BUYING A HOUSE IN ENGLAND AND WALES - PART TWO

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BUYING A HOUSE IN ENGLAND AND WALES - PART TWO

Post  sleepyme123 on Thu Nov 15, 2012 11:22 am

Finding A Surveyor

It is not hard to find a surveying company. Asking for recommendations from your lender, solicitor or estate agent is probably the easiest way of finding a reliable surveyor, or you could contact one of the professional trade associations for details of surveyors in your area. The Yellow Pages also lists many surveyors. If you need a specialist survey, make sure you instruct a surveyor with expertise in the relevant area.

Shop around and get plenty of quotes, as it costs a lot to get a survey done and prices can vary. The amount you pay normally depends on the cost of the property you are buying. It is important to discuss in advance how much you will have to pay and what kind of survey will be undertaken, or you might find yourself being ripped off. It is possible that you may have to pay more than once for a survey, if the sale falls through or if you decide not to buy the property on the basis of the survey results and carry on looking.

You are advised to check up on the surveyor's credentials if you are unsure that they are a qualified professional. All surveyors should be a member of the Royal Institution of Chartered Surveyors (RICS).

Always talk to your mortgage lender before instructing a surveyor as it is usually possible to get the basic valuation done at the same time, which will reduce your costs.


What is Conveyancing?
The term 'Conveyancing' refers to all the legal and administrative work associated with transferring the ownership of land or buildings from one owner to another. The conveyancing process starts after an offer has been made and accepted for a property, and solicitors' details have been exchanged by the two parties.

Who Does The Conveyancing?
Most people hire a solicitor or licensed conveyancer to undertake the legal side of buying their home. It is possible to do the conveyancing yourself, but this is a time-consuming business and also risky if you lack the necessary expertise. Although professional services are expensive, they have become cheaper in recent years and it is well worth the cost to successfully complete the purchase and to resolve any possible problems. This part of the process is crucial.

DIY Conveyancing: Pros and Cons
DIY-conveyancing is possible. If you are sharp, not put off by legal jargon and willing to deal with the large amounts of paper-work involved then it might be safe not to hire a professional conveyancer or solicitor. However, it is advisable to think about this very carefully as it is a complex and time-consuming business. If it is not carried out properly you could, for example, find yourself involved in costly legal disputes over boundaries, discover that there is a new road planned to be built opposite your home, or even that the seller did not have the legal right to sell the home.

In reality very few home-buyers undertake the conveyancing themselves, for three main reasons:

Many mortgage lenders will insist on employing a solicitor to protect their interests. They do not want to risk having shoddy conveyancing work.
There is a higher risk of things going disastrously wrong
The other people involved may not be happy with you doing your own conveyancing, and may even reject your offer on this basis

There are some cases in which DIY-conveyancing is particularly inadvisable, for example:

if the property is being sold by a divorcing or separating couple (this requires specialist skill or knowledge)
if the property is not a freehold
if the property is unregistered
if the property is not a house

When a property is being sold an energy performance certificate will need to be provided.


Choosing A Solicitor or Conveyancer

Traditionally, solicitors undertook all conveyancing work but now there are also licensed conveyancers to do the work.

It is illegal for conveyancers who are not licensed to charge a fee for conveyancing work. Check with the Council for Licensed Conveyancers that a named conveyancer is licensed.

It makes little difference whether you choose a solicitor or licensed conveyancer - other considerations are more important.

Key Factors to Consider in Choosing a Solicitor

Prices vary, but be wary of the very cheapest services - this might indicate poor quality. It might be worth paying a bit more for a good service. On the other hand, the most expensive is not necessarily the best.
Look for a solicitor who is not overworked or inexperienced as this could mean important details are missed. Equally, you don't want one who is very slow or too pedantic as this could hold up the process.
Buying a house is a stressful business, and it is important that you get on with your solicitor. Think about whether you can trust this person.

Overall, be sure to hire a solicitor or conveyancer as soon as possible in your home-buying process, so that they will be ready to step into action as soon as you have had an offer accepted - preferably as soon as you know you are likely to make an offer on a house. The faster things move, the better the chances that all will go smoothly.

