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Q. FAQ for Residential Property Sellers

Q. When should I instruct my solicitor?

Although you will not be asked for your solicitor's details until a sale has been agreed in our experience any Seller is likely to be able to speed the time taken between the sale being agreed and exchange of contracts, by appointing a solicitor as soon as the property is placed on the market. That solicitor will need details of where to obtain the title deeds and if the property is leasehold the details of the management company so that up to date service charge information can be obtained at the earliest opportunity. There are Government plans to make Seller's Packs compulsory, which will probably require that sellers instruct solicitors and put together a comprehensive title/information pack including a survey before putting their properties on the market.

Q. What if the local authority where I am selling my property is taking up to 6 weeks to deal with the buyer's local search. Will this inevitably delay exchange of contracts?

This has increasingly become a problem in certain parts of London and some local authorities are much slower than others. As the Seller there are various possible ways round the problem.

It is recommended that when you put the property on the market that you check with your agent or your solicitor as to the turnaround time for local searches in your area so that you can anticipate any problem.

· Even before you have found a buyer if you are confident of selling your property within a reasonably short time your solicitor can apply for a local search which can be sold to the buyer. We would however draw to your attention that the search has to be less than 6 months old at completion and if you are unsuccessful in completing the sale of your property within this period the cost of the search will have been wasted.

· Make sure that when a buyer is found the agent draws to their attention the potential problem and ensure he appoints a solicitor promptly and preferably that his search is submitted at the earliest opportunity.

· If neither of these is appropriate ask your solicitor to recommend that the Buyer can take out local search delay insurance. This will insure the Buyer and their mortgage company against the risk of anything adverse being revealed on the local search, thus enabling an exchange of contracts to take place. The one-off premium (which depending on the value of the property should be modest), or a contribution towards it, could be offered to the Buyer as an incentive for an early exchange of contracts. 

· A relatively new way to carry out searches is now being offered by a few firms including ourselves using the latest technology though the Internet. Not every mortgage lender will accept electronic searches, but the majority are happy to and this can reduce the turn around time to as little as 3-5 working days! This is perhaps something that should be drawn to the Buyer's attention to ensure that they consider this option with their solicitor.

Q. My Buyer has mentioned that he will have less than a 10% deposit at exchange of contacts. What are the risks for me?

In general the deposit paid by the Buyer at exchange of contracts is held by the Seller's solicitor as part payment of the price and as security for the performance of the contract by the Buyer. If the Buyer does not pay the balance of the purchase price in the appointed manner on the completion date, then after certain procedural steps are complied with the Seller can end the contract and forfeit the deposit.

If you agree to accept less than a 10% deposit on exchange of contracts, the contract will normally state that if the Buyer fails to complete the transaction on the due date they must pay the balance. However, you may have to bring legal proceedings to recover your losses, and the Buyer may be difficult to trace and possibly it will not financially worthwhile to sue him. Fortunately in practice it is extremely rare for a Buyer to default but you need to be aware of the slight risk if you accept a deposit of less than 10% of the price.

Q. The property I am selling has a mortgage secured against it, which I believe, may have a penalty clause for paying off the mortgage before the end of a fixed rate term. Is there anything I can do to avoid/minimise the liability?

Many mortgage products have a "tie-in" period and before putting your property on the market if you are in any doubt about your obligations under your existing mortgage you should check the position with your lender. It may be that you will need to time the sale so that it does not take place before a certain date. Sometimes redemption penalties can be avoided if you are taking out a new mortgage with the same lender. We would recommend that you take advice from your financial advisor if you are uncertain.

If you have a different question you may wish to e-mail us at solicitors@saplaw.co.uk. Although we cannot promise to respond personally unless you are one of our clients, we regularly update this web site and will try to include replies to any questions we are repeatedly asked.