Sale and purchase procedure
A lot of leasehold transactions follow a similar course to freehold transactions. The procedures are modified in the case of some transactions involving shorter leases which limit the potential liability of the tenant for reasons of economy.
- One of the stages that is commonly omitted in the case of a leasehold transaction but less commonly in the case of a freehold transaction is a preliminary agreement for the transaction taking place at a later date, the “exchange of contracts” stage.
- In many cases there is a gap between the parties becoming bound to buy and sell (the “exchange of contracts”) and the final disposals of the property (“completion”). This is usually to enable the buyer to get hold of the funding to buy the property, and for the seller to arrange for the property to be emptied, rather than for any strictly legal reason Freehold transactions also will allow the parties to limit liability for certain aspects of the transaction, however in the case of the grant of a lease this might be dealt with in the lease itself.
- However sometimes the gap can be longer, for example where there is a conditional contract a potential buyer does not have to go ahead planning permission for development or change of use has been obtained or other issues need to be sorted out before the buyer is happy to go ahead to complete the contract.
- The process will not be complete until the buyer has registered the freehold transfer document or lease and any mortgage at the Land Registry. [What the Land Registry shows you]
- For most cases of freehold sales and some leasehold transactions, the buyers or their lawyers will require satisfaction regarding the ownership of the property and any burdens that come with it, planning issues and other questions of statutory compliance and to some extent health and safety issues. There are extensive due diligence procedures for this purpose that require provision of information and documents to the solicitors for prospective buyers or tenants usually using the “CPSE” questionnaires.
- Where the condition of a property will affect its value or put the buyer or tenant under the risk of expense or difficulty, some kind of survey would be essential. This may also reveal issues such as potential breaches of health and safety legislation or rights that have arisen without any documentation, or the presence of occupiers who may have legal rights that would still apply after the sale.
- The buyer will wish to search the public Land Register to ensure that the seller owns the property and that there are no legal rights that would adversely affect its value or rights of use.
The buyer will also usually carry out a search of the Local Land Charges Register and raise standard enquires of the Local Authority to ensure that there is nothing that will adversely affect the value of the property. Searches may also be carried out in relation to Chancel Repair liability.
- Other searches may include drainage and water environmental searches and in the case of areas with a mining history, coal, tin, brine, limestone, or clay mining searches.