Conveyancing is the term for all the legal and administrative procedures involved in buying and selling property.
Their objective is to safeguard your legal interests and interests or your mortgage lender. The lawyer will ensure all parties are appropriately dealt with and that the property is purchased without any previous charge or liability with a potential to reduce the value.
The process of events your solicitor will go through will be similar to this.
1. Receiving / negotiating the draft contract.
Check the contract prepared by the vendors solicitors and amend any clauses which may be detrimental to your interests.
2. Send a local search to the council.
Check that there are no plans to build a road through the property, planning on any land nearby etc.
3. Send preliminary enquiries to the vendor's solicitor.
Example questions might be 'disputes over fences', 'is the property on mains drainage'. Most of the questions are standard and just sent over in a standard form.
4. Check the mortgage offer.
Make sure that you can comply with all its conditions.
5. Signing of contract.
Once your solicitor is happy with your contract you will be asked to sign it. You will also need to give you solicitor the deposit (usually 10% of purchase price)
6. Exchange contracts.
Once happy with the contract, and results from searches, mortgage offer/conditions and other funding is in place they will exchange contracts. Once this is done the contract of sale is binding. Withdrawing now will forfeit your deposit.
7. Check Mortgage arrangements.
Inform the mortgage lender of the completion date and ask them to ensure the necessary funds are available on this date. They will also ask you to sign the mortgage deed and transfer document.
8. Final documents and searches.
Final mortgage deed, all outstanding payments received, 2 final searches. Check vendor is not bankrupt and there are no undisclosed mortgages or other charges on the property.
Register your title with the Land Registry, details of your mortgage and other charges will be included.
11 .Charge Certificate
Once your title is registered the Land Registry, they will send a Charge Certificate to your Solicitor, who in turn will forward this onto your mortgage lender. If no mortgage was involved then Land Registry will send a Land Certificate to your Solicitor, which shows you have outright ownership of the property. Most people entrust this very important document to the bank for safe keeping.
Choosing the correct Solicitor
There are plenty of options. You may decide to go to your nearest solicitor in the area, or follow a recommendation of an online conveyancer . Some offer certain deals for example 'no move - no fee', and as you would expect with most services, you pay to get several quotes, remembering that the cheapest isn't always the best option.
There are a couple of dangers you need to guard against, when selecting your solicitor.
1. A solicitor who is slow and inefficient: this may cause your property purchase to take unnecessary extra weeks, or in a worse case scenario you might even lose the property altogether.
2. An inexperienced or overworked solicitor: this could be a potential disaster. If they don't check all the documentation carefully or carry out all the relevant searches, it could leave you with an un-saleable property.
You should always go to a specialist! Make sure that they specialise in residential conveyancing .
Cost
As a rough guide line in England expect to pay around £350 for a £100,000 property and up to £750 for a £300,000 property.
Foreign Conveyancing
Conveyancing services no matter which country you are purchasing a property includes all very similar aspects. Compare here typical services by a Spanish Solicitor.
Complete all necessary searches on the legal status of the property and the developer/vendor, informing the buyer/s of any issue which is relevant for deciding on the particular purchase.
Liaise and agree with vendor/s and/or lawyers in respect of terms and conditions of the purchase, ensuring compliance with laws. Where the vendors are non-resident parties, ensure that any amount paid prior to completion is lodged safely with a resident party, preferably the vendor lawyer´s account.
Make preparations at the Notary Public for completion or in respect of any other matter regarding the purchase, including preparation of powers of attorney abroad, duly legalised and translated, giving authority to a physical person/s to act on behalf of the buyers.
Assist in the completion process and ensure deeds are properly registered in the appropriate local Land Registry free from all charges and encumbrances, free from occupants and tenants, as well as paying the relevant taxes associated with the purchase.
Obtain, negotiate and assist in the obtaining of a mortgage loan to finance the purchase of the property. The obtaining of the mortgage loan may be in the form of an approval in principle prior to the signing of the private purchase contract and is understood without prejudice to any other mortgage facility provided by the developer or the vendor.
Obtain the NIE (Número de Identificación de Extranjeros), or foreigners tax identification number.
The Law Society of England and Wales operate a searchable database of Solicitors operating in the UK. It also includes EU registered lawyers working in this country and registered foreign lawyers who are qualified to go into partnership with English/Welsh or EU lawyers.
