When you’re buying or selling a property, you’ll probably hear lots of myths, legends and things that “happened when I bought a property” from your relatives.
In fact, there are so many stories going around that it’s not surprising that many of our clients are thoroughly confused when they first come to us. So, we have pooled together some of the most common myths and questions we hear from clients to help clear things up!
- “Signing my contract with my e-signature or scanning a copy of my contract is the same as a hard copy signature.”
Actually, the solicitor dealing with your transaction will require a “wet signature” on the contract (i.e. you must provide an original signed copy). In order to exchange contracts, your solicitor must have your original signature.
In some circumstances, a solicitor can sign on their client’s behalf, but only with their permission.
- “I have signed the contract – that means I have bought the property.”
Your contract will only become legally binding once exchange of contracts has taken place. This is a discussion that the solicitors on both sides of the transaction will have over the phone, each referring to their client’s signed contract, to confirm the details and agree the date for completion. The solicitor will usually ask their client to sign the contract ahead of this discussion, and it will then be put on file so that it is ready to go once all the questions have been ironed out.
- “The seller said that we have to exchange contracts today – so I am booking my removal service.”
Your contract won’t become legally binding (the point of no return!) until your solicitor has confirmed that contracts have exchanged. They will either call you or email you to let you know this has been done. You should only book your removal service once you are certain the transaction is binding.
- “I am putting down a 25% deposit, so why do I only need to send you 10%?”
For the exchange to happen, your solicitor will ask for 10% of the purchase price. This is the deposit required under the terms of the contract as security for your purchase. If you are getting a mortgage, your lender will calculate the difference between what you have saved and the purchase price to work out what you need to borrow. The mortgage company will also call the money you have saved a deposit (which may well be more than 10%). Your solicitor will ask for the remaining balance of your savings after exchange of contracts has taken place.
- “You spoke to me yesterday to get my permission to exchange – I haven’t changed my mind!”
Your solicitor is obliged to speak to you on the day of exchange to get your permission to go ahead. A lot can happen between the end of one day and the start of another, so we have to make sure that you are alive and kicking before we bind you into buying a house!
- “I don’t own the property until I complete, so I will insure my property from then.”
Buildings insurance should be put in place from exchange of contracts. If the property were to fall down between exchange and completion, you would still be bound to buy it whether it is still standing or not! The exception to this would be if you were buying a property off plan, where the developer would take care of insuring the property until the build was completed.
- “My partner can sign everything on my behalf, they do everything for me.”
If you own a property with another person, then all legal owners must sign the paperwork.
- “You want how many forms of ID? Do you require my inside leg measurements too?”
Solicitors have to run a lot of checks to make sure the funds are coming from a legitimate source and that there is no money laundering involved in the transaction. This means that you and anyone else providing money towards the purchase (i.e. people who are gifting you money) will have to identify themselves and provide evidence of the source of funds. We know it can sometimes be annoying, but it’s unfortunately what we have to do!
- “The time between exchange and completion has to be four weeks.”
There is no set time period that must elapse between exchange and completion. You can even exchange and complete on the same day if everyone agrees and if everything has been done in advance of completion (for example, requesting monies from the mortgage lender). Usually, there is a period of one or two weeks between exchange and completion to give the buyer enough time to finalise their packing and so that we can arrange for the monies to be in place in plenty of time.
- “My mortgage lender is doing a valuation so I won’t need a survey, will I?”
A valuation report is not the same as a survey. The mortgage lender will do a valuation, which involves someone visiting the property and quickly looking at it to make sure it exists. We would always advise you to instruct a separate surveyor to do an in-depth report of the property. There are two main types of survey: a Homebuyers Report, which uses a traffic light system to outline the condition of the property, and a Full Structural Survey, which goes into more detail.
- “Can I have my deeds?”
For the majority of properties, the “deeds” to your property as understood in the traditional sense will be a PDF stored on the Land Registry Website. Registration of property became compulsory in the 1990s, but there are some properties that are still unregistered. It is in cases such as these that you will then require your paper deeds to sell, transfer or remortgage your property. If you know that your property isn’t registered, we would then advise you to ask one our solicitors to carry out a First Registration. This will ensure that the Land Registry have a copy of all the deeds to your property, so that your interests are protected if they go missing.