Moving Home 2008


Home Information Packs

Mike Dibben, partner at Brethertons, answers some frequently asked questions

1.  What is a Home Information Pack?

A Home Information Pack (HIP) is a pack of legal searches and other information about your house or flat that is made available to potential buyers.  The idea is that buyers have the opportunity to view, and get legal advice on, essential documents relating to the property before they make their offer.  In theory that should mean there is less chance of a sale falling through later on.  It also provides an energy efficiency rating for the property.

2.  Why do I need a HIP?

It is now illegal to market any residential property for sale without first ordering a HIP.  For the time being, it will not be a requirement to actually have a HIP in place before the property is marketed.  As long as you have applied for one, you can start marketing straight away.  This concession is expected to be dropped from 1 January 2009.  Anyone who is thinking of selling their home in the near future should order their HIP as early as possible to avoid possible delays in marketing later, when potential sales could be lost.

3.  What is in a HIP?

The compulsory elements of the HIP are:

  • An index
  • An energy efficiency certificate prepared by a qualified specialist inspector
  • Local Authority and Drainage Company searches
  • A copy of the title
  • (for properties less than 10 years old) unexpired new homes warranty
  • (for leasehold properties) a copy of the lease

Other documents that can be added optionally include the additional searches relevant to the property, all documents referred to in the title containing provisions affecting it, a standard-form type of survey called a Home Condition Report (HCR), and leasehold management information such as service charge accounts, block buildings insurance details and management company constitution.

Further regulations may be made over time, for instance to make HCRs compulsory rather than optional.  It is also expected that from 1 January 2009, HIPs will have to include a standard property information questionnaire which the seller fills in, providing some information that the seller should normally know about the property.

4.  How do I get a HIP?

At Brethertons LLP we can order a HIP for you.  Please speak to any of our Conveyancing Team.  We recommend that you order your HIP some weeks before you intend to ask the estate agent to put the house on the market.  This will avoid any delay in marketing the property.

5.  What does it cost?

Prices start at £299 plus VAT, depending on the type and size of the property.  Our conveyancers can advise you on the cost of a pack for your property.

6.  Why use Brethertons to order my HIP?

The HIP is a legal pack.  It contains legal documents, many of which are very technical.  At Brethertons LLP we have teams of solicitors with the expertise to advise on the implications of the documents for you as seller and any additional documents that could sensibly be added to the HIP.  As an additional option, we can also study the contents of the legal documents and advise you on any missing documents or other potential legal obstacles that could affect a sale and how to overcome them.  By anticipating legal issues that a buyer’s solicitor may raise later you can reduce the risk of the transaction being delayed or falling through later in the process.

The pack we obtain for you is your HIP – we can deliver it to whoever you want to market the house.  If you subsequently change your estate agent, we simply deliver it to the new agent.  (If you were to ask an estate agent to order a HIP for you, they would probably insist that it is their HIP, so if you later change agent you have to pay for a new HIP.)

HIPs contain many of the legal documents required in the conveyancing process.  By ordering your pack through your solicitor you get all the legal work done by one solicitor – your solicitor.

Our HIPs are ordered and supplied electronically, which cuts out delays and keeps the cost to a minimum.

Brethertons Announce Record Number of New Recruits

As part of it’s planned expansion, Brethertons has announced the appointment of 7 new dedicated professionals who have joined the Property Management, Marketing and IT Departments.

Debbie White, Nikki Beckinsale, Lyndsay Peters, Joanne Lawson and Edward Carlton all join as Property Managament Assistants.  Claire Thompson joins as Senior Marketing Executive and Shahed Miah joins as IT Assistant.

Whilst many businesses are looking to cut costs and reduce expenditure, Brethertons recognise that getting through economic downturns includes investing in people and business where appropriate.


Deal or No Deal?

The key event in the legal process in buying or selling a house is Exchange of Contracts.  But in many cases exchange of contracts is delayed, causing distress and inconvenience.  Mike Dibben of Brethertons LLP explains the significance of exchanging contracts.

In England and Wales the legal system for conveyancing is very different from that in other countries.  As the law stands a seller does not currently have to provide any survey or warranty as to the condition of their property, and a Home Information Pack – if required at all – is unlikely to contain full details of legal rights and covenants affecting it.  Buyers will typically make their offer for the property ‘subject to contract and survey’ based on one quick look round the house.

Once the offer is accepted the buyer and their solicitor embark on various investigations.  The buyer will probably want some form of survey done on the house.  The solicitor will check the legal title and make searches and raise queries about covenants, legal rights, planning conditions and other legal issues that could affect the property.  Sometimes the investigations can lead to a major deal-breaker causing disappointment to buyer and seller.  If there is a chain of transactions, a problem with one purchase will frustrate the whole chain.

When everyone in the chain is satisfied with their investigations, a completion date can be agreed and the solicitors can exchange contracts.  Normally exchange takes place over the telephone.  The buyer’s solicitor and the seller’s solicitor confirm they have identical contract documents signed by their respective clients, which they each agree to send to the other.  This telephone conversation is the moment when buyer and seller become legally bound to complete the sale.  Until then, anything can be renegotiated or either party can pull out, even if all documents have been signed.