Finding a Solicitor
One of the best ways to choose is through personal recommendation. If you know someone who was happy with a solicitor/conveyancer's services throughout the process this is a very good indication of their quality.

Otherwise, you can consult the Law Society's regional directory for solicitors in your area, or look in the Yellow Pages or local newspapers for adverts.

If you have already used a solicitor for other business, you could contact them for recommendations of solicitors in the same firm specialising in conveyancing.

Usually the same solicitor cannot act for both the buyer and seller of a property, but two solicitors of the same firm may do so as long as there is no clash of interests between buyer and seller.


The Conveyancing Process At A Glance

Buying or selling a home is a complex business, both legally and administratively. The exact order of events varies slightly, but there are three main stages to the process.

The three main stages are outlined at the most basic level below. Follow the links for more detailed information on what each individual stage entails.

Stage One: Before the Exchange of Contracts
The draft contract is received and negotiated, enquiries are made and the formal mortgage offer is received. See further Stage One in Detail.

Stage Two: Exchange of Contracts
The contract is signed and you hand over a deposit. Final accounts are prepared and the mortgage deed requested for you to sign. Final searches are made. See further Stage Two in Detail.

Stage Three: Completion
You obtain the keys to your new home and receive the title deeds. Stamp duty is paid and the transfer is arranged at the Land Registry. See further Stage Three in Detail.


Stage One in Detail

1.Your solicitor contacts the seller's solicitor
Once the sellers have accepted your offer, you exchange solicitors' details with them. Your solicitor will then contact the seller's solicitor and receive the draft contract.

2.Your solicitor receives and negotiates the draft contract
The draft contract contains details of prices, the two parties, other information about the transaction such as deposits, and information from the seller's title deeds.

3.Your solicitor makes pre-contract enquiries

4.Your solicitor should send you a property information form or a copy of the draft contract for you to check.

A property information form may be included if the solicitors are operating the TransAction Protocol. This is a Law Society scheme which is used by many solicitors in the conveyancing process. If your solicitor is operating this scheme, the seller's solicitor provides a package at the beginning of the process which includes:

the draft contract
copies of previous title deeds (registered/unregistered?)
a property information form, giving key property information (this saves the solicitor from many of the preliminary enquiries)
fixtures, fittings and contents form, telling you what fixtures, fittings and other items are included in the price and which will be removed. You should agree with the seller what is to be included, and make sure everything is included in the form

Your solicitor will check the details of the draft contract and negotiate it with the seller's solicitor.

It is a good idea to check through the draft contract yourself in case anything has been missed out, such as any agreements you had made with the seller, so ask your solicitor for a copy if you have not been sent one.

5.Your solicitor applies to local council for local searches, checks the title, contract and papers, and raises queries with the seller's solicitor.

It is the solicitor or conveyancer's job to make all the necessary enquiries to ensure that there is no reason why you might want to change your mind about buying the property. For example, it is vital to guarantee that the seller really owns and has the right to sell it.

The main standard searches are:

Local Authority Searches
Enquiries are sent to the local authority such as whether there are any plans for a major road to be built nearby, or whether there are any problems with the property which you would need to rectify. Your solicitor should also get checks done on nearby buildings or empty land - do they have planning permission for more buildings or development?


Enquiries To The Seller's Solicitor (the 'preliminary enquiries')
Your solicitor will send a standard set of enquiries to the seller's solicitor which will include:

Disputes: whether there are any disputes relating to the property, such as disputes with neighbours.

Boundaries: what exactly are the boundaries of the property and who has responsibility for the maintenance of hedges and fences. Arguments over boundaries sometimes even escalate to court cases between neighbours, so it is important to establish this now.

Planning constraints and permissions: whether any additions or alterations that have been made to the property have met local planning requirements and that building regulation consent was received.

Rights of way: checking that there is no right of way or footpath through the property, and on shared rights of access with a neighbour such as a garden or driveway.

Restrictive covenants: whether the deeds specify that certain things are forbidden, for example keeping pets, or specifying that the house cannot be painted a different colour from other houses on the street.

