The following can only be a brief introduction of the legal subject concerned. Before you take any action which may have legal consequence, you should first seek advice from your own lawyer or make an appointment at any District Office to see a volunteer lawyer of the Free Legal Advice Scheme.




(201) CONVEYANCE OF LAND

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When buying a flat, most people will wish to instruct a solicitor to act on their behalf, though this is not essential.

The conveyance, or purchase, will be in two steps. The first document you will be required to sign is called 'the contract' or 'formal Agreement for Sale and Purchase': the second is called 'the Assignment'. This is the document which will formally give you legal title to the property.

The formal agreement is prepared by the parties' solicitors. It is often proceeded by an informal, temporary agreement called various names (such as provisional agreement, preliminary agreement and memorandum of sale) signed by the vendor and the purchaser and the estate agent who introduced them and who prepared the temporary agreement. The purpose of this temporary agreement is to provide for the main terms agreed between the parties, the payment of an initial deposit and the agent's commission. Unless the temporary agreement is marked 'subject to contract' or with similar words indicating that it is only a conditional agreement, it is binding upon the parties until is replaced by the formal agreement. However, it is quite common for the temporary agreement to contain a clause which permits the purchaser to withdraw but lose the initial deposit and a clause which permits the vendor to withdraw if he pays to the purchaser twice the initial deposit.

The formal contract will contain all the general terms on which the property is being sold such as the price, the number of years unexpired on the lease, description of the property itself and time for completion of the contract. It should specify any rights to be granted to the purchaser such as use of the common parts of the building, and any fixtures and fittings being sold.

If there has been no temporary agreement or no binding temporary agreement, until each party has signed and exchanged identical copies of the formal contract, both the seller and the purchaser can withdraw without any legal liability towards the other party.

Before you commit yourself to exchanging contracts, you should ensure that your solicitor has explained all the obligations, and restrictions contained in the government lease, the deed of mutual covenant and any other document mentioned in the contract, and any liability to contribute towards the building maintenance costs.

Upon exchange of contracts, a deposit, normally 10% of the purchase price, is paid to the seller. The seller retains possession of the property, pays the rates, and receives any income from the property until completion. But responsibility for insurance now rests with the purchaser.

After exchange of contracts, your solicitor will prepare the Assignment and, if you are buying the property with a bank loan, the mortgage deed which will be signed by you. Just before completion, your solicitor will ask you to pay to him the balance of the purchase price plus stamp duty so that he is ready to complete the purchase on the agreed date with the seller's solicitors.

On the agreed date, your solicitor will pay the balance of the purchase price to the seller's solicitor. In return he will be given the title deed to the property, including the Assignment which will also have been signed by the seller. Your solicitor will then arrange for stamp duty to be paid on the Assignment, which will be registered with the mortgage deed at the Land Registry. A nominal registration fee is payable.

After registration, the title deeds will be handed to you for safekeeping, or kept by the Bank as security if you have a loan. From the date of completion, the property becomes yours, and unless you have agreed otherwise (e.g. because the property is tenanted) you are entitled to occupy it immediately.

Date of amendment: 7th May 2002