It is therefore important to get contracts exchanged as soon as possible.  Do not be tempted to delay exchange until just before, or even the same day as the completion date you want.  Otherwise things can still go wrong.  The quicker contracts can be exchanged the sooner everyone knows where they stand.

‘Team Brethertons’ Take Part in the Banbury Rotary Club’s Dragon Boat Race

 

Brethertons were pleased to take part in the Rotary Club of Banbury’s first community charity dragon boat festival.  The festival was held in the idyllic grounds of Broughton Castle on Sunday 20th April.

The team of 10 paddlers and 1 drummer took to the water on the Moat around Broughton Castle to raise funds for the Banbury Young Homeless Project (www.byhp.org.uk).  Although there were some seriously competitive teams the main emphasis was on having a good time!

 


Selling Your Property at Auction

In recent years, increased mobility and growing rates of home ownership have meant that ever-larger numbers of people nowadays inherit properties from relatives who lived many miles away. Similarly, many buy-to-let properties have been purchased in areas with a large student population, miles away from where their owners live. In such cases, when the time comes to sell the property, it is often difficult for the usual process of showing it to prospective purchasers to be carried out by the owner.

In such circumstances, it is quite common for a property to be sold at
auction. If you are considering selling a property by this method, here are
some steps you can take to help make sure your sale goes as smoothly as possible.

Well before the auction is planned, make sure you put together the necessary documentation, such as the Home Information Pack.

Make a list of the information a prospective buyer will find useful, such as
the age of the central heating system, wiring etc. and include any guarantees.

Set your reserve price, which is the lowest price you will accept for the
property. If the reserve is not met at auction, the property will not be
sold. The reserve price should therefore be reasonable as if the property
does not sell, there will still be costs to meet for the marketing of the
property and the related legal work.

You should also decide when you want the completion date to be. The contract to buy and sell is created when the auctioneer's hammer falls and the deposit is payable immediately, with the completion normally a few weeks later.

Work out your plan B. In the present market, property is becoming more
difficult to sell, so do not assume that the property will inevitably sell
at auction. It may not. Make sure, therefore, that you are prepared for the possibility that after the auction, the property will still be yours. Vacant properties do qualify for rate relief, but other costs (such as insurance) may rise. Remember that if the property does not sell at the auction you still have to pay the auctioneer's fee.


Searches what searches?

Anyone who has bought a house knows that their solicitor had to make some searches before they could safely exchange contracts.  What are the searches and what do they tell us?  Mike Dibben, partner at Brethertons LLP explains more.

One search that should be made on every property purchase is a search with the Local Authority. This will tell us among other things whether the adjoining road is a public highway and whether the council has issued any formal notice affecting the property such as any breach of planning regulations, a compulsory purchase order, or notice of a debt due to the council.  The cost of a local search varies from about £70 to about £220.

In addition to the standard enquiries on the local search, we can also make additional enquiries - for instance to establish that there is no public footpath whose route is recorded as passing through the property, or and that no part of the property is affected by any common land or ancient rights of village green.

Contrary to popular belief the Local Search relates only to the area of land being purchased.  It is unlikely to reveal any nearby development for which planning consent has been granted. 

For that reason it is sensible to carry out a Plansearch.  This is relatively cheap (around £30) and should reveal any recent planning applications and any relevant local planning policies affecting land and properties within 250 metres of the property you are buying.  It also gives details of other recorded data as to land in the vicinity such as radio masts, the routes of public footpaths and local public amenities, as well as statistics relating to the type of properties in the area.

It is also advisable to have an Environmental search made.  This costs about £35 and will disclose registered activities in that area that could affect the general environment and the quality and stability of the land such as local landfill sites, storage of hazardous materials, past industrial activities, evidence of high levels of radon gas or clay soil, and history of flooding.

If the property is in a past mining area, a search can be made with the Coal Authority or other relevant mining authority as to whether the property is likely to be adversely affected.

Most properties are registered at the Land Registry.  To check if the whole of the land being bought is registered or unregistered, a free search of the land registry’s Index Map is made.  If the title is registered the seller’s solicitor will normally supply a copy of the title register to the buyer’s solicitor.  Before completion the buyer’s solicitor will make an Official Search to establish that no further entries have been made on the register since the previous copy.  If the title is not registered, additional searches should be made against the seller’s name in the Central Land Charges register.

If the buyer is taking a new mortgage, the lender will require a search to be made in the Bankruptcy Register to establish that the buyer has not been made bankrupt.

In the light of a recent court case it is also necessary nowadays to check if the property could be affected by Chancel Repair Liability.  This is an ancient right of the Rector of the Church in some circumstances to call on the owners of certain properties to contribute to the cost of church repairs.  Until 2013 the Church does not have to register the right against the land registry’s title register for the properties affected.  It is impracticable and very expensive to search public records to establish whether an individual property is affected.  However, it is very cheap to check if the property’s postcode is in an affected parish.  If it is, insurance cover is also available at a relatively low cost against the associated risk.