Guarantees or insurance policies: for example whether the property is covered by the NHBC guarantee or the woodrot treatment guarantee

Services: whether the property's utilities (gas, water, electricity) reach it via a neighbour's property or are shared with a neighbour

List of contents included in the sale: you must make sure that you have reached a clear understanding with the seller about what is and what is not to be included and listed it clearly.

If it is a leasehold, they will ask who the managing agent is, who the freeholder is and whether the seller is up to date with ground rent and services charges.

You may want to consider asking your own additional enquiries via your solicitor, these might include questions such as whether the property has been burgled, additional questions about the neighbours or more information about any known building works.

Other Searches
A set of standard questions is also sent to the water authority. There are additional searches which may be carried out if necessary, for example commons searches, coal mining searches and so on. If you are buying a newly built house there are particular checks which must be carried out by your solicitor. Your solicitor will then check through the draft contract and send anything that needs changing to the seller's solicitor.

6.The contract is negotiated and agreed. A completion date is agreed.
There is often a fair bit of correspondence between the two solicitors so finalising the draft contract can take some time. Make sure your solicitor knows about any agreements you have made with the seller.

The day for the completion of the transaction (ie the day when the deal is finalised) must be agreed upon before the contracts are exchanged. It normally takes about two weeks from exchange of contracts to completion day, although it can be more or less. Some people arrange for exchange of contracts and completion to take place on the same day, but this is not always possible. Note that if you are part of a chain of sales, the completion date will probably need to be agreed with more than two parties.

7.You get a formal mortgage offer (if you are getting a mortgage) on this property, not just an agreement in principle. Your solicitor will send you a mortgage deed to sign.
The formal mortgage offer for this particular property which you obtain at this stage is distinct from an agreement in principle (which you should have obtained earlier). At this stage you also need to have received the results of your survey if you are having one done, and accepted these results. If you are not satisfied with the results of the survey, you need to address any problems at this stage, not after the exchange of contracts when you are legally bound to buying the house. Make sure that the two parties have agreed all the terms of the contract and that any disagreements or any matters that are unclear have been resolved.

Pre-Stage Two Check List
Before exchanging contracts, check that all is in order:
You have received and are satisfied with the survey report
You have received your formal mortgage offer, and are happy with it
The deposit sum has been agreed and you have the money available
You have arranged life and property insurance and they are ready to begin on completion
The completion date has been agreed with all parties
The terms of the contract have been checked and finalised by all involved


Stage Two in Detail

1.Contracts are exchanged. You hand over a deposit which is non-refundable if you pull out of the sale.

Once you and your solicitor are satisfied that everything is in order, the contracts can be exchanged. You sign a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which you receive. Once contracts have been exchanged (normally by the two solicitors) both parties are legally bound to follow through with the transaction. You can no longer change your mind - if you pull out it is likely that you will lose your deposit, and you could be sued for breach of contract. You also now have no need to worry about gazumping.

At this point you hand over a non-refundable deposit as security to the seller in case the contract is not carried out. This is normally 10% per cent of the purchase price, but it is usually negotiable. If you do not have the money for the deposit at hand immediately, you can arrange for a bridging loan from your bank.

2.Your solicitor draws up a transfer document and sends it to the seller's solicitor
Once contracts have been exchanged your solicitor prepares the draft transfer document (if the land is not registered it will require a special kind of transfer or 'conveyance'). This documents transfers the title of the property from the seller to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller.

3.Your solicitor arranges finalisation and signing of your mortgage documents
Your solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale.

4.Your solicitor carries out final searches and enquiries
Land Registry checks are carried out by your solicitor, to make sure that nothing is registered against the seller (or at the Land Charges Registry if the property is not registered). Problems such as undisclosed mortgages or disputes could be uncovered at this stage.

There will be various matters for you to deal with in the run-up to completion. There will be some documents to be signed and payments to be made: you must pay Land Registry fees and stamp duty. Before completion you need to make sure that all the terms of the contract have been fulfilled, such as any repairs.