The lawyer should be specialized in the country's law and be fluent in both English and the local language.
Finally it is recommended to have all documents translated into English by a company certified to translate legal documents.
The foreign office keeps a list of English speaking Lawyers, translators and doctors where the UK has diplomatic representation.
Other benefits to using a lawyer
Get an Independent and Impartial Service
Not only is the lawyer obliged to observe strict professional standards, but he will get paid regardless of where and from whom the buyer buys. Conversely, the seller of the property will only receive his money if the buyer purchases his property and will therefore be unconcerned about what happens next. An almost identical situation happens with many real estate agents; they don't get paid unless a given property is sold and are therefore bound to let their impartiality slip to get a given property sold.
Get Protected with the Lawyer's Legal Insurance
Registered lawyers are covered against negligence by professional indemnity insurance, which means that if something goes wrong during the transaction and as a consequence your interests are damaged, the professional indemnity insurance must cover any liability arising from this negligence.
Avoid the Language Barrier
As most conveyancing lawyers are fluent in English, the chances of confusions and misunderstandings when attempting to understand or translate the promises of a vendor are reduced, and with it, the transaction increases in safety. A lawyer will also provide you, unknowingly, a free translation service when dealing with the Notary Public, banks and many more instances.
Get Better Conditions in your Mortgage
Even where the buyer finds a suitable mortgage loan to finance the purchase of a property, the lawyer will be able to give a second opinion. Non-resident applicants are typically burdened with the highest rates as they are perceived to be awkward clients. The reason for this is that paying for a holiday home abroad comes as a 'secondary' priority when the owner is faced with financial difficulties and the likelihood of defaulting payment of the loan is higher. Lending entities are naturally conservative and in order to mitigate this risk they increase interest rates, increase arrangement fees, reduce loan periods and lend less on the loan to value ratio. A loan for a non-resident borrower is as a consequence more expensive, where these are given, as many lending entities do not even contemplate these applicants.
Avoid Bank Charges
All conveyancing lawyers hold a clients' account with a local bank with preferential conditions. When transferring monies from abroad you can bypass the extortionate conditions imposed on non-resident accounts (anything up to 0.5% of the sum transferred) and bank accounts and save good money. If you transfer 100,000 Euros to Spain , you can save 500 Euros by using your lawyer's client account.
Get a Free Escrow Service
In some countries, certain professionals and companies provide an escrow service for a fee. (http://www.escrow.com in the UK ) Most, if not all Spanish lawyers consider this as part of the conveyancing service and do not charge separately for it. An escrow account allows parties to make a transaction to deposit funds in an impartial party held account. By using your lawyers free escrow service, you can save 800 Euros when depositing an amount of 100,000 € into an escrow, which is what escrow.com charges for that amount (0.8% of the amount).
Get More Advice and Services
Lawyers will not only provide you with advice on the transaction itself but will assist you in the processing of NIE numbers, opening bank accounts, changing utility contracts and arranging payment of standing orders, setting up companies, drawing up wills, rental options, etc.
You do Not Need to be Present
All the above can be done by the appointed lawyer, in your absence. All that will be required is a visit to the Notary Public in Spain or even in your home country to sign power of attorney (in which case it will be posted) and follow instructions from the lawyer.
Get a Valuable Post Sale Service
The lawyer will look after the filing of tax forms, collection and registration of the deeds, but also will assist you when dealing with after-sales situations which require a lawyers letter or phone call, such as arranging the "snagging", talking to the Community of Owners Association, developers/vendors, banks etc.
Here are 10 real case scenarios that could happen if you don't hire a lawyer.
Buyer buys property with charges, encumbrances and other debts.
Buyer buys a property that has never been registered
Buyer buys a property with perfect clean title, registered, taxes paid up to date. The property is however not the one that has been seen. They had relied on a description and some land registry details which simply corresponded to another property. They have no right of recourse.
Buyer hands over a deposit to someone purporting to be owner who subsequently disappears.
Buyer buys a property with tenants living legally, but unbeknown to him, there are legal tenants occupying the property. The latter either decide to stay until expiration of the term of the contract, exercise their priority purchasing rights or even demand a sum of money as compensation.
A buyer who had paid a sum of the money towards a new property is unable to complete because the developer has run out of money and declares bankruptcy.
