters Law our legal conveyancing fees start at £345 for first time buyers and go up from there in clear fixed brackets, any disbursements are then added to the top.

Fees and disbursements will only ever change if something comes to light during the Conveyancing process which was unforeseen at the time the quote was given. A good solicitor will always contact you before incurring additional expenses on your behalf.

On top of the legal fees there are other costs that you need to consider:

  • Mortgage administration fee - Charged by most mortgage companies, this is basically a processing cost and can vary from a few hundred pounds to a few thousand but should be made clear to you at the outset of arranging your mortgage
  • Mortgage valuation fee - They have your property independently valued, you pay for it. Normally a few hundred pounds.
  • Moving costs - Whether you do this yourself to save money, or employ a professional will depend on the amount of furniture you have and how much stress you want on completion day.

Q. What is the difference between a survey and searches?

In the somewhat confusing world of conveyancing, these two items quite often get mixed up. They both provide a better understanding of the property being purchased, they will normally cost the client money and, of course, they both begin with the letter "S"; they are however quite different but equally important elements:

Survey

If you are using a mortgage to purchase the property, a basic mortgage survey (a "valuation report") is undertaken to ensure that the property you are purchasing meets the value of the loan that the mortgage company is lending you. In other words, does it offer them sufficient collateral to lend against or, if they had to repossess it , can they get their money back? They arrange this and administer this, but you pay for it.

Although this survey will highlight any significant defects that the property might have, it is not the best way of ascertaining the property's overall condition or value, and a further problem with such a valuation report is that it is prepared for your mortgage company's purposes only - you cannot rely on it if there is a problem in the future. If you wish to know more about the property, you are naturally at liberty to instruct a more detailed survey, again at your expense. Here you can have a Home Buyers Report (which is much more detailed) or even a Full Structural Survey (which is even more detailed), any problems will be highlighted and advice given from the surveyor.

Remember that buying a property is probably the most expensive purchase you will ever make - it is worth spending a couple of hundred pounds on a decent survey to ensure that what you are buying is not only correctly priced, but also, that it is not going to cost you thousands of pounds in maintenance bills as soon as you move in.

Searches

Searches are simply a set of enquiries that your solicitor submits to various third parties that include Local Councils, the Environmental Agency, the Coal Authority and Water Authorities. They are called searches because your solicitor is asking those organisations to search their records for information about the particular property you are buying. The type and number of searches vary according to what and where you are buying, although if mortgage finance is required, searches will usually include: -

  • Local search - this is carried out by your solicitor with the Local Authority and will confirm if there are any Local Authority Land Charges relating to the property (such as improvement grants or Smoke Control Orders etc); the Building Regulations and the planning history for the property, if roads are adopted (i.e. maintained and repaired by the highways department, as opposed to private roads which are down to the owner or a private management company to maintain); whether it is a listed building and whether there are any proposals for a motorway at the bottom of your garden, etc. If any entries are revealed on the search, your solicitor will then make further enquiries with the sellers' Solicitors to investigate any issues on your behalf.
  • Environmental Search - this is a commonly used search that will identify risks within 500 metres of the property and will reveal the history of the site on which your house has been built. It will check if it has been built on a waste or landfill site, and if the property is within a flood plain. This search is required by most mortgage lenders. Again, if problems are identified, your solicitor will raise this with the sellers.
  • Water & Drainage Search - this is carried out with the local water authority, and will confirm to your solicitor if the property is connected to the main drains and whether the property is on a water meter or not. It will also reveal if there are any public sewers within the boundaries of the property, or nearby, which could affect future development or building work.
  • Chancel Repair Search - this will show whether a property has a potential liability to contribute to the cost of repairs to the chancel of a local mediaeval church. Unfortunately, there is no readily accessible central database to identify properties with chancel repair liability and existing records are incomplete. In some cases, liability will be shown on the register for the property at the Land Registry, but this is not always the case.