You also need to be arranging all the practical matters related to moving house.


Stage Three In Detail

1.You move in! At last! On the day of completion you receive the keys and the seller is obliged to move out.

2.You pay the seller the balance of the house through your solicitors
On the day of completion you also have to pay the balance of the price on the house (the agreed price minus the deposit which you have already paid), usually through your solicitor or conveyancer.

3.You receive the transfer document and the title deeds
The seller's deeds are now handed over to you, and arrangements are made for any outstanding mortgages on the property to be paid off.

4.You pay extra costs: stamp duty, Land Registry fees and solicitor fees

5.Solicitor carries out final administration

After completion the solicitor still has various details to tie up. Your solicitor will:

where relevant, inform your mortgage lender, life insurance company, and the freeholder that the sale has been completed

register the transfer of ownership at the Land Registry. They will then send the deeds to your mortgage lender who will keep them until you either sell the property or pay off your mortgage

pay the stamp duty

send you a statement of completion, including a summary of the financial transactions. If you have not already paid their fees, they will ask for these now.


Insurance & Other Legal Matters

When you buy a new home, it is important to think about insurance and any other affairs connected to the purchase of your home, especially if you are a first-time buyer. This section contains introductions to all kinds of insurance policies which are related in some way to buying, owning and paying for a home. You have made a large investment, and you need to protect it, including from a situation where you are unable to continue to pay off mortgage loans. In this section you will find introductions to the different types of insurance you will require - this is particularly important for first-time buyers who are buying this insurance for the first time.


Household Insurance: Buildings and Contents
You now own a new home, so it is essential to protect it, and also all your possessions. Household insurance has two parts - buildings insurance and contents insurance. They can be bought separately, though some insurance companies offer a single policy covering both which can save you money.

Buildings Insurance provides cover for the property itself, including basic essentials such as kitchen and bathroom fittings (sink, toilet, bath etc) and running water. It also provides cover for events such as fire, flood or even subsidence.

When buying a home, make sure that you have arranged for insurance cover on your new home to start on the day you exchange contracts. If you are not a first-time buyer, arrange for the insurance on your previous property to continue right up until the day you exchange, in case the deal falls through.

If your home is part of a larger building, such as a block of flats, your buildings insurance may be bought in a joint policy by everyone in the building so you will only need contents insurance, or if it is a leasehold then the freeholder may have insurance - check up on these.

With property values fluctuating so much, it is not always clear how much your property should be insured for. It is not the market value, but the amount it would cost to rebuild it that gives a more stable value for an insurance policy - including the costs of clearing rubble and architects' and surveyors' fees, as well as building materials and labour. Check your survey or valuation details for the rebuilding costs, which will be listed under the term 'reinstatement'. The Association for British Insurers (ABI) also has a leaflet on how to work out reinstatement costs, or you can check with your surveyor.

What If Insurance Is Refused?
Sometimes properties are difficult to insure because of past problems in the area concerning flooding or subsidence. It will usually be a term of your mortgage offer that suitable insurance is arranged and so if you are borrowing money insurance will be essential. Bear in mind that this could in future make the property difficult to sell, but if the price is right and you still wish to continue there is an arrangement where the existing insurer will normally continue to offer cover for domestic premises. So check with the sellers who their insurer is and contact them directly yourself.

Legal Expenses Insurance is usually part of the cover offered with the buildings insurance. This can be useful as it provides access to private legal remedies for things like nuisance neighbours or disputes over a private roadway. Check the premium and the level of cover but it could be a worthwhile investment.

Contents Insurance insures all your possessions inside your home. You may be surprised how much your possessions are worth - even if you are not a big spender, they can be worth tens of thousands of pounds. 'Contents' refers to everything from furniture and carpets to jewellery, cameras and clothes. It's up to you exactly what your insurance policy covers and the price depends on how much it covers. The policy will state an overall limit on the amount you can claim, called the sum assured, and there is also a minimum sum assured which is normally in the region of £30,000 although some insurers will quote for less.

