…which read together with the Form of Instructions and Terms and Conditions of Business form the basis of our retainer with you. Particular sections relating to costs have been emboldened to help highlight these important matters.
Q. Why do I have to pay a deposit for fees/disbursements, and why is a credit/debit card authority the best method?A. It is usually important to clients to keep costs to a minimum and to avoid delays. If we are expected to pay for things like searches or undertake the work carrying them out or obtaining them on behalf of clients until completion monies come through, this puts up our overheads. By you paying for your own search costs in advance etc. our overheads are lower and we are therefore able to offer lower fees.
Also, even if we do not need a deposit for known expenses, if there are other expenses to be incurred, which we do not yet know about .e.g. a landlord who will not provide information without a fee, or say if copy documents, e.g. planning permissions which you thought were with the title deeds but they are not and duplicates need to be obtained from the local authority, then having access to funds on a credit/debit card authority will save time in being able to get the information/documents.
The credit/debit card authority will enable us to collect fees during or at the end of the retainer including abortive transactions without having to bother you to send cheques or the like.
Q. What does it cost to pay by debit/credit card?
As is common with most organizations these days, where payments are collected remotely there is a small charge for printing the collection of the payment on the card.
The fee for processing a credit card payment from you will be a fixed 2% sum inclusive of vat e.g. a payment of £100 would attract a charge of £1.70 plus vat totaling £2.00.
Payment made by debit card will attract a fixed charge of £0.50. So a payment of £100 would attract a charge of 43p plus vat totaling 50p.
These charges include the charges that we pay to the credit/debit card companies.
Q. Why do you ask for a deposit for fees/disbursements on a remortgage – is this not covered by insurance?
A. Although most lenders accept search indemnity insurance on a remortgage, NOT ALL of them do. Asking for the deposit is simply to help you avoid delays just in case your new lender insists on an official/personal search being carried out. Rest assured if they do not, we will not be spending your money needlessly!
Q. What are disbursements?
A. Disbursements are payments that you are principally responsible for paying to third parties, that we make on your behalf, e.g. Stamp Duty, Land Tax or Land Registry payments. But usually NOT searches, as we charge these as a professional fee and not as a disbursement, and we assume and undertake responsibility for either obtaining a personal search result, or, more usually, by instructing our agent (not yours, and therefore we are responsible for paying the third party and not you), to obtain a result for us, and on which we then relay to you our recommendation to proceed or not, and our Certificate on title to any lender who instructs us. Please be aware, however, that other firms from whom you may obtain a quotation may not work in a similar way, and therefore the quotation will not be on a like for like basis.
Q. How is Stamp Duty Land Tax (SDLT) calculated?
A.SDLT is calculated at 1% on prices over £125,000 to £250,000 (though First Time Buyers as defined below are exempt from SDLT on purchases up to £250,000), at 3% on prices over £250,000 up to £500,000, and at 4% on prices over £500,000. From 6th April 2011 prices over £1,000,000 will be subject to 5% tax. Special rules apply for Transfers of Equity where the “price” is calculated as half the value of the outstanding mortgage plus whatever is being paid to the other party for the transfer. Also see the section Tax Returns under the question what other fees, taxes and expenses can I expect to incur.
Q. What is a First Time Buyer?
A. A First Time Buyer is someone or joint purchasers none of whom have ever owned a property anywhere in the world before and who must own the property they are buying as their only or main residence.
Q. What are Land Registry fees?
A. Land Registry fees are the fees charged by the Government for changing the records that the Government’s Land Registry hold about your property. They are based on the purchase price/remortgage amount. For purchases they range from £50 for prices up to £50,000, rising through to £130 for prices up to £100,000, £200 for up to £200,000 etc. For remortgages different scales apply, but follow similar principles.
The other types of Land Registry fees are for official up to date copies of the title to your property you are selling/mortgaging and are likely to be £14 for freehold properties and £24 for leaseholds.
Q. Tell me more about searches and your professional fees and the costs involved.
A. There are several types of searches involved in a property transaction:-
Local search* £40 - £288 Deals with local authority matters relating to your property only, i.e. not neighbouring properties. These are usually supplied as part of a HIP but sometimes are inadequate or out of date necessitating a new search being undertaken.
