. . . The Legal Process Continued

A separate contract and price is then concluded for these excluded items, additional to the purchase price of the property. Please be certain, at the very beginning, as to what is, and what is not, included. Incidentally, the structure and collection of Stamp Duty (now called Stamp Duty Land tax) has recently been tightened up. The Inland Revenue has set up a team of investigators to look into the true value of ‘extras’. They can inspect property and there are now heavy fines for cases of tax evasion.

When all is agreed in principle, the seller‘s solicitor prepares a draft contract to send to the buyer’s solicitor for approval or suggested amendment. This is because only the seller knows what title he can give; whether freehold or leasehold and including any documents to any critical aspects, such as the death of the original owner and Probate of the Will vesting ownership in the seller plus any encumbrances (easements) against the title, such as rights of way.

Sales used to involve the physical transfer of the title deeds or lease which were handed over to your conveyancer or, if the property is mortgaged, obtained from the lending source. The last statement from your mortgage provider will be a great help. These days virtually all titles are registered, so all a conveyancer needs to know is the title number so they can obtain all the necessary information from the Land Registry. These will come electronically although they are still called ‘Office Entries’.

Incidentally the whole operation of HM Land Registry is changing following the Land Registration Act 2002 which, in effect, rewrote all the procedures for the age of electronic communication.

You may have heard talk of seller’s having to prepare ‘Home Information Packs’ (HIPs) before property goes on sale. This is still a little while away but the Government is keen to press ahead with this approach which is as much involved with electronic conveyancing as reforming estate agency practice – the intention throughout is greater disclosure and transparency to help make everything quicker and more efficient. If you have any particular queries on these future developments please let us know.

But that is for the future, presently, while the sale or purchase is going through the initial preparatory procedure, either side may withdraw without any liability and can do so until contracts are exchanged. When the market is extremely buoyant with prices rising, the inherent delays built into the system, may allow ‘gazumping’‘ to occur.

This term means the seller accepting a higher offer than the one already agreed with the first buyer. The seller may have previously agreed a sale verbally but then reneges on that agreement attracted by the higher amount – or perhaps a promise by the new buyer to move more quickly which may be more understandable. Incidentally, the word ‘gazump’ derives from an old Yiddish word ‘to cheat’.

When several people are interested in the same property various bids may be made as the seller is casting around for the best bid. That is the market operating to achieve a fair price: it is not gazumping which only occurs when he has already agreed to sell at a definite price and legal work is under way, but it is still, technically, ‘subject to contract’. There is little that can be effectively done to stop the practice, as the seller is legally entitled to proceed with the best offer but this is one factor behind the Government’s enthusiasm for HIPs.

Of course a buyer could, when the offer is accepted, ask the seller to agree, in writing, to treat with him alone for a specific period, to allow him to conclude his enquiries and exchange contracts within that time-scale. There are ways of avoiding much of the risk which we can suggest to you.

If an offer has been formally accepted and the owner wishes to keep it on the market hoping to attract a higher offer, the buyer should be told that this is happening as it is an obligation in the Estate Agency Code of Practice to which most estate agents subscribe.