Advice on Your Solicitor's Role When Buying a Home
It can be a stressful time when buying a new home. Get some solid advice on any legal issues involved with buying a property.
- Choosing a Solicitor
- Property Certificates
- Buyer’s Solicitors Job
- Legal Extras on Buying
Solicitors are practising lawyers and officers of the Courts who have had a legal education and, who have passed examinations. Under the Solicitors Northern Ireland order 1976 solicitors in Northern Ireland have a monopoly on the legal process involved in the transfer of land (conveyancing).
Solicitors are regulated by this statute and the Law Society of Northern Ireland in relation to the fees they are allowed to charge and how they may advertise their services. They are also subject to spot checks by the Law Society on their management of client monies and have to undergo an annual independent audit of their accounts and disclosure is made to the Law Society of any accounting irregularities. Solicitors have to annually pay a contribution to a compensation fund which is used when solicitors commit fraud or become bankrupt. This fund has made sure no client in Northern Ireland has ever lost money as a result of a solicitors fraud or insolvency.
In Northern Ireland estate agents find the buyer and agree price details; solicitors do the paperwork. Contracts for the sale and purchase of land must be in writing. For this reason and because the process involves so much money solicitors act for sellers and buyers to advise and protect their respective interests. This process is called conveyancing.
Conveyancing procedures involve the preparation of a contract by the sellers solicitor and the examination of the contract and the title (ownership) documents by the buyers solicitor prior to signature. The seller is obligated to disclose all his knowledge about the property but the buyer carries responsibility for buying the property in its current physical condition. The process is complicated and will take longer than you think.
Conveyancing is complex legal work. In Northern Ireland fees charged for the conveyancing of residential property are subject to a competitive marketplace. Some tips are:
- Solicitors conveyancing fees vary considerably between firms and there are lots of firms. Some firms adhere closely to traditional fee scale rates (1% of the price + an hourly charge for time) and refuse to quote for business. Others are keen to give competitive quotations.
- Some firms give competitive verbal fee quotations over the phone. Do not instruct a firm on the basis of a verbal quotation over the phone. Only consider instructing a firm which has provided you with a detailed written quotation. Solicitors are obligated by the Law Society of Northern Ireland to provide you with written terms of business detailing the pricing arrangements in a specific detailed form.
- Check the written quotation details not only the firms proposed fees but also all the tax, registration, search and other expenses involved. The additional expenses will be the same for all firms although some firms identify these costs more clearly.
- Very often the presentation of the quotation information is a good guide to how organised and efficient the firm is.
- Most of your business will be transacted over the phone or by post with perhaps only one visit to the solicitors office necessary so a local firm is not essential. All your business can be affected over the phone or post if you want.
- Does the firm:
- advertise it clearly wants this type of work?
- do the staff have pleasant and friendly telephone manners?
- have you been given good detailed written quotation information?
If a firm passes the above tests don't quibble if the professional fees are a few pounds (rather than hundreds of pounds) more.
A solicitor is responsible not only to his seller client but also to the seller's lender who must be paid off the entirety of the existing loan. Similarly a solicitor for a buyer is also legally responsible to the lender providing the new mortgage money and has to report to that lender on behalf of and at the expense of the buyer.
Home Charter Scheme
The Law Society of Northern Ireland has a compulsory kite mark quality scheme to set standards of quality of work by solicitors. Whilst the scheme does not measure how quickly or efficiently solicitors do their work, it does set minimum standards and tasks which are expected to be adhered to by all Solicitors in all residential conveyancing matters. Some firms provide better standards and speed of service at more competitive rates than others. The scheme provides a benchmark against which complaints can be measured.
The reason for Land Registration is to have a public record of the ownership of land; the two systems presently operating in Northern Ireland are different ways of recording that information.
Registry of Deeds
Under this system your Solicitor prepares a summary of the document transferring ownership to you and, if applicable, also of your mortgage document. The summary is retained by the Registry of Deeds as a record of your ownership while the actual transfer document is returned to your Solicitor to be placed with all the other Documents of Title.