In certain circumstances, if you are purchasing in a certain area of England or Wales, your solicitor will undertake additional specialist searches, for example mining or flood searches. The costs of these searches can vary, but generally you should budget for about £200 for a local search, drainage search and environmental search.

Q. Do the searches explain where a property's boundaries lie and will they help resolve a boundary dispute?

Boundaries and boundary disputes are an extremely complex area of property law. Boundaries are illustrated on the Title Deeds and the Land Registry plans, however this does not make the illustrations definitive or legally binding.

Many people believe that the boundary between theirs and the neighbouring properties is defined by the Land Registry plans. However these are not intended to determine the actual line of boundaries. They are drawn generally and with thick lines separating the properties. It is therefore often difficult to ascertain boundaries, and they cannot be relied upon to move or re-establish boundaries.

There is also a common misconception that the boundary runs in a straight line between the properties. However, this is often not the case: boundaries differ and vary over time; moving slightly or changing direction due to the removal and/or replacement of the physical boundary, agreements between previous owners of the property and various other factors.

The general lack of any definitive boundary representation means that most boundary disputes have to be resolved by the instruction of an expert (usually a surveyor) who will consider the Title Deeds the properties concerned and various other indicators such as old photographs, witness evidence and the actual property itself (including any old boundary markers such as posts) to determine where they believe the boundary is. However, it is of course possible that one person can instruct an expert who determines that the boundary is in a particular place, only for the neighbour to find another expert who believes it is in fact somewhere else. This 'grey area' is why a lot of these cases end up in the Courts, leaving it to a Judge to make a decision based on all of the evidence as to where the boundary is - the legal declaration by the Judge as to the location of the boundary is only then definitive.

However, litigation through the Courts should be used as a last resort. It is often better for most boundary disputes to be resolved through mediation or a 'meeting on site' of experts. If you are thinking of moving a boundary or you wish to object to your neighbour doing so, specialist advice should be sought. Disputes with neighbours should be avoided, and boundary disputes can be arbitrary, stressful and can last a number of years - and importantly, they can cost thousands of pounds to resolve. Therefore, it is always wise to check the position with regards to your boundary before making any changes. A good property solicitor is the best place to start.

Q. How long does the conveyancing take?

The simple but rather unhelpful answer is that it is 'as long as a piece of string'. If everything is in your favour with a freehold property, no chain or finance required and the property is empty or sold with 'vacant possession', a conveyancing transaction can literally be wrapped up in a few days. At Fosters Law we have even been known to turn them around in under 48 hours. However, unfortunately we don't live in an ideal world and at virtually every step throughout the process there is an opportunity for delay. Searches and enquiries can raise issues that need clarifying. You may be surprised (!) to hear that banks and lenders can prove to be somewhat awkward and, particularly in these austere times, getting the blood out of the proverbial stone can prove very difficult. Then there is the chain, a common problem, where the ability to reach exchange and completion is out of your hands; the chain moves at the speed of the slowest party.

So to get back to that 'piece of string'. A general conveyancing transaction should on average take no more than five or six weeks to get from the point of initial instruction to exchange and a further week or so from there to completion. You can assist this process by having all your 'ducks in line'; complete and return paperwork to your solicitor as promptly as possible and have your finance agreed in principle for the amount of the property you are looking to buy. Communicate with both your solicitor and estate agent, be honest and, within realistic reason, demanding too; you pay the bill so let them know what you want.

Q. How can Chains delay matters?

Delays in a property sale or purchase are more often than not caused by breakdowns in 'the chain'.

A property chain is quite simply where there are more than two parties involved and their sale and/or purchases are interdependent, e.g. you are selling to someone who is in turn selling to someone, who is in turn selling to someone etc etc. Here, the old adage applies, in that you are only as fast as the slowest member of the team; however in this 'team' not only do you have varying speeds, there will be different objectives, schedules and consequent levels of honesty.