Plan search* £47.00 Discloses planning applications on properties within 200m of your property.
Plansearch Plus* £58.75 Everything in a plan search, plus further information regarding telecom masts, local footpaths, neighbourhood data on: schools, crime rates, insurance claims, housing prices and local amenities.
Land Registry search £4 A legal search to check the title is safe to buy/mortgage.
Land Charges search £3 per name. Again, a legal search to check the title is safe to buy/mortgage.
Bankruptcy search £2 per name. Required by lenders to check the status of the person borrowing the money.
Specialist searches:-
Coal Mining* £35.58; Tin Mining £75; Environment Agency (formerly National Rivers Authority) £100 - carried out in areas where properties may be affected by such matters;
Environmental search* £58.75 – carried out where we, you, your surveyor or the lender consider there may be questions over the land upon which your property is built, e.g. landfill/contaminated land.
Drainage search* £58.75 – checks the water drainage/sewerage arrangements that affect your property, though these are usually supplied as part of a HIP where available.
Commons Registration* £25 – checks if the land is common land and therefore subject to common rights
Company search* £29.38 – necessary to check the status of a company which is selling, or is a relevant landlord or management company in a leasehold property.
Chancel Repair* £23.50 – checks to see if the property is within a Parish boundary which may be subject to paying a contribution to repairs to the church.
To achieve speed and consistency, (except where local search indemnity insurance is used or where a lender will not accept personal searches), usually we will arrange for most types of searches, generally, to be carried out by our own staff or, more usually, outsourcing to our established insured personal search agency on our behalf (not yours), to obtain a result for us and on which we rely to give you our recommendation “to proceed”; and a Certificate of title for any lender who instructs us. As such the professional fees for the searches will be payable to us. Although in relation to local searches the total cost to you will be exactly the same as an official search, some of the cost charged to you will be paid by us to the search agency, and some will be retained by us in defraying the costs of our overseeing and administering the process, and as our profit. This arrangement enables us to cover all the additional works over and above completing an official search form, and to impose higher service level agreements and standards on our staff and/or agents over whom we have contractual control. Therefore, those searches will usually appear as VAT inclusive professional fees (as opposed to as a disbursement) on our bill. For the avoidance of doubt the fee charged to you in these circumstances is NOT a disburstment but is our fee. What we pay to our search agents out of this will be less. In short, what you pay is the fee stated against each search type. If you have a special preference about searches you will be able to let us known when confirming you want us to act (see Searches: you have a Choice).
Q. What is an electronic transfer of funds?
A. There are different ways of transferring monies , all with different speeds and costs:-
Cheque – slow – banks advise to allow at least 8 days before treating a cheque as clear - £free
Bank draft – can be treated as cash. Cost £10 to £20.
BACS – one of the payment methods of electronic transfer through the bank – takes at least 3 working days to reach the receiving account – usually £free to the public but our fee to you for us sending or processing the receipt of a BACS payment is the same as the cost of a telegraphic transfer being as stated on the front page of the quotation and will sometimes be incurred when redeeming a mortgage or accounting to you on completion where agreed or when monies are received in by this method from a third party (including you).
Telegraphic transfer – another form of electronic transfer through the bank, otherwise known as CHAPS or TTs – same day transfer of funds through the bank – usually less than an hour, but delays can occur. Costs £15 - £50.Our fee to you for us processing the sending of a TT is stated on the front page of our quotation and also in clause 3 of our terms of business, and will usually be incurred: on a purchase; sometimes when redeeming a mortgage; or accounting to you on completion where agreed, or when monies are received in by this method from third parties (including you).
For the avoidance of doubt the fee charged for the BACS or TT is NOT a disbursement that we pay to the bank but is our profit cost fee.