To work out how much cover you need, make a list of everything in each room and how much it is worth or would cost to replace. Remember to include furnishings, carpets and other fittings, and clothes and food, as well as more obvious items like TVs and jewellery. Insurance for items which you take outside your home such as bicycles, musical instruments, sports equipment and so on may also be included in your contents insurance. Often this is set up to a general limit, so if you need extra cover for more valuable items then you will need to ask for this limit to be increased. You can also ask for cover to be removed if you do not need it, so check what your policy includes - often standard policies include items like cash and cards left at home and frozen food up to a certain limit in case your freezer breaks down which you may feel are not worth paying for. You can reduce the cost of your insurance premium by agreeing to an excess on any claim, on both buildings and contents policies. This is where you pay the first part of any claim; for example, if your TV is stolen and you have agreed to a £50 excess you receive the price of the TV minus £50.

If you already have contents insurance on your previous home, make sure the cover is transferred from your previous home to your new one on the day you move in.


Which Insurance Policy?

There is a huge amount of choice of deals in household insurance, so searching for a good one can be a bit daunting. If you already have household insurance on a previous home, this can be transferred when you move. If you do this, make sure you are getting the best deal for your new property which may come under a different premium and be worth more, or less, than the last one. Get a lot of quotes from different insurance companies. It is also worth looking into direct insurance companies, brokers and online services.

Top Tip: When looking into insurance deals, keep a record of what you tell each insurance dealer and the questions you ask them. This will make it easier to compare premiums.

Some mortgage lenders provide their own insurance deals, but it is not necessarily wise to buy your home insurance from your lender. Their insurance premiums are often extremely high compared to those sold by insurance companies, and they might throw the cost of the premium in with the cost of the mortgage which makes it very difficult to work out how much you are paying. If your mortgage lender is offering you the convenience of an insurance policy bought from them, look very carefully at how much it will cost you and compare it to insurance policies elsewhere.

The Association of British Insurers website contains a lot of information about buildings and contents insurance. They will also send out leaflets by post.

Protection in the Case of Unemployment or Illness

Mortgage Payment Protection Insurance (MPPI)
"Your home is at risk if you do not keep up the repayments on a mortgage or other loan secured on it"

This is a familiar phrase to home-buyers. You may think it will not apply to you, but what if you are unemployed for a period, or cannot work due to illness? The future is always unknown, and if the worst does happen you could suddenly face a crisis in paying your monthly mortgage repayments. It is a very wise precaution to insure against losing your home should such circumstances arise; every week, over 1,000 families have their homes repossessed.

In the past, the government provided enough help with mortgage repayments in the case of unemployment to save many people from losing their homes, but since 1995 the rules have changed. Now, borrowers who took out their mortgage after 1 October 1995 who are having repayment problems do not receive any help until 9 months after the beginning of the period of unemployment - enough time to fall dangerously behind with payments. It is extremely inadvisable to rely on the Social Security system. You should instead seriously consider taking out Mortgage Payment Protection Insurance (MPPI) to cover your mortgage payments should you become unable to continue paying them.

Standards have been devised for MPPIs by the Association of British Insurers and the Council of Mortgage Lenders. These stipulate that a policy should:

start paying out after no more than 60 days, so that at most you will have to find two months' worth of repayments yourself

continue covering your repayments for at least 12 months after that period

assess each medical condition individually and not just refuse conditions such as backache and pregnancy complications automatically

give at least 6 months' notice of any change in the cover, such as cost or nature of the cover

operate more consistent policies towards self-employed and contract workers. Self-employed workers should be covered for unemployment if they have informed the Inland Revenue that they have ceased trading involuntarily and have registered for the jobseeker's allowance. Contract workers should be able to claim if they have worked for the same employer for at least a year.

Make sure your policy covers as many circumstances as possible, and your particular work situation. Many policies do not insure part-time or temporary work. Also check the exclusion clauses - for example, many insurers will not cover unemployment which is due to medical conditions which you had before taking out the policy, or due to pregnancy, stress or back pain. Unemployment which is voluntary, caused by misconduct or is seasonal are among other circumstances generally excluded.