If you can appreciate the host of issues that can cause a delay to your own conveyancing transaction and multiply that by the members involved in the chain, and their many individual agendas, you can begin to understand why most multiple property transactions do not run smoothly and why property solicitors are greying or, like me, getting a little thin on top. It takes a huge amount of time, diplomacy and patience to progress chains. Like many solicitors, at Fosters Law, we actually employ a number of tenacious individuals just to do this. Finally even when all parties are ready, it only takes one person to move the completion date or even worse pull out and the whole chain can collapse like a deck of cards. But more of that next week.

It is not all doom and gloom, however, since although much of the chain is out of your hands, patience, honesty, organisation and a little persistence can help progress matters. Be realistic and talk to your solicitor and agent.

Q. What happens if the chain collapses?

Until all contracts are exchanged, there is nothing to stop individuals in a property chain from pulling out - the transaction is 'subject to contract' until the point of exchange. When this happens, as most people rely on the proceeds from their sale to fund the subsequent purchase, only one cancelled deal can quite often lead to the whole chain collapsing, leaving everyone in limbo, exposed and out of pocket.

If the chain breaks down, your solicitor will look to find out exactly why the party has pulled out and to see what, if anything, can be done to get things back on track. Is it simply a question of cold feet or is there something more significant, e.g. an unsatisfactory survey or financial complications brought about by job problems or a declined mortgage?

Renegotiation can quite often rectify matters. If it is money related, it may be that the other parties in the chain would be willing to help out in order to keep the chain alive. On rare occasions, some parties in the chain might accept a reduction in their sale price to ensure that another party is able to move, thereby not breaking the chain; and in other cases, it may be that the estate agents agree to reduce their commission to be able to pay a financial incentive to one of the parties.

If you're selling and the buyer drops out, keep solicitors and everyone in the chain informed while you search for another buyer. Remember to be fair with the price and honest about the condition of the property as this will generally keep the surveyors happy and the purchasers calm and constant.

If you're buying and your financial situation is jeopardising the sale, try renegotiating a lower offer with the seller. Obviously be prepared for a 'no' but it never hurts to ask.

Finally if the chain does fall apart, and at worse you end up without a buyer for your existing property and you lose out on your new 'dream' home, be practical. If your property was right for one person it'll be right for someone else and, in my experience, invariably another 'dream' home will pop up too. Speak to the local estate agents; they will know that you are serious, organised and keen to proceed.

Q. What are gazumping and gazundering?

When the sale price has been agreed between buyer and seller, but the contracts have not yet been exchanged on the property, there is still the opportunity for a third party to offer the seller a higher price. When the seller accepts this offer, and subsequently withdraws from the sale to the original buyer, the third party has 'gazumped' the original buyer. This has severe consequences for the original buyer, in that not only do they lose out on the property they wanted, but they may well have incurred significant costs including surveys and legal fees. Furthermore they have no redress against either of the other two parties for these sums - every sale and purchase transaction is 'subject to contract until formal exchange of contracts takes place.

As is a common misconception, this scenario does not usually come about through the estate agent's desire to maximise their commission by obtaining a higher sale price for the property. Yes, they are keen for you to maximise the sale price of your property but that's what you pay them for. In actual fact, they are very much just doing their job; an estate agent has a legal duty to inform the seller of all offers made on their property. This includes offers made after another offer has been formally accepted. An estate agent can legally give guidance but can never recommend and it is entirely at the seller's discretion as to whether they accept the higher offer or not.

It is worth noting that the highest price does not always win and there are cases where a seller, having received higher offers, sticks to the original lower one because the transaction is proceeding well or they simply felt it was the right thing to do. Also a new entrant is not always a bad thing - sometimes a 'gazumper' can save a chain. If an original buyer is dragging their feet or looking to 'gazunder' the deal (see below), the transaction and reliant chain can quickly fall apart, however a new buyer, with the means and intent to proceed, can save matters for all parties. As a buyer, what can you do to lessen the chances of gazumping? If you have had your offer accepted, you can stipulate that, as part of the offer, the property be removed from the agent's register and no further viewings allowed; you might also be able to negotiate an 'Exclusivity Agreement', where the seller effectively gives you the right of first refusal on the property, for a fixed period of time. However some sellers prefer to keep their property on the market until exchange of contracts, so that should the transaction fall through, they may have a back up buyer. An obvious point is that in paying the asking price you show your commitment and thereby dramatically diminish the likelihood of the occurrence of gazumping.