Q. What happens if the transaction aborts, or there are complications/urgent additional works?
A. An abortive transaction is one which does not proceed to completion. Where costs are to be paid these will be calculated in accordance with the hourly rate quoted in the terms and conditions of our retainer.As a general guide (as each case will be different) it is likely that our fees will be (a) the agreed fee in respect of any personal searches undertaken or arranged by us or our agents which will be payable in full plus: (b) if the matter aborts before the receipt/preparation of draft contracts, then our fee is likely to be 30% of the total of the other fees quoted that would have been payable had the matter proceeded to completion; if the matter aborts once contracts are received/issued , then 65% of the total of the other fees quoted that would have been payable had the matter proceeded to completion; and if the matter aborts after a contract report letter is prepared to you with the papers for signature, then 90% of the total of the other fees quoted that would have been payable had the matter proceeded to completion.
If during the course of the transaction there are complications or urgent or additional works required, then additional fees will be charged as outlined in the terms of business. If you are not already aware of them, then you will be notified in advance of us incurring those additional fees. An estimate of the likely fee to be incurred will be given where possible/appropriate, or will have been given in the terms of business.
If your abortive transaction involved a mortgage, then the total fees that would have been payable at completion will include the fees that would have been payable in relation to our dealing with the mortgage aspects.
Q. What is expedition, and what are the cost implications?
Expedition is where you require, or you agree to the other party’s requirement for, a period of time from the exchange of contracts date to the date that completion is to take place on, that is 10 working days or less. The shorter the period, the greater the fee. Clause 4 of the Terms of Business sets out the rates. If you are unclear of how the charge would be calculated, please ask now to avoid queries later. By way of example, if, on a purchase, there are only 9 working days between exchange and completion, an expedition fee of £50.00 plus VAT would be payable. If we were able to arrange a simultaneous exchange and completion for you then a fee of £100 plus vat would be payable. For the avoidance of doubt, in the case of a sale and a purchase, the charge applies to both transactions.
Q. What is a lien?
A. A lien is a right to keep possession of property or money until a debt is discharged. In common with normal solicitors’ business practices we will exercise a lien over any funds or documents we hold on your behalf if any funds are owed to us by you, and this right is contained in our conditions of business.
Q. What other fees, taxes, and expenses can I expect to incur?
A. Leases:-
If now or in the future the property you purchase, or the property you are remortgaging, is of a leasehold nature, then you are advised to consider budgeting for other fees and disbursements, namely, our fees for company searches, usually £29.38 each, and if, for example, there is a landlord company and management company involved then two searches may be required. A typical disbursement may be a copy of a Headlease from HMLR at a cost of £20.00.
You should also consider other payments under the lease such as landlord's registration fees, apportionment’s of rent, service charges and insurance, purchasing of shares in the management company or special deeds of covenant that the landlord/management company may require you to enter into.
Sometimes it is necessary to apply for copies of the landlord's title deeds from the Land Registry at a cost of £14.
If any leasehold interest that you acquire is under a new lease, then even where the purchase price is under the normal stamp duty threshold the Government charge a special levy for stamp duty and Land Registry fees calculated on the average and maximum rent payable under the lease respectively. Landlords also require payments for preparation of documents as well.
As you will appreciate this information is given for guidance as it is not possible to quantify these items without sight of all the papers and a known completion date.
New mortgages
Where now or during the course of this transaction, you are obtaining a new mortgage you should also be aware that the lender will have various costs and expenses which they will expect you to pay to us or to them or on their behalf. Obviously we cannot give you accurate figures as this will largely depend upon which lender you use and how much you borrow but to assist in your budgeting you should take into account such items as:
Property valuation/survey fees.
Mortgage application fees but these depend on the type of loan.
Broker arrangement fees varying from nil to a fixed sum or a percentage of the loan.
Mortgagees solicitors legal fees (also known as a lender’s legal fee) depend on the lender and type of loan and will be payable by you to us in accordance with condition 3 of our Terms of Business, and invariably as required by your new lender, if we are instructed to act for the lender or deal with separate lenders solicitors. You should budget for £120 plus vat or whatever is stated in your mortgage offer if greater being the minimum legal fee on a first mortgage. Work undertaken in respect of subsequent mortgages will also be payable by you at the rates referred to in the Terms of Business.
