Published: 03/09/2019 By James Edmonds, Jane RobathanWhy you should
Much has been written on how to present your property for sale, with plenty of blogs on styling, kerb appeal and viewing preparations (fresh flowers, coffee brewing and cakes baking), but legal fundamentals should be considered as soon as you decide to sell.
Once a price is agreed between parties, it’s in everyone’s interest that the sale is brought to exchange as soon as possible with the fewest hiccups on the way. Here are nine things you can do that will significantly speed up your sale.
Know your property
Before you invite agents to value, and certainly before you market your property, you should know what you’re selling. It’s surprising how many owners of leasehold properties aren’t sure of how long their lease is. Fewer still know the extent (boundary) of the flat; sometimes vendors mistakenly believe they own the basement or loft space on the basis that their flat has sole access to it. These might well be outside the demise and in fact belong to the freeholder.
If you own a share of the freehold, do you have you an agreement with your co-freeholder(s) regarding use of lofts/basements? Even if you own a freehold house, it’s worthwhile checking the title plan to make sure your garden boundaries match the registered plan.
Tip 1) If you haven’t kept these documents from when you purchased, then access the Land Registry and download a copy of your title, plan and lease for just £3. If you are a lessee, as well as checking your demise, read through your lease and see what rules apply. A regular problem is a requirement for the flat to be carpeted, meaning floorboards aren’t allowed. Make sure the lease plan is accurate and reflects the actual layout.
A heads-up on forms
The first documents you need to complete with when a sale proceeds are protocol forms. These will be sent to you by your solicitor at the start of the conveyance (you must use these copies since they will be the latest version). It’s a good idea to know what the questions are before you even go on the market. There are two forms to complete for freehold properties (called the TA6 and TA10 forms) and for leasehold homes there’s an additional form (TA7). You can download specimen copies from the Law Society to get a head-start on the kind of questions you’ll be asked.
The TA6 form is probably the most important, since it asks for information on wide-ranging matters about the property and its history. If, for example, you have been involved with disputes (disputes will crop up), it is better to address this before you market the property. Give your agent background information about the dispute so they can explain things to an interested buyer. Likewise for notices: if a party wall notice has been served, then let prospective buyers know at the outset.
Tip 2) Find your purchase file and go through the documentation you have available. If you don’t have the file anymore then download the protocol forms and see what you are going to be asked when a sale is agreed. Note that whilst your solicitor will tend to minimise giving out information, a buyer’s solicitor is not going to be fobbed-off with vague answers to questions and will want detailed answers!
Certificates, guarantees and consents
The TA6 form also refers to the provision of certificates connected to the property. These are particularly relevant if building work has been done in the past, including before your ownership. These could be planning permissions, building regulation completion certificates, FENSA certificates for replacement windows and any guarantees available for works. For leasehold properties you will also need consents from the freeholder for any past works. A careful read through the TA6 form will flag up missing paperwork that can hold up a sale or even affect an agreed offer.
Tip 3) The TA6 form will tell you what additional supporting documents will be requested at the start of the conveyance. If you can’t find them, then now is the time to obtain duplicates where you can. If any are going to be problematic, then discuss this with your agent when you instruct them.
These days it is common practice for buyer’s solicitors to request electrical and gas certificates. Whilst these are not mandatory for the sale, it is a good idea for a vendor to have these as part of a sale information pack. It helps to prove the MOT status of a property and, just as a recent MOT makes a car more saleable, having a clean bill of health with regard to energy safety, also helps the sale process. The cost is reasonable at around £200 for an electrical report (EICR) and £100 for a gas safety and boiler check—well worth the investment. These certificates will inevitably crop up in the survey, and in any case most vendors would be happy to know that they are selling a safe property.
Tip 4) Arrange an electrical and gas inspection at the outset, and remember that the gas safety inspection is separate from the boiler installation certificate, which is a building control requirement with the certificate issued by Gas Safe. If you can’t find yours, you can can get a duplicate online for £6.
Sometimes you may not be able to find certificates. However, many are an absolute requirement for buyers’ solicitors, since they protect lenders and buyers and lenders sign them off their checklist. Often certification applies from before you owned the property. Don’t panic if you don’t have planning or building control certificates. Your solicitor can arrange an indemnity policy to cover lack of certification. The costs tend to be reasonable since often past works to a building are no longer enforceable by the local council. Councils can’t enforce deviations from planning applications for four years following the work or building control regulations for one year after completion of the work, unless the works are deemed dangerous.
Tip 5) If you are missing any certificates discuss this with your agent. Some will be more important than others (e.g. lack of freeholder’s permission for works that have been undertaken is a tricky one, for which an indemnity might not be available). It is possible that obtaining retrospective permission/certification may be appropriate, but do not contact your local council at this stage. If you do, then this is likely to negate any indemnity policy that might otherwise be available.
