RE1
Real Estate – Taking Instructions
Outline of a simple transaction
Seller Buyer
EARLY STAGES
Marketing the property
The transaction begins with seller putting property on the market.
- Could engage in an estate agent.
- Must commission an Energy Performance Certificate.
Once a buyer is found, and price agreed, the conveyancing process
begins
- Parties have NOT entered any legally binding relationship with
each other - can walk away at any point until exchange of
contracts.
Energy Performance Certificate Energy Performance Certificate
Must have been commissioned (even if not received) BEFORE the
property can be marketed. Inspect EPC before drafting contract required acknowledgement
- Obligation to use all reasonable efforts to ensure that it is can be inserted into contract for sale
received within 7 days of marketing, if not then a further 21
days.
- Once obtained, estate agent must provide a copy with the sale
particulars and in the advising.
- Responsibility of seller/landlord to ensure that a valid EPC free
of charge is given to buyer/tenant.
Green Deal – Government initiation that enables property
owners/tenants to carry out range of energy efficiency measures
with no upfront cost.
- Seller required to provide prospective buyers with EPC
containing required Green Deal plan information failure
may result in paying compensation
Inspect EPC before drafting contract required acknowledgement
can be inserted into contract for sale
Minimum energy efficiency standard: From April 2018
- Landlords of certain domestic or non-domestic buildings will
not be able to grant new tenancies or renew existing if not at
least EPC rating E.
- A landlord who wishes to rent a sub-standard property will
have to undertake relevant improvements… unless:
obtained an opinion that improvement will have
negative impact on fabric/structure
tenant’s consent has not been forthcoming.
would result in reduction of more than 5% of property
market value
EPC must be available free of charge at earliest opportunity
PRE-CONTRACT STAGE Due diligence most time heavy aspect
Take instructions Take instructions
Obtain proof of the client’s identity due to money laundering Obtain proof of the client’s identity due to money laundering
regulations. regulations.
Indirect instructions (e.g. from an estate agent on behalf of the Indirect instructions (e.g. from an estate agent on behalf of the
client) must be confirmed directly by the client). client) must be confirmed directly by the client).
Prepare pre-contract package Check client’s finances
o The draft contract, showing what land the seller is selling and Check that client is able to proceed with deposit (traditionally
on what terms; ~10%), transaction and associated costs e.g. stamp duty land tax
o Evidence of the seller’s legal title to the property; - Sufficient available cash or satisfactory offer of finance
o Sometimes includes the results of pre-contract searches which
the seller has made e.g. local authority planning permissions
Commission survey
Pre-contract searches and enquiries
1
,RE1
- caveat emptor (let the buyer beware) principle pre-
contract searches necessary.
Investigate title
Buyer’s solicitor check documents that the seller is entitled to sell
what he is purporting to sell.
- queries raised by requisitions.
- Contract usually contains clause excluding buyer from
questioning the seller’s title once contracts for sale have been
entered. Thus, essential to be raised and resolved before.
Approve draft contract
Once satisfied, buyer’s solicitor ready to return the draft contract to
the seller’s solicitor, telling him the buyer has approved the terms.
- Then prepared for signing, with two copies printed off.
EXCHANGE OF CONTRACTS Legally binding stage
Contract comes into existence = buyer receives the copy signed by the seller, and vice versa.
Or telephonic exchange: parties agree over the phone that contract has come into existence at that moment
= now a legally binding relationship
If withdrawing from transaction will incur liability
Normally pays deposit
POST-CONTRACT STAGE i.e. PRE-COMPLETION STAGE
Raise requisitions with the seller
Procedural queries re completion – e.g. who holds key, where
should payments be made.
Prepare transfer deed
- Send transfer deed to seller for approval.
- Draft contract states what parties have agreed to do; transfer
deed carries out what has been agreed and should reflect
terms of contract
- NB: sometimes contract states that seller prepares this with
the draft contract.
- Registered land: standard form of a transfer as prescribed by
Land Registration Rules – if not traditional conveyance.
- Seller MUST SIGN transfer deed
Approve transfer deed
- Then the transfer deed is ‘engrossed’ – copy is then prepared
containing agreed amendments.