Bankruptcy searches of £2.00 per borrowers name.
Mortgage indemnity guarantee premium which is normally levied by the lender where the loan exceeds 75% of the valuation and can be as much as £1,000, or even more, depending on the size of the loan as a percentage of the valuation of the property.
You should check with your financial adviser/broker or lender and read their literature carefully to ascertain what expenses/deductions or payments there will be or that you must pay on their behalf. Please revert back to us for clarification if you receive advice which is different from ours.
Existing mortgages
You should also take into account other expenses involved relating to each and any mortgage to be redeemed or loan to be repaid as applicable, such as:-
Solicitors mortgage redemption or loan repayment legal fees which we charge you, which are normally £80 plus VAT per debt where we are instructed to act on the redemption/repayment of each charge or debt.
However, on subsequent redemptions or other loan repayments or if separate mortgagees solicitors are instructed to act for your lender there will be additional fees that you would have to pay of £80 plus VAT.
Lenders sealing/redemption administration fee usually of between £50.00 and £200.00.
Lenders deeds production fees, usually about £50 to £200.
Lenders fees for provision of information such as up to date balances and redemption figures; where charged, each in the region of £50.
Penalty interest on early repayment of your mortgage. The amount will depend on your existing mortgage conditions. IT IS FOR YOU TO CHECK THIS WITH YOUR LENDER.
Your lender may insist upon repayment of your mortgage by telegraphic transfer as opposed to the normal method of payment by cheque. If they do then see the question on telegraphic transfers.
Tax Returns
Stamp Duty Land Tax (SDLT) was introduced in 2003, and all property transactions over £40,000 now require a SDLT Return completed even where no tax is payable, with financial penalties (minimum £100) for failure to deal with correct filing requirements. This is a specific tax document and is both involved and time consuming to complete.To save you accountants’ fees we are willing and able to complete the Return for you and have incorporated a cost for of £75 plus VAT, for which we will also prepare and act for you under a Power of Attorney in not only submitting the Return to the HM Revenue and Customs but also in endeavouring to deal with any queries raised by them. If you do not want this service, and would like to make your own arrangements to deal with this item allowing you to make a saving against the fee payable to us for this work item, you should please let us know before we undertake the work which will commence prior to the exchange of contracts.
Professional Indemnity Insurance
All solicitors firms are able to provide you with the peace of mind of knowing that their service is fully protected by an insurance indemnity limited to a maximum and minimum of £2,000,000 should anything go wrong. Some years ago the Law Society recommended that solicitors separately identify the contribution that their clients were expected to pay towards the indemnity as part of the overall fees payable to the solicitors. Some firms still do this but please note thatour legal fee includes this and there is no additional charge to you.
Some of our obligations to you are limited in the terms and conditions to avoid any misunderstanding, e.g. regarding personal tax matters, the use of e-mail, structural or planning issues, mortgage products suitability. You should of course seek advice from other suitably qualified experts.
Surveys
Although surveys can be expensive, they can save you a lot of money in the long term if faults are revealed that can facilitate your renegotiating the price or even influence your decision about whether to buy or not.
Please remember, though, that we are lawyers and can only advise you onlegal matters and therefore please refer any non-legal issue to your surveyor. Any queries referred to usmust be clearly identified as to the legal issue involved.
Where you ask us to refer you to a surveyor and we agree to do so, we may receive a commission which we will inform you of in advance, if applicable.
Indemnity Policies – Demands and Needs
It may be necessary in some transactions for a special legal indemnity policy to be obtained relating to the property and the legal interest that you hold in that property. This usually results where a defect has been detected in relation to the title or use of the property which, if you are buying/remortgaging the property, prevents your solicitor from providing a clear certificate of title on the property to you or your mortgagee, or if you are selling, results in your buyer’s solicitor advising their client against proceeding until the insurance is effected, where the defect is not otherwise remedied. Sometimes you, or conversely, your seller, may have owned the property without any problem for many years, but unfortunately it is a consequence of the current compensation/claim culture society that we live in, that means that whilst such a policy may not have been considered necessary before, it is now; particularly where a mortgagee is involved, when such a policy will be essential.