As with household insurance, shop around for your MPPI. If your mortgage lender offers you a protection policy, make sure that you will not be paying far more than if you bought a policy elsewhere.

Life Insurance

For those buying homes and taking out mortgages, life insurance is an important purchase to make. Most mortgage lenders insist that borrowers take out life insurance, but if yours does not, don't treat this as a good excuse to avoid the extra expense. Life insurance may seem like an unnecessary additional cost, but it is worth considering seriously. The point of it is to provide enough protection to cover outstanding mortgage repayments should you die before you have finished paying it off. This is particularly crucial if you have a family or other dependants, as it would make sure they could keep a roof over their heads in the event of your death.

Those with endowment mortgages do not need to worry about life insurance as the policy incorporates life insurance. However, nowadays most borrowers do not have endowment option mortgages, and so have to purchase life insurance separately. It is not a complicated product to understand - if you die, it simply pays out a lump sum. However, there are a few things you should look out for:

terminal illness benefit included in the policy at no extra cost: this means that if you are diagnosed with a terminal illness then your policy will still pay out when you die, even though the insurer knows beforehand that you are ill

waiver of premium means that if you become involuntarily unemployed or too ill to work, and you haven't got protection for unemployment or illness, your life policy premiums will still be paid even though you can't afford them. You will pay about 2.5% extra to have waiver of premium in your policy.

Which Policy?
As with other types of insurance associated with home-buying, your mortgage lender is likely to offer you life insurance when you take out your mortgage with them. This is not necessarily the cheapest option, so shopping around can save you a lot of money and give you more choice of policy.

Different policies work in different ways, and different kinds of policies suit different types of mortgage. For example, some life insurance policies provide 'level term assurance', which means that you will be covered for the same amount throughout the duration of the policy. This suits an interest-only mortgage, which is to be paid off in a lump sum at the end of the mortgage term. On the other hand, 'decreasing term assurance' is good for a repayment mortgage - as your outstanding loan gets smaller as you pay it off, the amount of cover decreases too. Remember that if you are moving to a larger home, you will need to increase your life cover.

Removals Insurance & Other Legal Matters
Some household contents insurance policies will insure your possessions for the period of the move, but if yours does not you should take out extra insurance cover for any mishaps that might occur during the move. Most insurers will extend your cover for the removal period, for an additional premium to cover the increased risk. This premium is normally around £25. It is difficult to obtain this cover from insurance companies with whom you do not already have an insurance policy. Check what the policy covers and the time limit within which a claim must be made.

The policy will probably NOT cover:

scratches and dents
bank notes, shares, bonds, deeds, stamps and securities
loss or damage due to strikes, weather conditions, or delay
goods that are not professionally packed - make sure everything is packed, and unpacked, by professional removers or your claim may be jeopardized.

Removal firms may offer insurance as part of their contract. If they do, check the limit on what compensation you will be able to claim as it is often quite low. Ask to see in writing exactly what will be covered and the time limit for making a claim.

With most removals insurance you have to pay a part of any claim, known as the excess, which is usually £50 or more.

Legal Protection Insurance
It is possible to take out insurance cover on all the legal aspects of buying a house. This will cover any legal action that you need to take related to buying your home. It can be used against builders and developers, sellers, removal firms, utilities (water, gas, electricity companies), surveyors, solicitors and conveyancers.


Other Legal Matters

Your Will
When you buy a home for the first time you acquire a large asset. If you do not already have one, it is a good idea at this point to draw up a will to specify who will receive which parts of your estate (what you own less what you owe) when you die. It is not too difficult to draw up a will yourself, but consult a guide to making wills as it is important that it is done properly - look in any good bookshop for a guide. If you are unsure, or think that your situation is complex, consult a solicitor.


Inheritance TaxAlthough set up as a tax on the wealthy, spiralling house prices mean many families are now liable for inheritance tax. The first £325,000 of the estate is inheritance tax-free. The government charges 40 per cent tax on anything over that.
Money over the threshold left to a spouse, through either marriage or a civil partnership is exempt. This is called the spousal exemption. In 2007 the threshold for married couples and those in a civil partnership changed. When the surviving member of a couple dies, their threshold for inheritance tax is double the threshold for a single person. This effectively makes the inheritance tax from their deceased partner transferable.

