Proposed improvements in residential conveyancing NI to make buying and selling your house faster and more transparent, by reducing administrative inefficiencies and unnecessary delays. A Joint Memorandum between Estate Agents and Property Solicitors will bring a better understanding of who does what and when give more clarity to the respective roles and responsibility of estate agents and property solicitors.
It is now a common occurrence when acting in the sale or purchase of a residential property in Northern Ireland that the contract is not signed by the purchaser until about a week before the proposed completion date. This situation has been ongoing for at least ten years and unfortunately has become the norm. This puts a great deal of pressure on all the parties involved in the process, the poor vendor who has to wait on average six to eight weeks for a contract to be signed by the purchaser; the purchaser who only has a week to prepare for a proposed completion date; the estate agent, who such a long time ago, agreed the property for sale; the vendor’s solicitor who has had to deal with various enquiries and requisitions; and the purchaser’s solicitor, who is scrambling to get all the funds in place, prior to completion and also prior to possibly receiving an accepted contract. The reason for this situation is that purchaser solicitors now wait for everything to be in place before the contract is signed and released by the purchaser. This is commendable to some extent and it means that quite often when contracts are signed by purchasers there are no special conditions. All the property certificates, searches, replies to pre-contract enquiries, fixtures and fittings list, energy performance certificates, gas safety certificate, Land Registry mapping search, mortgage instruction and survey have all been obtained. However it is not an ideal system and if the vendor’s solicitor is instructed upon the premises being put on the market and is pro-active in obtaining much of the said documentation then contracts could be signed earlier in a transaction. This would give everybody sufficient time to prepare for the completion.
Recently, meetings have taken place between the Law Society of Northern Ireland Conveyancing and Property Committee members, the Royal Institute of Chartered Surveyors NI and the National Association of Estate Agents NI. The purpose of the meetings was to agree a Joint Memorandum on improving communications between the professions. It has been felt for some time that residential conveyancing in Northern Ireland could be improved radically if all the main stakeholders in the system are working together in the process of completing a purchase or a sale. If the agent, the solicitor, the surveyor or the lender is not carrying out the tasks that they need to do then the whole transaction will be delayed and can abort which is in no one’s best interest.
It was also felt that it may be helpful if each of the professions involved in residential conveyancing could meet and agree what each individual profession should be doing in relation to the process, this would improve the system and would clarify to each profession what the other profession is supposed to be doing. It was felt that there was a considerable lack of understanding between the professions as to what each profession was supposed to do and was actually doing.
As a result of the recent meetings, the Law Society, the Royal Institute of Chartered Surveyors and the National Association of Estate Agents have announced and issued a Joint Memorandum on improving communications between the professions. What has been extremely satisfying is that there has been great willingness to engage in this process from all participants and there has been surprisingly little negativity to date in relation to the project.
The Joint Memorandum is a relatively straightforward document which is split into four parts detailing what the seller’s agent, the purchaser’s surveyor, vendor and purchaser’s solicitor should be doing in a normal residential transaction.
As regards the selling agent, it was felt that a lot of delay and difficulties could be avoided at an early stage in a sale, if the vendor actually instructed their solicitor at the time the property was put on the market. Vendors’ solicitors often discover when they take initial instructions from the vendor and re-examine the vendor’s title that problems can be dealt with at the outset of the process, even prior to the property being agreed for sale. This can obviously avoid delay later in the transaction.
Also, there has been, possibly as a result of staff cutbacks in banks and building societies, an increased delay in vendors’ solicitors obtaining documents of title from lenders. Sometimes these delays can be considerable and can even jeopardise a transaction. This delay can easily be avoided if the vendor’s solicitor writes for the title deeds once the property goes on the market.
The other advantage of the vendor’s solicitor being instructed early is to enable the vendor to provide their solicitor with replies to the pre-contract enquiries. The pre-contract enquiries can often raise issues that may need to be resolved. By obtaining the title deeds and then applying for property certificates and searches and completing the replies to pre-contract enquiries, the vendor’s solicitor is front-loading the process. The accumulation of these initial actions could mean that completion dates take place earlier than they do currently. The main goal though would be for contracts to be signed earlier in the process than they currently are.
There is more emphasis also being put on the selling agent to assist the vendor’s solicitor in notifying the vendor to obtain details about their ground rent, service charge, advising them to obtain gas safety certificates and energy performance certificates. These are matters that should be dealt with quickly at the start of any transaction and should not be delaying the process.