- This is the copy that will be signed by the parties.
Perform pre-completion searches
- To check that the info that was checked before exchange
remains valid.
Discharge of mortgage
Often the seller will have a mortgage which must be removed on
completion
Seller’s solicitor must confirm with lender the exact amount
required to discharge mortgage (‘redemption figure’) and make
sure all documents required to complete transaction are available
Final checks
- Make a checklist of what is to happen at completion ensures nothing is overlooked
Make appointment for completion
Prepare for completion
COMPLETION
Common today for clients to “complete through the post” – method of completion agreed at requisitions stage.
On completion day, money is transferred to the seller’s solicitor’s account from the buyer’s solicitors account.
The seller’s solicitor will be notified by bank when received and continues with completion.
Seller’s solicitor will then telephone buyer’s solicitor of safe arrival of funds and completion has taken place.
Clients then informed by telephone – they do not attend.
POST-COMPLETION
2
, RE1
Post-completion matters Post-completion matters
o Send the seller’s lender amount required to pay off mortgage o Pay stamp duty land tax within 14 days of completion.
o Obtain a receipt and send to buyer’s solicitor, who will need o Particulars of the transaction send to HMRC - Certificate then
for Land Registry. issued by them as proof of compliance. Without this, not
o Account to client for the proceeds of sale and, if not already, possible to register
submit bill of costs. o Must apply to Land Registry for title to be registered.
o Provides buyer with Title Information Document confirming
MUST deal with proceeds of sale ASAP/on day of completion ownership
o Solicitor to forward to lender or buyer for safe keeping, or
keep themselves.
Preliminary questions: Other issues on which instructions should be obtained
ISSUE Acting for the seller Acting for the buyer
[Details required about the property usually found on the register or
the title]
Personal details Full names and addresses of sellers/buyers, and home and business telephone numbers of sellers.
Name, address and person to contact at estate agents.
Name and address of the other party’s solicitor.
Property in Full address and description of the property to be sold.
question Whether the property is freehold or leasehold tenure.
Price and financing The price at which the property is agreed to be sold.
Has a preliminary deposit been paid and if so how much?
Customary for a deposit of 10% of the purchase Discuss how the deposit will be funded.
price to be paid by the buyer when the contract
is entered into. If it is contemplated that a lower
deposit will be paid in this case, the seller should
be fully advised of the consequences of this step.
Client must be advised as to the costs of the Buyer have sufficient money to purchase the property and
transaction, and a financial calculation should be pay the related costs of purchase?
How will the
made to ensure that the sale will yield sufficient - e.g. Land Registry fees and stamp duty land tax. Land
transaction be funds to carry out the client’s proposal Registry fees are payable for registering the land or
funded? registering a dealing at Land Registry after completion.
Proceeds to be dealt by solicitor ASAP after
completion Source of the funds?
- If not, client may be entitled to interest from - Where residential property is being purchased with the
solicitor aid of a mortgage, the Lender’s Handbook requires the
sol to ascertain the source of the remainder of the
Money to be sent to client’s bank account, purchase price and advice the lender if it is not being
solicitor needs to know name and address of the provided from the buyer’s own funds.
relevant bank and the client’s account number
Consider money laundering issues here conduct due
diligence
Anticipated Useful to know for each of the party’s timetable, if they have any constraints or deadlines.
completion date
Fixtures and Which fixtures and fittings are to remain in property / which to be removed byseller
fittings Consider whether fittings (e.g. curtains and carpets) which are included in the sale are included in the
purchase price/paid for separately by buyer
Enquiries/Searches Seller will be expected to provide answers to Enquiries should be made as to the situation of the
enquiries raised by the buyer. property, e.g. its proximity to canals, rivers etc which may
indicate the need for special searches to be undertaken.
Where Law Society Conveyancing Protocol is
being used (i.e. residential property), seller Discuss insurance e.g. life assurance and buildings contents
should be asked to complete the Property insurance
Information Form
- seller’s S must obtain client’s answers to the
questions in TA6 (Property Information Form
PIF)
In commercial transactions, the seller will be
required to reply to enquiries raised by the
3
Real Estate – Taking Instructions
Outline of a simple transaction
Seller Buyer
EARLY STAGES
Marketing the property
The transaction begins with seller putting property on the market.