Some bequests and life-time gifts are tax-free, such as those between husband and wife. If one spouse leaves everything to the other, this avoids tax at the time of death of the first spouse but the problem is carried over to when the second one dies. When making your will, therefore, it is advisable to spread your assets, for example by leaving them to children as well as your spouse.


Gazumping & Other Problems

Watch Out.....!!
Even if you have done everything possible to make things go well, there are unfortunately still a few stages where things can wrong. One of the major hitches encountered by home-buyers is gazumping, an ugly practice which can be both emotionally and financially draining for the gazumped buyer. Note that gazumping is widespread in England and Wales, but not in Scotland.

What Is Gazumping?
'Gazumping' is the term used to refer to when a seller accepts an offer from one potential buyer, but then accepts a higher offer from someone else. The first buyer is left in the lurch, and either has to offer a higher price or accept that they have lost that home and continue looking. This practice tends to occur in a market when house prices are rising are there are more buyers around than sellers.

The problem is that until contracts have been exchanged the sale agreement is not legally binding. Once your offer has been accepted, either you or the seller can pull out at any time until the exchange of contracts. Unfortunately agents are legally obliged to inform sellers of all offers made on their property, even after one offer has been accepted. But during this period between the acceptance of your offer and exchange, you as the buyer spend a considerable amount of money on surveys, solicitor's fees, and confirmation of your mortgage offer. If the sale falls through you do not get this money back, and have to fork out all over again next time round - that is, unless you have been put off the idea of buying a new home. If you are part of a chain of sales, you could even be affected by someone else being gazumped.

The Scottish system of conveyancing has effectively eradicated most cases of gazumping. In Scotland a seller must provide written acceptance of a successful bid. This is legally binding and is further supported by Scottish solicitors' code of practice, which forbids working for a client who is seeking other offers after a written acceptance has been made.

How Can I Avoid Being Gazumped?
If it does happen there is nothing you can do, but there are some ways in which you can minimise the risk of it happening.

Help speed up the sale - the faster it is, the less opportunity there is for the seller to pull out.

Choose a seller whose agent has a policy on gazumping, if at all possible. Some agents insist that the seller signs an agreement to turn down any offers after one has been accepted.

Keep in regular contact with the seller's agent - tell them when you have completed the survey and received a formal mortgage offer. This way they can be sure that the sale is progressing and are less likely to be tempted to consider any other offers.

Make a pre-contract deposit agreement. This involves both parties paying a deposit of 1.5% of the agreed purchase price to a stakeholder, and signing an agreement saying that contracts will be exchanged within four weeks. If one side withdraws from the sale, the other party receives both deposits. If you are a gazumped buyer you therefore get some compensation. This is not a water-tight agreement as either party can pull out if they are willing to lose the deposit, but it definitely reduces the risk.

Draw up an exclusivity agreement with the seller after your offer has been accepted. In return for a fee, this gives you exclusive rights to the house as long as contracts are exchanged within a certain period. Few people make such an agreement as it involves hiring a solicitor, but it is worth considering.

Take out insurance cover to protect you if your deal falls through. This is yet another expense, but you might be glad of it if things do go wrong.

Insist that the house be taken off the market once your offer has been accepted. Check that the board outside the house has a 'Sold' sign on it, and contact the agent if it does not.

Top Tip: If you are gazumped, emphasise to the agent and seller how keen you are on the property. If the buyer whose offer they have accepted pulls out, they may contact you to ask if you are still interested.

Other Potential Problems To Look Out For
There are a few other situations which you may find yourself involved in which it is worth thinking about as you may need to take extra care.

The Chain Situation
This is where there is a whole chain of buyers and sellers: for example, you are buying a house but you can't complete the purchase until your own house is sold; in turn, the buyer of your house can't buy until they have sold their own house; and so on and so forth. If you are part of a chain, your own purchase may be affected if someone a few links down the line pulls out of their sale or purchase, or if someone else is gazumped. If you are not part of a chain, this could encourage a seller to accept your offer over someone else's as there is less risk of the sale being delayed.