'Gazundering' is the other side of the coin where, at the last minute, the buyer refuses to go ahead with the sale unless the price is reduced. Again, there is nothing the seller can do about this apart from negotiate on the price or lose the sale. Here the estate agent should negotiate on the seller's behalf, or failing that, will attempt to find you a suitable new buyer with all possible haste. Fortunately gazundering is rare but current market conditions dictate that there is often greater price negotiation and the buyers have greater leverage.

Q. With broken chains, gazumping and gazundering on the increase, what will I be charged if my transaction falls through?

Buying or selling property comes with a certain amount of risk and this includes the possibility that the conveyancing transaction can fall through due to factors beyond your control. Unfortunately when this happens, more often than not, costs relating to this will have already been incurred.

If this happens through reasons outside your control, most solicitors will charge a reasonable proportion of their fee relating to the amount of work that they have undertaken, plus any expenses or disbursements that have been incurred at that time. I can only speak for my firm here, but at Fosters Law, we would certainly look to do this, therefore with us, the cost to you is dependent on what the stage the transaction reached.

Alternatively we also offer a 'Fair Deal Conveyancing' scheme, where we are able to guarantee that, if your sale doesn't proceed for reasons outside your control, you won't face the expense of our fees for dealing with your abortive transaction - you will only have to pay for the disbursements that we have paid out on your behalf, such as search fees etc. In this way, at least you can minimise the costs associated with the risk.

It is always best to clarify with your solicitor at the outset what their policy is on abortive transactions. This information should also be included in their Terms and Conditions. Remember to pay particular attention to the division and payment of both fees and disbursements.

Q. What do we have to pay as deposit?

Discussion of deposits can often cause confusion as during a conveyancing transaction there are effectively two types of "deposit" that most people refer to. More commonly, when people refer to the deposit they are using to buy a house, they are referring to the sum that is the difference between the amount being borrowed from their mortgage lender and the actual purchase price of the property. It is usually privately funded by the buyer although it can also be lent by a third party, e.g. family member. However, when a solicitor refers to the deposit, they mean something very specific; namely the sum the buyer pays as a down payment on the property when contracts are exchanged. The balance of the purchase price for the property is then paid on the completion date.

In theory the deposit should be 10% of the purchase price, however the amount actually paid will depend on the transaction type and the amount that is being borrowed, e.g. with a 95% mortgage it is sometimes possible to pay only a 5% deposit at exchange of contracts. The actual amount payable will be negotiated in advance by your solicitor. Also, in chains of transactions, the deposit tends to be passed up the chain, so effectively the buyer at the very bottom of the chain physically pays a deposit based on his or her purchase price, and then this money is used as a deposit by all other parties in the chain.

If you are purchasing a property, your solicitor will request the deposit when they send all the contract paperwork to you for signing. When both parties have signed and 'exchanged' their respective contracts, your solicitor will pass the deposit over to the seller's solicitor. They then keep the deposit until the completion date and this is then offset against the purchase price. You can pay your deposit by cheque, electronic bank transfer, or bank draft. However, you should note that if you pay by cheque or even bank draft, your solicitor will have to wait for your money to clear through the bank account - this may therefore delay exchange of contracts by up to 5 working days.

Q. What exactly happens when you exchange contracts?

Exchanging contracts is very much a "does what it says on the tin" moment. In the old days, your solicitor would physically take your signed contact and deposit cheque round to the office of the other solicitor, and would then swap, or exchange, contracts with the other party's solicitor. Nowadays, with the advent of telephones, computers and the like, thankfully exchange of contracts takes place over the telephone, between the two solicitors.