The policy is obtained in order to protect the insured against the various losses that may be incurred and covered by the relevant policy arising out of a claim in relation to the defect in the title of the property, subject to the terms and conditions of the policy having been complied with.A fee of £50 plus VAT, plus the policy premium, is payable for arranging such policies. You would never incur this without prior notification and agreement, and often the other party agrees to bear the cost of it, particularly where the defect is on their property.
Please be aware that ANY contact with anyone who may have an interest in the issue being insured MUST not be contacted either (a) before or (b) after any policy is arranged, as in the case of (a) insurance will not be able to be arranged, and (b) the insurance company will deny liability; in both cases because the person will have been put on notice of their ability to bring an action which the insurance policy is intended to insure.
Please note we do NOT trawl the insurance market to source the most competitive policies, and although we are not contractually obliged to conduct business in this way, we generally obtain our policies through: (a) Countrywide Legal Indemnities, for home environmental liability cover, (b) Legal and Insurance Services Limited, for local search indemnity insurance, (c) ChancelSure, for chancel repair liability cover, and (d) Guaranteed Conveyancing Solutions for other policies. We would request that should such a situation arise, (which will become apparent from our additional enquiries on a purchase, or by specific notification to you), that you view their respective websites, (a) www.countrywidelegal.com; (b) www.goodtitle.com; (c) www.clsl.com; and (d) www.guaranteedconveyancing.com for the statutory disclosure documentation, more information about the companies, the relevant policy and its specific key facts and terms of issue and cover, and to ensure that you are fully aware of all implications relevant to such a policy. A copy of the policy and relevant information will be sent/available to you/placed with your deeds/documents when such a policy is actually arranged.
Transfers at an undervalue/gifts
There are a number of situations which are regarded as involving a gift or partial gift of the property, the most common being a Transfer of Equity, where one party transfers a share in a property to another either without charge or for a reduced (undervalue) amount, e.g. two parties, A and B, transfer to one, A, or one party, A transfers to two, A and B. This has many implications, including Stamp Duty Land Tax, indemnity insurance, mortgagees’ approval, and other tax implications (e.g. Capital Gains tax and/or Inheritance tax, outside the scope of our retainer). Further advice and figures will be given when full details are known and the transaction is underway.
File storage
At the end of your transaction we will retain your file. However this will be for only 6 years, after which files are destroyed. We have access to an off-site long- term storage facility and are able to offer an optional extra period of storage of 12 years, i.e. an extra 6 years, for only £12 plus vat, so that your file is available to deal with any post completion queries or subsequent transactions you may have. If you would like to take advantage of this option we will remind you of it nearer the conclusion of the transaction
Q. We are joint owners, what happens to the property if we split up?
A. During the course of a purchase transaction we will provide detailed advice of your options over how to own the property: as Joint Tenants, Tenants in Common and/or whether a Trust Deed is required. However, do bear in mind that all agreements reached between joint parties are subject to intervention by the courts, e.g. under Matrimonial Law and now under the new Civil Partnership Act 2004, which covers same sex marriage and divorce. For unmarried opposite sex couples, however, it would be a very good idea to enter into a Cohabitation Agreement, which is a contract drawn up between both parties confirming financial arrangements between them and recording what should happen in the event of a separation. For advice on this and other like issues you will need to contact our matrimonial department via our head office, on 01376 326868, who will put you in touch with the most appropriate person within our firm to deal with you, and who will be able to advise you on the question of costs.
Q. What are Money Laundering checks?
A. Currently, legislation makes it a criminal offence to be involved in money laundering. This can be assisting someone spending undeclared income or illicitly obtained monies. We will not be able to receive more than £250 in cash on any transaction. We have to undertake identity checks and make enquiries to establish the source of funds you provide in the transaction and, as this is a statutory requirement, your co-operation on this will be appreciated, or otherwise we may have to cease acting.
General
These notes are not exhaustive, and are designed to be helpful; you should refer to the Terms and Conditions of business supplied and any accompanying correspondence.
If you do not understand any aspect please askbefore you instruct us