Contract Races
If there are two or more potential buyers for a house, the seller may send out contracts to more than one set of buyers. The buyers then have to race each other to send a deposit and the signed contract gets the home. Solicitors are legally obliged to inform any buyers involved that they are in a contract race. Contract races normally only happen when there is a shortage of houses or rising prices. Be careful - you may win, but if not you could lose a lot of money from all costs you have in the period before exchange of contracts, so only get involved if you have a very good chance of winning.


Making Complaints

During the course of buying your home, you have to deal with a number of professionals, including surveyors, solicitors and mortgage lenders. It is possible that you will not be happy with their services, and may even lose out financially or in other ways due to negligence on their part. This section suggests what action you may take if you find yourself in such a position.

With all complaints, you should first of all write to the professional or company in question stating what exactly you are not happy with, how it has affected you, and what kind of response you are wanting - do you want a refund, compensation, or some other result? Remember to keep a copy of this letter. If they refuse to accept your complaint, you can pursue the matter further with the relevant professional body. Surveyors, solicitors and licensed conveyancers all have bodies regulating their profession.

What if I Am Not Satisfied with my Estate Agent?
Remember, estate agents act for the seller and not the buyer, but if you are concerned that some unethical practice has taken place during the transaction you can complain to the Property Ombudsman or to the Office of Fair Trading.

What if I Am Not Satisfied with my Surveyor?
If your surveyor has shown negligence, by not pointing out defects which cost you money later on, you may be able to claim back the financial costs incurred by you as a result. You have a right to sue in court. Just remember that a surveyor can't always find every fault as some parts of every building are inaccessible - they will not, for example, drill holes in walls, pull up carpets and floorboards, or take any personal risks.

If your surveyor has refused to compensate you after you have complained as advised at the beginning of this section, you have the right to take the matter further. All companies who are members of one of the surveyors' professional trade associations have to follow standard complaints procedures. These associations' members all have access to a professional arbitration scheme set up in 1998 whose findings they, and you, are obliged to accept. If the company is not a member of either of these bodies, the case will have to be heard in court. For more details, contact The Chartered Institute of Arbitrators.

If your surveyor has not caused you any financial loss, but you are dissatisfied for some other reason, you may still be able to make a complaint. Contact the RICS Professional Conduct Department.

What if I Am Not Satisfied with my Solicitor?
If you are not satisfied with your solicitor's services but this has caused you no financial loss, you may have the right to make a complaint to the Solicitors Regulatory Authority (SRA). The SRA has disciplinary powers and can order compensation or a refund of your fees up to £5,000. When you write your initial letter of complaint to the solicitor, try threatening to contact the SRA if they do not satisfactorily respond to your complaint - this in itself may achieve the desired result.

If, in turn, you are not happy with the way the SRA has dealt with your complaint, you can complain to the Legal Services Ombudsman.

If you have suffered financially as a result of your solicitor's negligence, you can claim for compensation. Reasons for this happening could include, for example, steps not being taking to ensure the seller's mortgage is paid off on completion of the sale, or missing an important restriction or other information during the inquiries. Solicitors are legally obliged to hold negligence insurance; contact a different solicitor if you need to make a claim on this insurance as the SRA will not deal with negligence claims.

Remember to contact your solicitor before notifying the regulatory bodies, as described in the introduction to this section.

What if I Am Not Satisfied with my Conveyancer?
If you are dissatisfied but have not suffered financially, contact the Council for Licensed Conveyancers (CLC) who fulfil the same disciplinary role for licensed conveyancers as the SRA does for solicitors. Remember, if a conveyancer is not licensed it is illegal for them to charge for their services.

If you have suffered financial loss as a result of your conveyancer's negligence, you can claim for compensation. As in the case of solicitors, conveyancers are legally obliged to hold negligence insurance; contact a different solicitor if you need to make a claim on this insurance as the CLC will not deal with negligence claims.
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