Last week's column looked at some of the issues related to the housebuying process, including the role of the estate agent, the proposed new Home Information Packs and investigation of title. This week's column continues to look at the process and, in particular, some aspects of the role of the conveyancer.
As part of the investigation of title, a conveyancer will need to carry out various searches, including the Charges Register (if the property is registered), the Land Charges Register (if the property is unregistered) and the Local Land Charges Register. The latter, which must be searched regardless of whether the property is registered or unregistered, will identify details of town planning schemes and so on.
If the property is unregistered, a search also must be made of the title deeds. If the property is registered, then a search of the property and proprietorship registers must be undertaken.
Other searches that must be carried out include a bankruptcy search to ensure the applicant is not a bankrupt, and a commons registration search to check that the land being sold is not common land. The Institute of Financial Services' CeMAP study manual covers these and other registers and CeMAP students must ensure they are clear about what each register contains and which registers apply to registered property and which to unregistered property. Questions on these topics could come up in both the CeMAP paper two and paper three exams. It should be noted that land registration is now compulsory for all transfers of land. Consequently, when property that is unregistered is transferred, details of the property must be registered at the Land Registry.
After exchange of contracts, neither the vendor nor the purchaser can withdraw from the transaction without risking a substantial financial penalty. It is at this point that the purchaser should effect insurance on the property. The conveyancer will carry out the work necessary on behalf of a lender to ensure that the mortgage deed is ready for signing on or before the completion date. The conveyancer will also liaise with the lender to ensure that the advance cheque can be drawn down in time. In addition to the mortgage itself, the conveyancer may also have to deal with deeds of assignment of life assurance policies and other matters.
The conveyancer will also deal with the administration of Stamp Duty. Students should memorise the rates and bands to which Stamp Duty on the purchase of a property applies. These are:
|Purchase price||Rate of Stamp Duty|
Remember that it is the purchaser who is liable to pay Stamp Duty. If an exam question asks how much Stamp Duty a person who is selling a property for £200,000, is liable to pay, the answer is nothing and not £2,000.
An important role for a conveyancer is providing advice throughout the property purchase and mortgage process. Advice can relate to a range of matters including the mortgage itself, other financial issues and having the property put on cover for buildings and contents insurance.
If a conveyancer is negligent in his duties, the consequences can be profound. Licensed conveyancers and solicitors can be sued for negligence in the civil courts by those to whom they owe a duty of care. To establish a case, a plaintiff must prove that a duty of care was both owed and breached and that some loss, damage or inconvenience was caused. In addition to legal redress, solicitors are bound by strict standards laid down by their professional body, the Law Society, which can take disciplinary action against members who fail to observe these standards.
Solicitors and licensed conveyancers should carry professional indemnity insurance cover against claims for negligence. This does not get them of the hook because if found guilty, their reputation, finances and future business prospects could be affected. Professional indemnity does, however, ensure a client will be recompensed in full if damages are awarded.