Following formal exchange, the Buyer's solicitor will also transfer the buyer's deposit (the money that you pay at exchange) to the seller's solicitor. This is usually non-returnable and acts as security for the seller in case you either cannot or do not want to complete. If that happens, the seller may be able to keep your deposit, and may take you to court to recover any additional losses arising from the breach of contract.

With contracts exchanged, both solicitors will arrange a convenient date for completion. They will then begin to make final preparations, ensuring everything is in place by that date. This includes:

  • Land Registry - The seller's solicitor will have sent a copy of the registered title for the property at the start of the process. Now they will do a final check to make sure that nothing has changed.
  • Transfer deed - This is the document that records the buyer as the new legal landowner in the Land Registry. The buyer's solicitor will prepare this before completion, and send it to the seller's solicitor.
  • Money transfers - The buyer's solicitor will make the final arrangements for payment of the outstanding funds. This includes receiving any mortgage money for their lender.
  • Final accounts - Your solicitor will prepare the final accounts for you. These will include details of any further money needed from you to complete. If you are taking out a mortgage, your solicitor will draw down the loan amount from the lender in time for completion.

You need to ensure that you fully understand what is being asked of you; exactly what is required and when. In particular make sure you have access to the appropriate funds when required. If you have any questions, ask.

Q. What happens on the completion date?

Completion day is the day everyone has been waiting for; when the keys are handed over and the buyer gets to move in, and the seller, or their bank, gets the money for the property. A lot will happen on completion day and, as there may be multiple transactions working simultaneously within a chain, it is difficult to give a precise time as to what will happen when. At Fosters Law we always aim to complete around lunchtime, giving good time for you and your removal men to get in. However we would stress that the transaction is in the hands of other parties and the banking system, so it's a good idea to take time off work or set a few hours aside to make sure everything goes smoothly.

The process will start with the buyer's solicitor transferring the payment to the seller. When a mortgage is involved, this money will have been sent from the lender. In situations where there is a chain of transactions, money has to be sent from the buyer at the bottom of the chain, all the way up to the seller's solicitors at the top of the chain; depending upon the length of the chain, it can take several hours for this process to be completed.

When the seller's solicitor has received the funds, this is the point of actual completion of the transaction - they will send the transfer deed and any other important documents to the buyer's solicitor. At a more practical level they will also release the keys to the property. These are usually picked directly up from the Estate Agent that has been managing the sale. If there is no Estate Agent you would make arrangements direct between the seller and the buyer.

The buyer's solicitor will complete a tax return for the stamp duty land tax, and will pay any Stamp Duty that you owe for your transaction. They will then arrange for the Land Registry to record you as the owner and to register the lender's interest (if any) as a mortgagee.

Q. When should I insure the property?

At the point of exchange of contracts, the "risk" of the property usually passes from buyer to seller - this means that, although the buyer doesn't yet have access to or rights over the property, they are responsible for it, so Buildings Insurance is required. This provides cover for the building and gives the buyer, and their mortgage lender, adequate protection should anything happen to the property prior to completion that may cause serious damage. Please note, this is irrespective of whether or not the seller still has the property insured.

There is no absolute requirement for you to insure your property, but if you do not do so, you will be taking something of a risk; it may also be the case that, if you are taking out a mortgage, your mortgage lender will require buildings insurance to be taken out before the loan is completed. Similarly, there is no obligation for you to insure your personal possessions by means of a contents insurance policy, but again, you would usually be advised to do so.

Ideally Building Insurance should be arranged prior to the exchange date so that it can be 'put into force' and begin to provide cover from this time.

Although it is very rare, there are cases where properties have been completely destroyed between exchange of contracts and completion - in such a case, the buyer is still obliged to complete the purchase and to pay the money due on the completion date, even if the house is now effectively a pile of rubble. The Buildings Insurance policy will then have to pay out for the property to be rebuilt where possible.

If you are purchasing a new build property, the Buildings Insurance should usually be put into force once the property is completed - the builder's own insurance policy covers the property until the completion date.