Also, the selling agent is being advised to investigate that the purchaser has the finances to complete the transaction and if the purchaser is to carry out a survey they should obtain the same quickly.
The selling agent can also assist the process in more complicated matters. If the selling agent discovers, upon initial inspection, that there have been alterations or extensions, etc to the property they can prompt the vendor to obtain, at an early stage, the appropriate building control approvals, completion certificates, regularisation certificates and also any planning permission documentation. Another recent delay in the selling process is the obtaining of statutory consents to discharge when the property is served by a septic tank and soakaway. Again, an agent can prompt the vendor on initial instructions to check with their solicitor that there is the appropriate documentation available and, if not, to request same from the appropriate authority.
The Joint Memorandum suggests that the vendor’s solicitor should upon receipt of instructions obtain the title documents and inspect same. There should be no delay by the vendor’s solicitors in forwarding the contract and title deeds once the sale has been agreed to the purchaser’s solicitor. The vendor’s solicitor should at that stage forward the fixtures and fittings list to the vendor for completion and also complete the replies to pre-contract enquiries.
The Joint Memorandum also suggests that the property certificates and searches should be applied for once the property is agreed for sale as most transactions do proceed to complete rather than abort during the transaction.
Matters that arise from the vendor’s solicitor checking the title or completing the replies to pre-contract enquiries, or obtaining the property certificates and searches should be dealt with quickly by the vendor’s solicitor. The solicitor should also keep the selling agent reasonably advised as to the progress in relation to the sale.
If the process is front-loaded as advised and the vendor’s solicitor is much more proactive from the property going on the market, then there is every chance that on a standard residential transaction it should complete within six to eight weeks of the property being agreed for sale.
This period of time is deemed in the Joint Memorandum to be a reasonable target completion date, unless the vendor and purchaser agree otherwise. It is hoped by these changes in the process that contracts would be able to be signed earlier which would then allow both the vendor and the purchaser more time to arrange and deal with the practicalities involved in the moving out and in to the new house.
There is an emphasis in the Joint Memorandum that the purchaser’s solicitor is to examine the documents of title and raise enquiries and requisitions as soon as possible, so these can be dealt with in good time. The purchaser’s solicitor should also encourage the purchaser to obtain a home buyer’s report in preference to a mortgage valuation as the former is of more value to the purchaser and their solicitor and the latter is really only of benefit to the lender, as it contains very little information. On obtaining the report the purchaser should request if there have been prior alterations carried out to the property by the vendor or prior owners, any outstanding statutory approvals, planning permissions, building control approvals and completion certificates from the vendor’s solicitor. The contents of the Joint Memorandum seem in summary to be good common sense suggestions but unfortunately much of what is contained in the Joint Memorandum is not being carried out at present. If the various professions embrace the recommendations then there is a good chance that our system will improve for the benefit of all.
In tandem with the Joint Memorandum, the Conveyancing & Property Committee of the Law Society is currently involved in the redrafting of the General Conditions of Sale and the revision of the Home Charter Scheme. There is a new emphasis contained in the proposed amendments to General Conditions of Sale that the vendor’s solicitor is to carry out and obtain the required documentation as early as possible in the transaction. Again this front-loading of the system is felt to be beneficial to all and to hopefully eradicate the need for special conditions to be put into the contract as all the documentation should be available prior to the parties entering into the contract. I don’t ever foresee a time even with enormous advancements in IT systems and practices and procedures that a residential conveyance will be instantaneous, on the property being agreed for sale. This certainly would not be in the best interests of a vendor or purchaser as parties need to have an adequate ‘cooling off’ and, as newly described by the lenders, ‘reflection’ period. However, I do envisage if recommendations contained in the Joint Memorandum and amendments of the General Conditions of Sale and Home Charter Scheme are widely accepted and implemented that the time it takes to purchase a house will be much shorter than it currently is. More importantly contracts will be entered into hopefully within a three to five week period from agreement. This will provide everyone with comfort and would also make it more unlikely for the vendor to be gazumped or the purchaser to gazander. Both of which are unsavoury aspects of the residential property market, when it is either overheating or there is a price freefall.
There is another encouraging benefit to the Joint Memorandum. It helps cement the relationship between the three different professions. These parties should remain independent and carry out their respective duties. All purchasers should be free from any undue influence and should receive independent advice during the process of purchasing a property. The benefit of this is to protect the legitimacy of the property market and to make property fraud much more difficult.