- Could engage in an estate agent.
- Must commission an Energy Performance Certificate.
Once a buyer is found, and price agreed, the conveyancing process
begins
- Parties have NOT entered any legally binding relationship with
each other - can walk away at any point until exchange of
contracts.
Energy Performance Certificate Energy Performance Certificate
Must have been commissioned (even if not received) BEFORE the
property can be marketed. Inspect EPC before drafting contract required acknowledgement
- Obligation to use all reasonable efforts to ensure that it is can be inserted into contract for sale
received within 7 days of marketing, if not then a further 21
days.
- Once obtained, estate agent must provide a copy with the sale
particulars and in the advising.
- Responsibility of seller/landlord to ensure that a valid EPC free
of charge is given to buyer/tenant.
Green Deal – Government initiation that enables property
owners/tenants to carry out range of energy efficiency measures
with no upfront cost.
- Seller required to provide prospective buyers with EPC
containing required Green Deal plan information failure
may result in paying compensation
Inspect EPC before drafting contract required acknowledgement
can be inserted into contract for sale
Minimum energy efficiency standard: From April 2018
- Landlords of certain domestic or non-domestic buildings will
not be able to grant new tenancies or renew existing if not at
least EPC rating E.
- A landlord who wishes to rent a sub-standard property will
have to undertake relevant improvements… unless:
obtained an opinion that improvement will have
negative impact on fabric/structure
tenant’s consent has not been forthcoming.
would result in reduction of more than 5% of property
market value
EPC must be available free of charge at earliest opportunity
PRE-CONTRACT STAGE Due diligence most time heavy aspect
Take instructions Take instructions
Obtain proof of the client’s identity due to money laundering Obtain proof of the client’s identity due to money laundering
regulations. regulations.
Indirect instructions (e.g. from an estate agent on behalf of the Indirect instructions (e.g. from an estate agent on behalf of the
client) must be confirmed directly by the client). client) must be confirmed directly by the client).
Prepare pre-contract package Check client’s finances
o The draft contract, showing what land the seller is selling and Check that client is able to proceed with deposit (traditionally
on what terms; ~10%), transaction and associated costs e.g. stamp duty land tax
o Evidence of the seller’s legal title to the property; - Sufficient available cash or satisfactory offer of finance
o Sometimes includes the results of pre-contract searches which
the seller has made e.g. local authority planning permissions
Commission survey
Pre-contract searches and enquiries
1
,RE1
- caveat emptor (let the buyer beware) principle pre-
contract searches necessary.
Investigate title
Buyer’s solicitor check documents that the seller is entitled to sell
what he is purporting to sell.
- queries raised by requisitions.
- Contract usually contains clause excluding buyer from
questioning the seller’s title once contracts for sale have been
entered. Thus, essential to be raised and resolved before.
Approve draft contract
Once satisfied, buyer’s solicitor ready to return the draft contract to
the seller’s solicitor, telling him the buyer has approved the terms.
- Then prepared for signing, with two copies printed off.
EXCHANGE OF CONTRACTS Legally binding stage
Contract comes into existence = buyer receives the copy signed by the seller, and vice versa.
Or telephonic exchange: parties agree over the phone that contract has come into existence at that moment
= now a legally binding relationship
If withdrawing from transaction will incur liability
Normally pays deposit
POST-CONTRACT STAGE i.e. PRE-COMPLETION STAGE
Raise requisitions with the seller
Procedural queries re completion – e.g. who holds key, where
should payments be made.
Prepare transfer deed
- Send transfer deed to seller for approval.
- Draft contract states what parties have agreed to do; transfer
deed carries out what has been agreed and should reflect
terms of contract
- NB: sometimes contract states that seller prepares this with
the draft contract.
- Registered land: standard form of a transfer as prescribed by
Land Registration Rules – if not traditional conveyance.
- Seller MUST SIGN transfer deed
Approve transfer deed
- Then the transfer deed is ‘engrossed’ – copy is then prepared
containing agreed amendments.