Also, if you are buying a leasehold property, you will normally find that the freeholder (the "landlord") insures the whole building, and each leaseholder in the building has to pay a proportionate part of the annual premium. In such a situation, there is no need for you to take out your own building insurance policy for the flat - although you would still be advised to take out a policy to cover your home contents.

Q. How can I get a mortgage?

Certainly a topical question and one that offers a more complex answer than I certainly can provide. However, although I am not a financial adviser, having worked in property for many years, I will do the best as I can. Certainly not financial advice but perhaps layman's guide.

To start with, when a bank or building society is looking to lend you the money to buy your home, they will basically look at three things:

  • The overall value of the property
  • The amount that is being lent against that property
  • Your ability to make repayments on that loan

The overall property value and the amount that can be lent against it, are important as they determine the lender's security in the property. So, although the property is your home, it is their collateral; if they needed to repossess it they have to ensure that when sold it is of sufficient value to cover the debt. Whatever amount is lent against the property value determines the Loan To Value (LTV), for instance if they lent £75,000 on a £100,000 property, with your deposit covering the other £25,000, the LTV would be 75%. At the moment lenders, being rather risk averse, are keeping the LTV's relatively low, and certainly 100% mortgages appear a thing of the past. Generally the rule is that the greater the deposit, and lesser LTV, the better the mortgage product and associated interest rate.

The next key consideration for the lenders is your realistic ability to make repayments. Here they analyse your income; usually using multiplier based on your overall salary, or in the case of joint mortgages, you and your partners salaries. They also take into account any significant expenditure you may have and, of course, your overall credit rating.

So, by way of example, in its basic form, a mortgage provider may lend you up to 3.5 times your annual salary as a mortgage. If there are two of you then they usually have a slightly different formula, either a set figure of the combined salary, e.g. 2.5 times, or an unequal split, e.g. 3.5 times the first salary plus 1 times the second salary. These formula can be complex, they vary from lender to lender and from mortgage to mortgage so please check.

To summarise, the more you put in the better the deal. Shop around and I would always advise speaking to a professional financial adviser before proceeding.

Q. How do I know what fixtures and fittings are included in the price?

Prior to exchange of contracts, your solicitor will provide you with a copy of the list of fixtures and fittings. This will have been completed by the seller. Generally anything fixed permanently to the house should be included but the seller can take anything that they wish, e.g. carpets and curtains etc, so it is important to take time to check the list to ensure everything that you thought was, or wanted, included is.

It is also worthwhile gaining confirmation that those appliances included in the sale are in good working order. If you there is an issue with the fixtures and fittings list provided, you can negotiate directly with the sellers, via the Estate Agents or through your solicitors. Please note that whatever is decided you must inform your solicitor of variances to the list of the agreed sale price.

Q. When I'm buying, when do you require the final payment?

We request that we receive the final balance a few days prior to the moving date. You will receive formal notification of the preferred date in the contract paperwork. In requesting the funds well in advance, we give you time to organise your finances, and in obtaining them in advance we have the money in our client account ready to complete on time and avoid any delays (hard to believe but banks have been known to misplace money). If you think you may have an issue in making the final payment, always let your solicitor know as soon as possible.

Like many modern solicitors, at Fosters Law we accept payment via bankers draft, telegraphic transfer, switch, or credit card.

Q. When my sale goes through, when would I receive my money from you?

When you sell your home, you are entitled to the remaining balance after you have repaid the mortgage loan the lender and covered any Estate Agency and legal costs arising from the sale. Provided the funds are clear, a good solicitor will arrange to forward this amount onto you on the day of completion. If they don't, you need to ask what they are doing with it.

At Fosters Law we can pay your balance by cheque or, like most modern solicitors, we can arrange an electronic transfer of the funds directly into your bank account.

Q. How do I buy a home with my partner?

There are essentially two ways in which you can buy a home with someone else, either as Joint Tenants or as Tenants in Common. Despite the term 'Tenants', this has nothing to do with renting a property; it's all to do with how a joint share in the property is distributed if one of you dies.