There is a host of other searches that can be made, depending on the situation and legal records for the property.  When buying any property it is imperative to take advice from your solicitor as to the appropriate searches that should be made, and on the implications when the results come in.  It is likely that very basic searches provided by the seller in a Home Information Pack will fall a long way short of the information you need as a buyer from your own solicitor before you can commit yourself to the purchase.


Restrictive Covenants

Are you planning to extend or alter your house?  Applied for planning permission and building regulation approval?  Think you have everything covered?

You may need the consent of a third party under restrictive covenants contained in the title to your property, even if, for example, you are simply replacing the windows.

Over the years many restrictive covenants relating to development of property have been imposed. 

It is now quite standard on a new housing development for the developer to impose a restrictive covenant stating that no external alterations or additions can be made to your new house without the developer granting their consent.  The reasoning behind this covenant is said to be to retain the uniformity of the estate.  This is especially important to the developer when they are still selling new houses on the site.    It should also be noted that ex-council houses will usually be subject to  this type of covenant.  This means that an application to the council for covenant consent should be made in addition to the usual planning/building regulation applications.

The difficulties occur when several years down the line you wish to extend your property and the copy of the deeds and advice from your solicitor are a distant memory.  You erect your new conservatory after checking with the local authority as to any required consents.  However the local authority will not hold details of restrictive covenants affecting the property.

So what should you do to find out if there are any such restrictive covenants affecting your property? You will have received a copy of the title to the property from your solicitor when you purchased the property. This will usually contain a list of such restrictive covenants. In most cases the list will be quite readable so that you will be able to identify any covenants relating to alterations and then apply for the requisite consent. If however you are unsure you should consult your solicitor for assistance.

What happens next? In our experience, the consent will usually be forthcoming where the proposed works involve modest development such as an extension or conservatory, provided planning and building regulations approvals have been already obtained. Payment of an administration fee will also be requested. If on the other hand you are planning to build a new house in your back garden then the consent may not be so freely given!

“I extended my house five years ago and forgot to apply for consent under a restrictive covenant!” 

This is something that we often hear from property sellers. Don’t panic! It is often possible to apply for retrospective consent from the developer.  Alternatively insurance may be able to be taken out against the possibility of proceedings being taken in respect of the breach of covenant, subject to payment of a one-off premium.


Estate Agency Fees Require More than Introduction

Estate agents must do more for their money than simply show a potential purchaser around a property, following a recent decision of the Court of Appeal explains Mike Dibben of Brethertons LLP.

When a Mrs Bicknell signed a standard sole-agency agreement with Foxtons Ltd. to sell her £1.4 million home, she agreed, among other things, to pay the agency 2.5 per cent of the sale price if contracts were exchanged ‘with a purchaser introduced by us [Foxtons]’.

In June 2005, Foxtons showed a Mr and Mrs Low around the house three times but, after initially showing interest in the property, the couple took no further action. In July, Mrs Bicknell ended the sole agency arrangement and agreed a multiple agency deal with Foxtons at 3 per cent commission.

She then appointed a second firm, Hamptons International, at a 2.25 per cent commission rate. In October, Hamptons spoke to the Lows and persuaded them to view the house again, eventually securing an offer of £1.15 million for the property. The offer was accepted and the purchase was completed in January 2006.

Hamptons duly submitted an invoice for their commission and received payment. When Foxtons learned of the sale, however, they also sought to be paid a commission. When payment was refused, they commenced court proceedings. The lower court decided in favour of Foxtons on the basis that the Lows were a purchaser introduced by Foxtons and this alone was sufficient to secure their right to a commission.

On appeal, the question of the meaning of ‘a purchaser introduced by us’ was again raised. The Court of Appeal held that in order to charge commission, an agent must be the effective cause of the sale. Simply introducing a property to a person who eventually becomes the purchaser is not sufficient.

Had the reverse been true, Mrs Bicknell would have been in the unusual position of having to pay two agencies a commission for the same sale. Mrs Bicknell was not required to pay Foxtons for their initial, unsuccessful, introduction.

Webinar Programme

Brethertons carry out many online training webinars for businesses and trade associations. Webinars can be an effective means to bring people together without the inconvenience of leaving the office.  It’s quick and easy to set up and can be recorded so played back at any time which is useful for ongoing training requirements. 

Brethertons recently ran an employment webinar which attracted over 85 firms throughout the UK with over 300 delegates listening.  Future webinars include; Overpayment of Salaries – the right to recover on 5th September, Terms and Conditions, what’s the point? on 11th September, Small Claims Court Procedures in a nutshell on 13th November and Effective Letter Writing on 4th December 2008.

In order to participate in any of these webinars (all are free of charge) email marieholloway@brethertons.co.uk or call 01295 661499.