Here, the actual transfer deed is submitted to the Land Registry and retained there. The Land Registry has a file for every piece of land registered there and on that file your ownership is recorded. As proof of ownership, the Land Registry issues a Land Certificate which gives details of the property, the ownership and other related matters such as mortgages. After each transaction has been recorded the Land Certificate is returned to your Solicitor to be placed with the other Documents of Title.
Northern Ireland registry of Deeds properties is compulsory registration resulting in a double registration process, first in the Registry of Deeds, and then in the Land Registry which costs buyers in these areas more expense.
As far as buyers are concerned the most important difference is that the Registry of Deeds process is considerably cheaper but it is being phased out.
The making of proper Searches is a vital part of the legal investigations into whether there is clear title (ownership) of the property you wish to buy.
Statutory Charges Register
This is a central register for a number of different government matters affecting land, known as Statutory Charges. These include charges in favour of local authorities under the Public Health Acts, notices under the Road Acts, listed buildings and many other things. A Statutory Charge registered before a buyer is registered as owner takes priority over the legal transfer to the buyer.
This Search will show if there are any court cases pending which may affect the property, crown judgments or judgments for rates.
When buying from a company, the Register of Charges must always be searched to ensure that the Company can give good title to the buyer.
When a person is adjudged bankrupt he has no power to transfer land to a buyer, so a search must be made to make sure the seller is not bankrupt.
Registry of Deeds and Land Registry Searches
These searches are carried out in the government title registries to show any matters which have been registered against the title during the seller's ownership of the property. They will reveal, for example, if the seller has taken a second mortgage.
The sellers solicitor has to provide property certificates to the buyers solicitor. These certificates provide up to date information about the property.
The Department of the Environment Property Certificates confirms such matters, as whether there are any proposals for road works which may affect the property, whether there are public sewers and water mains available to serve the property, and whether the property has been the subject of a planning application.
The local council Property Certificates reveals whether there have been any notices affecting the property in relation to Building Control Approval or enforcement, if there are any orders or notices against the property under Environmental Health legislation and whether the property is affected by any legal proceedings taken by the local council.
A quick list of tasks for the buyer's Solicitor in Northern Ireland are:
- examination of ownership documents
- examination of contract
- making disclosure requests from the sellers Solicitor
- requesting and on receipt examining all necessary reports on:
- planning status
- building control issues
- Energy Performance Certificates
- rights of way, access and usage
- bankruptcy and court judgment details against the seller
- searches in Land Registers against the property and the seller
- reporting to the buyer and settling details on:
- valuation, timber and structural survey reports
- fixtures, fittings and contents proposals
- title details
- contract proposals
- drafting and preparing for signature
- transfer documents
- mortgage deeds
- stamp duty land tax return forms
- having buyer sign the
- mortgage deed
- fixtures, fittings and contents lists
- stamp duty land tax return forms
- protecting lenders interests by checking:
- the buyers identity
- the buyer's life insurance protection is on risk
- reporting to the lender on title details
- reporting any adverse problems to the lender
- reporting any change in property price
- the deposit from the buyer and paying to the seller's solicitor
- mortgage funds from the lender
- the balance funds from the buyer
- effecting completion
- paying the funds over to the seller’s solicitor on completion
- submitting stamp duty land tax forms to the Inland Revenue and Customs together with paying any stamp duty applicable
- key arrangements
- ownership transfer documents
- lender's mortgage documents
- closing searches on completion of registrations
- collating all ownership documents and sending to lender to keep as security
- closing the Solicitor's file and storing it for twelve years in case of future disputes
Buying, selling or remortgaging all involve expense. If you have bought or sold a property previously you probably have some knowledge of the expenses involved. If you need refreshing this web page will remind you of some of the fees that estate agents, solicitors, lenders, etc. may charge.
This section explains in detail the property selling process including the particular legalities unique to Northern Ireland. We have arranged the topics in the order we think may be useful but you can look at them in whatever order you wish.
Allow for the following costs in compiling your budget:
- valuation and survey fees
- solicitors fees.
- legal extras on buying (stamp duty, tax, registration fees etc).