Most cohabiting couples who buy together do so as 'joint tenants', meaning that both parties jointly own the whole property, they each have an equal share of it and if one partner dies their share of the property automatically passes to the other joint tenant or tenants. This is known legally as the right of survivorship.

With a joint tenancy, in most cases, even if you or your partner have made a will, irrespective of what the will says, the surviving partner will still receive their share of the property. If neither of you have made a will and one of you dies 'intestate', it means that the property and other assets will be distributed according to the 'law of intestacy' but the surviving partner will still inherit the property.

Alternatively, if you're living together and owning the property as 'tenants in common', you don't necessarily have equal shares; instead each partner has clearly defined shares that are separate from each other. You may think this is appropriate if you have made unequal contributions towards the purchase price and want this to be reflected on the sale of the property, or you simply want to have more control than Joint Tenancy allows. With this, if one of you dies before the other, the share of the person who has died doesn't pass automatically to the other but instead passes according to the wishes of the Will the deceased partner made or the law of intestacy. In any case where joint owners of a property own as tenants in common, it is advisable to have a separate Declaration of Trust drawn up, to reflect either that you each own an equal share in the property, or alternatively, that you own different shares. This is a fairly inexpensive document to prepare, but can save thousands of pounds in legal costs in the event of a future dispute about who owns what.

With either ownership method, each partner has a legal share in the property, and generally, both have rights and obligations in respect of the property. For instance, if one partner moves out and stops contributing to the mortgage, the other will still have to keep up the payments. Equally the failure of one partner to meet credit card payments when registered at the property could affect the other. So beyond the simple structure of the home ownership, there are many other practical issues that need careful consideration and legal guidance. I will cover these in next week's article.

Q. What needs to be considered when buying with a partner?

You have to give credit to anyone for dealing with this rather unromantic but nonetheless important aspect of a developing relationship. Changing social norms and financial causes are increasingly motivating couples to buy their home together before marriage and, while this does have a number of advantages, there are unfortunately certain misconceptions that can allow one or both parties to make ill informed decisions.

Buying a home with your partner is a significant step, both emotionally and financially, and it is important that both parties understand their legal position from the outset; not doing so can cause issues during the relationship and could critically affect their legal and financial circumstances should it come to an end. There are a therefore number of things to consider before you actually go ahead and purchase a property:

  • What proportion of the property each individual owns?
  • What deposit either party will be initially contributing?
  • How the regular mortgage repayment costs are going to be divided?
  • How the upkeep and maintenance costs to the property will be divided?
  • When utilities and mortgage payments are due, how they will be paid and what will happen if one individual is unable to cover their share of the bill?
  • Understand that things change. Unfortunately couples do split up. If so; who stays, who goes? How would the property be divided?

These changes have consequences. By way of example, if the property is in one person's name only, generally in law the non-owner has no right to a share of the property. So it is necessary to think very carefully about how the house is to be bought and paid for in the long term and, in contemplating and addressing the unthinkable, what would happen in the event of a split. Equally, what happens if one person begins to contribute more than other? Consider the options, work out what is fair and how will this be reflected.

The answers to these practical considerations can avoid future complications and stress in the relationship. Be open and honest, and remember that although it is good to talk about these matters, this information needs to be documented in a formal contract, e.g. Declaration of Trust and/or a Cohabitation Agreement. It is also a good idea to make a Will at this time, as this will help you resolve and consider some more of life's delicate questions.

Before finalising matters, it is always advisable for you and your partner to gain independent legal advice from a specialist solicitor.

Q. What additional legal protection is advisable when buying a home jointly?

Unfortunately most people do not consider their individual legal position within a relationship until that relationship breaks down. By then, trying to reach agreement is often clouded by financial and emotional baggage. However by simply analysing, agreeing and documenting your and your partner's main considerations, e.g. assets and finances, much of the stress and cost can be removed from such a scenario.

