Buying a Home in England or Wales: Legal Terms You’ll Encounter

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When buying a home in England or Wales, you’ll walk through a handful of legal processes. They can seem complicated if you’re a first-time buyer. But as buying a home is a substantial financial commitment, it is necessary to go through a legal process. It ensures that all the terms, conditions, and clauses in your closing contract are fair and lawful.

Therefore, you need to know all the legal terms you’ll encounter throughout your home-buying journey. However, it’s always better to err on the side of caution and get someone who can represent you. Without further ado, let’s name and define each of them:

1. Mortgage Pre-approval

As its name suggests, mortgage pre-approval is a process that approves you for a special mortgage deal before you start searching for a home. It’s not exactly a legal term, but a pre-approval can be helpful in case you experience discrimination. For example, suppose a lender denies you a loan because you are a foreigner, despite your pre-approval. In that case, you can seek another lender and pursue legal action against the previous lender.

However, you can ensure that you won’t stumble upon a discriminating lender in the first place. The key is to find a reputable mortgage broker before borrowing. A mortgage broker will help you find a lender that can offer you the deal in your pre-approval.

2. Conveyancing Process

The conveyancing process transfers legal title to real property from the seller to the buyer. A solicitor or licensed conveyancer handles this process. It begins when you are ready to make an offer.

The seller also employs a solicitor. After agreeing on a purchase price, their solicitor and yours will exchange the contract details through your real estate agent. Then, the seller’s solicitor will send you the formal agreement to sell, along with the Property Information Form and the Fittings and Contents Form.

These two documents contain all the information about the property. It should state the problems (e.g., maintenance issues) and everything included in the sale. And finally, it also consists of the property title all forms completed by the seller. If the property is a leasehold, you’ll also receive a copy of the lease during the conveyancing process.

3. Conveyancing Searches

Your conveyancer will also conduct a search on the property, including a Local Authority Search. This process checks for any problems, such as disputes, boundaries, right of way, and planning constraints and permission.

They may conduct additional searches depending on the property’s location. For instance, if it is located on contaminated land, a health inspector might inspect it.

A female's hands covering a tiny model house

4. Title Insurance

The title insurance will provide peace of mind and a legal safeguard. It usually comes with the title search, which the conveyancer handles. These documents ensure that no other buyer can claim the property anymore when the seller already accepts your offer. In addition, title insurance protects you from financial loss sustained from title defects. It also protects your lender against loss and damage from liens, encumbrances, or title defects.

5. Closing Contract

The closing contract is the final transaction between you and the seller. It finalizes all your agreements and negotiations. In signing this contract, your real estate agent should represent you. But before that, a lawyer should first study the terms, conditions, and clauses.

For your part, you should review and endorse all your loan documents. That may include your mortgage, promissory note, a truth-in-lending statement, and affidavits, to name a few. Your agent and lawyer will let you know the requirements, and they can help procure them for you.

6. Seller Assist

A seller assist is like a credit. It refers to an agreement wherein the seller pays a portion of the closing costs that a buyer often bears. Since this agreement helps you save money, it can allow you to spend more on the property, such as if it needs repairs or improvements.

The closing contract must include the seller assist agreement. In addition, it should state the exact amount or price percentage each party agreed to cover.

7. VAT and Stamp Duty Land Tax Return

During the final steps in the process, you’ll start paying your solicitor. The typical cost of a solicitor’s bill ranges from £500-£1,500 plus 20 percent VAT.

The seller should pay the real estate agent’s fees since they often come from their end. Real estate agents take a small percentage from the sale price, usually 1–3 percent plus 20% percent VAT.

Finally, you have 14 days from the sale’s completion date to file the Stamp Duty Land Tax Return. If you bought a home in Wales, you’d also pay Land Transaction Tax. Your solicitor will handle these settlements for you.

The legal process can make home-buying a little tedious, but they protect you from dishonesty or suspicious deals. Study and understand these terms to prevent a seller from taking advantage of your inexperience.

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