- This is the copy that will be signed by the parties.
Perform pre-completion searches
- To check that the info that was checked before exchange
remains valid.
Discharge of mortgage
Often the seller will have a mortgage which must be removed on
completion
Seller’s solicitor must confirm with lender the exact amount
required to discharge mortgage (‘redemption figure’) and make
sure all documents required to complete transaction are available
Final checks
- Make a checklist of what is to happen at completion ensures nothing is overlooked
Make appointment for completion
Prepare for completion
COMPLETION
Common today for clients to “complete through the post” – method of completion agreed at requisitions stage.
On completion day, money is transferred to the seller’s solicitor’s account from the buyer’s solicitors account.
The seller’s solicitor will be notified by bank when received and continues with completion.
Seller’s solicitor will then telephone buyer’s solicitor of safe arrival of funds and completion has taken place.
Clients then informed by telephone – they do not attend.
POST-COMPLETION
2
, RE1
Post-completion matters Post-completion matters
o Send the seller’s lender amount required to pay off mortgage o Pay stamp duty land tax within 14 days of completion.
o Obtain a receipt and send to buyer’s solicitor, who will need o Particulars of the transaction send to HMRC - Certificate then
for Land Registry. issued by them as proof of compliance. Without this, not
o Account to client for the proceeds of sale and, if not already, possible to register
submit bill of costs. o Must apply to Land Registry for title to be registered.
o Provides buyer with Title Information Document confirming
MUST deal with proceeds of sale ASAP/on day of completion ownership
o Solicitor to forward to lender or buyer for safe keeping, or
keep themselves.
Preliminary questions: Other issues on which instructions should be obtained
ISSUE Acting for the seller Acting for the buyer
[Details required about the property usually found on the register or
the title]
Personal details Full names and addresses of sellers/buyers, and home and business telephone numbers of sellers.
Name, address and person to contact at estate agents.
Name and address of the other party’s solicitor.
Property in Full address and description of the property to be sold.
question Whether the property is freehold or leasehold tenure.
Price and financing The price at which the property is agreed to be sold.
Has a preliminary deposit been paid and if so how much?
Customary for a deposit of 10% of the purchase Discuss how the deposit will be funded.
price to be paid by the buyer when the contract
is entered into. If it is contemplated that a lower
deposit will be paid in this case, the seller should
be fully advised of the consequences of this step.
Client must be advised as to the costs of the Buyer have sufficient money to purchase the property and
transaction, and a financial calculation should be pay the related costs of purchase?
How will the
made to ensure that the sale will yield sufficient - e.g. Land Registry fees and stamp duty land tax. Land
transaction be funds to carry out the client’s proposal Registry fees are payable for registering the land or
funded? registering a dealing at Land Registry after completion.
Proceeds to be dealt by solicitor ASAP after
completion Source of the funds?
- If not, client may be entitled to interest from - Where residential property is being purchased with the
solicitor aid of a mortgage, the Lender’s Handbook requires the
sol to ascertain the source of the remainder of the
Money to be sent to client’s bank account, purchase price and advice the lender if it is not being
solicitor needs to know name and address of the provided from the buyer’s own funds.
relevant bank and the client’s account number
Consider money laundering issues here conduct due
diligence
Anticipated Useful to know for each of the party’s timetable, if they have any constraints or deadlines.
completion date
Fixtures and Which fixtures and fittings are to remain in property / which to be removed byseller
fittings Consider whether fittings (e.g. curtains and carpets) which are included in the sale are included in the
purchase price/paid for separately by buyer
Enquiries/Searches Seller will be expected to provide answers to Enquiries should be made as to the situation of the
enquiries raised by the buyer. property, e.g. its proximity to canals, rivers etc which may
indicate the need for special searches to be undertaken.
Where Law Society Conveyancing Protocol is
being used (i.e. residential property), seller Discuss insurance e.g. life assurance and buildings contents
should be asked to complete the Property insurance
Information Form
- seller’s S must obtain client’s answers to the
questions in TA6 (Property Information Form
PIF)
In commercial transactions, the seller will be
required to reply to enquiries raised by the
3