A Declaration of Trust is a formal document in which you and your partner define your joint ownership of the property. However, a Declaration of Trust is limited to the actual shares each person has in the property at the time of purchase. If you wish to set out the facts and figures in greater detail, you would be advised to prepare a Cohabitation Agreement. The agreement can be defined as the parties wish but considerations might include the following:

  • The percentage shares in the property.
  • Initial deposits paid by either party.
  • Whether it was bought individually before or jointly during your relationship.
  • Ownership of particular possessions, either existing or those acquired while living together.
  • How you will share the cost of the mortgage and bills relating to the property.
  • Options for one of you to buy the other out of the property in the event of a split, how this is agreed and at what price.

Cohabitation agreements allow couples to regulate their relationship at the outset, providing certainty once the decision has been made to live together. Although consideration of such a formal agreement can prove difficult, any such discussions can bring openness and maturity to the relationship.

Although Cohabitation agreements are currently not legally binding, the Courts are increasingly placing weight on the contents and, if information has been shared honestly, there is more chance that they will hold each party to their side of the bargain. Equally, if both parties have received the benefit of independent legal advice, then there should be no question as to undue pressure in entering the agreement.

It is a flexible agreement and the contents can be as simple or as complex as you wish. It can include:

  • Income and expenditure responsibilities,
  • Sensible terms if one owns the home both intend to share,
  • Plans for mortgage payments,
  • Respective shares of the property (i.e. how the proceeds will be split if one partner dies)

Ante-nuptial agreements (commonly known as "Pre-nuptial agreements") is a document in which a couple set out their rights in relation to any property, debts, income and other assets purchased together or acquired individually (e.g., through inheritance), or that they have brought into a relationship. They are now considered by many to be an important part of common sense, personal planning. By highlighting and discussing the base facts in a relationship can provide clarity, thereby avoiding potential thorny issues or disagreements in the future. The contents of a pre-nuptial agreement can vary, but they commonly include provisions for the division of assets if the relationship breaks down at a later date. Pre-nuptial Agreements are not currently legally binding, however the Courts will consider the Agreement along with all the other surrounding circumstances.

Legally, once married all of these assets become "matrimonial assets" and, unless specifically protected, are thrown into a single financial pot. The primary purpose of an Ante-nuptial Agreement will frequently be to limit the potential claims on the wealth of one of the parties to the marriage in the event of future divorce.

Anyone contemplating marriage should consider whether or not they need such an agreement and, as ever, with such significant matters it is always best to obtain specialist legal advice.

Q. If a family member dies and how do we sell the house?

The actual conveyancing procedure is the essentially the same, however before the sale can occur a number crucial procedural matters must be completed. Without going into too much detail about Estate Administration, the process basically involves implementing the deceased person's wishes and the first consideration is engaging a solicitor to ensure that this happens. When there is a Will this will be undertaken in conjunction with the executors, if there isn't then this will be in conjunction with the next of kin.

Usually an executor won't know much about the property itself so the forms that are normally filled out by the seller are usually left blank.

Q. What exactly are disbursements?

The cost of conveyancing can essentially be divided into two parts; the legal fee, which is the actual fee the solicitor charges for doing the work and the disbursements, which are the expenses incurred on your behalf, and are paid to third parties, such as Land Registry fees, Stamp Duty Land Tax if applicable and searches.

There are very clear rules as to what is a legal fee and what is a disbursement, make sure that there are no additional 'legal fees' tucked away in the disbursements. I can only speak for my firm here but we will always provide a clear and transparent quote before you instruct us. This will include a breakdown of all fees, including the standard disbursements for your transaction based on the information we have at the time. By way of example, at Fosters Law our legal conveyancing fees start at £345 for first time buyers and go up from there in clear fixed brackets, any disbursements are then added to the top.

Fees and disbursements will only ever change if something comes to light during the Conveyancing process which was unforeseen at the time the quote was given. A good solicitor will always contact you before incurring additional expenses on your behalf.