Check your insurance
While insurance information is one of the subjects addressed in the TA6 form, this can be glossed over by vendors, who always believe they have perfectly adequate insurance. However, is the quoted rebuild cost sufficient, and how do you know? If you are unsure there is an online BCIS checker (https://calculator.bcis.co.uk/) albeit this has limitations, particularly for flats. If your buyer is obtaining a mortgage, usually the lender’s surveyor will propose a value for insurance, so this may not be an issue—you may just need to increase the sum insured as necessary. On leasehold properties insurance will usually be arranged by the freeholder but check your lease on this point (the buyer’s solicitor certainly will). Sometimes individual flat owners arrange their own separate insurance which is not the best arrangement since the common parts may not be covered; a single policy for the building would be more encompassing and probably cheaper.
The buyer’s solicitor will want to know that full disclosure has been given to the insurer when you took out the policy such that the premium properly reflects the risk. Most insurers require you to complete a Statement of Fact covering the property description and past history. For example, if there are large trees nearby and you have omitted to let the insurers know, then your cover could well be invalid. The buyer’s surveyor will pick this up and warn the buyer’s solicitor.
If structural works such as underpinning have been carried out, were the insurers notified? Note that in this case, full documentation is going to be requested with particular emphasis on the sign-off letter by the supervising engineer and building control completion certificate, see Tip 3.
Tip 6) Check your building sum insured to check it is adequate. Additionally, for flats, check your lease to see if the current insurance arrangements match the lease terms. Check your schedule and policy wording and be confident that your insurance company is aware of any material matters that might affect the premium.
React to feedback
During marketing there will be various questions and feedback from viewers. Concentrate on the negative points which arise and liaise with your agent on how these should be addressed.
Tip 7) If detailed queries are raised at the outset by prospective buyers, they will inevitably be raised during the conveyancing process which is a much more in-depth exercise, so be prepared for this.
The perfect date
Timing is an issue in many property transactions. People’s moving date expectations are outlined when a sale is being negotiated. In a sales chain, everyone is simultaneously a vendor and a purchaser, except for two sets of buyers—first-time buyers at the bottom and the buyers at the top of a chain. Everyone involved needs time to find their next home.
Tip 8) Make sure that your agent conveys your position accurately, so you are not put under undue stress. In this regard it is probably wise to suggest that your buyer holds-off on expensive undertakings such as the survey, until you have found a property. We’d advise you propose that the legal process is started, maybe with searches ordered, which aren’t too expensive.
Building surveys can be a problem, often leading to mistrust between parties, arguments over price reduction and sometimes even a break-down of the sale. Remember that the survey report concentrates on property defects, so inevitably has a negative bias. Don’t expect the surveyor to write a glowing report on how gorgeous your Amtico floor is! Often vendors say that by accepting an offer below their asking price, the price reduction should cover costs to rectify survey defects. However, this is a fallacy. The buyer hasn’t agreed to purchase your property at the price you listed it, but at the price agreed, so it is unfair to use an argument that they already have a discount. They have agreed to pay the market price for the property—usually more than others who expressed an interest. If the survey shows unforeseen problems, then it is understandable that a buyer would want these rectified or the cost covered. Of course, a good agent will fight your corner and argue that any buyer should expect some defects particularly within older properties, but again being prepared is key.
Tip 9) You could prepare a Schedule of Defects so that the agent can give this to a prospective buyer who will have knowledge of these when negotiating the price. When these defects come to light during the survey, then the buyer cannot argue that these were unforeseen, and this will thwart any attempt to chip away at the price.
There might well be defects which you are not aware of, in which case it is reasonable for the buyer to look to you for a price reduction. The key word is unforeseen. The buyer shouldn’t have to take on board problems that he/she hasn’t budgeted for, so you are then going to have to negotiate. This is where you should rely on your agent who will be able to contact tradesmen to provide reasonable quotes.
Example 1: A recurring problem is roofs, particularly those with original slates. Inevitably, after 120-years a roof is reaching the end of its life, even though it’s still maintaining its principle function. A buyer will want a new roof when the surveyor proposes that, but you are not marketing your property with the benefit of a new roof! If this is considered at the time the deal is struck the problem will be avoided.
Example 2: Another common sticking point is damp in older properties. While you might not have noticed any damp, this often shows-up on the surveyor’s meter, and the buyer then arranges a ‘free’ quote from a damp specialist with predictable results—a rather high cost for remedial measures! This is where you need an independent damp surveyor to get to the bottom of what is really required.
“As specialist property lawyers, we are delighted to read this excellent advice from James of Roy Brooks, as we see first-hand the difference in outcomes when clients prepare for their sale in advance”.
Peter Ambrose, Managing Director, The Partnership