- removal expenses.
- mortgage arrangement fees.
- you will have to find at least between 5% and 25% of the price yourself as a deposit.
- renovating, decorating and furnishing your new home."
Solicitors in Northern Ireland charge fees accordingly to the purchase price of the house (to reflect the responsibility and insurance risk assumed) and the amount of time and effort required. Fees can vary from £300 to £3000 per transaction. In addition Value Added Tax (currently 15%) and additional expenses such as stamp duty tax, searches, property certificates and registration fees have to be added. A solicitor charges two separate fees for a sale and a purchase and price quotations should be requested prior to engagement. Fees quoted will vary considerably.
Written Terms of Business
Solicitors are required by the Law Society of Northern Ireland at the start of a residential conveyancing transaction to give you a written estimate of fees or how they will be calculated together with likely expenses. Beware of verbal quotes!
- obtain quotations
- do not act upon verbal quotations; only consider using firms that have provided detailed written quotations
- smaller firms or local firms do not necessarily quote less
- conveyancing is complex work; select a firm that appears to have an efficient operation and which is large enough to have plenty of specialist staff and resources
- the quality of service and the amount of fees do not always go hand in hand
A Solicitors bill can be disputed either on the basis of a specific arrangement or under legislation governing the way Solicitors are allowed to charge. Solicitors are strictly regulated by the Law Society of Northern Ireland and have to keep records of every meeting, telephone call and letter. If a Solicitor significantly overcharges, or is in serious delay, he can be liable to penalties, disciplinary action and public embarrassment. In relation to any bill you can ask the Solicitor to obtain a certificate of fairness from the Law Society of Northern Ireland; this review is free. Alternatively you can require the Solicitor to prove any bill in the High Court; the expense of this review would have to be paid by yourself unless the bill is reduced by more than a sixth.
When buying a property there are various payments which have to be paid on your behalf in addition to the Solicitors fee:
Value Added Tax
VAT is a tax on the purchase of goods and services and is currently 15%. This will be charged on Solicitors fees and will be included in some other expenditure.
Stamp Duty, which is a government tax on the purchase price of a property, is as follows:
Nil on properties of £125,000 or under
1% on properties from £125,001 to £250,000 *
3% on properties from £250,001 to £500,000
4% on properties over £500,001
Please note that as of 30th November 2001 the government has abolished the payment of Stamp Duty in certain designated areas. If your proposed purchase property falls within one of the designated areas and your purchase price is not more than £150,000 you will be exempt from the payment of Stamp Duty. However under the Finance Act 2003 you will still be obliged to complete a Stamp Duty Land Tax Return and notify the Inland Revenue of the transaction before registration of your title can take place.
You can make a provisional check on the HM Customs and Revenue website to see if the property is likely to be exempt from Stamp Duty. Visit this site and enter the post code of the property you wish to buy. The results will display advising if the property is in an exempt area or not.
Please note that in some instances the Inland Revenue may advise incorrectly that a property is exempt and in these cases you will still be liable to pay the duty required. It is therefore advisable to always budget for the possibility of Stamp Duty when buying a house over £125,000.
Land Registers Fees
Registry of Deeds - under this system of registration your Solicitor prepares a synopsis of both your purchase document and your mortgage document and lodges those copies into the registry with a registration fee paid to the government on your behalf of £13 per document. About 50% of all transactions in Northern Ireland are under this system all Registry of Deeds properties in Northern Ireland are now subject to compulsory land registration which adds a further £85.00 to the costs expended. A solicitor may also charge an additional fee in these cases for the extra work involved.
Land Registry - under this system of registration fees are charged on a purchase in accordance with the following scale (mortgages are usually an extra £50.00 on top):
Up to 20,000
20,001 to 80,000
80,001 to 100,000
100,001 to 150,000
150,001 to 200,000
200,001 to 250,000
Bankruptcy and Court Judgment Searches against the buyer for the lender will cost between £35 to £75 depending on whether there is one or two buyers.
Searches in the Registry of Deeds after registration on completion are necessary to bring searches up to date usually cost around £35.