In loving memory? Only to HIP providers, with the rest of the property industry letting out a hearty cheer on 20th May when it was announced by our new Cameron/Clegg led coalition that the mandatory requirement of producing a HIP was suspended with immediate effect. The sigh of relief from all quarters including homeowners looking to sell, selling agents, and solicitors was audible but with the previous government so adamant on advocating HIPs as the most transparent, accessible and speedy method to achieve a sale what is the real impact on the residential market?
Any experienced conveyancer would contend very little; it is no great secret that solicitors in this field believed that HIPs did not in reality add anything material to the selling and buying process. When homeowners are contemplating selling their properties that is also the time that they should put the associated legal papers in order. Agents should encourage their selling clients to involve their solicitor when the property is first exposed to the market rather than later when a buyer is found.
Solicitors, armed with their legal expertise and a knowledge of what is required, should be at the forefront. Being prepared with "the legals" is intrinsic to the transaction proceeding smoothly and quickly. You will find that making contact with your solicitor early on is invaluable as they will guide and assist you with gathering all the information you will need for the contract package. Accordingly, when a buyer is secured, any issues will have been resolved and a full information package is ready to send. So what does this seemingly elusive contract package contain?
The only survivor from the demise of the HIP is the mandatory inclusion of the EPC, as required by EU Law. The acting agent or solicitor can source this document which should be commissioned within 28 days of putting the property on the market.
The most up to date information can usually be obtained by solicitors electronically from the Land Registry and can be downloaded instantly; if there are any errors with the documentation this can be looked at sooner rather than later or indeed if there are any anomalies with the legal title now is a good time to investigate this.
When selling a leasehold property the seller will be reliant on third parties and there are two immediate matters that should be looked at.
First, is the consent of the landlord required for a valid sale? If so, they should be approached early on to see what their requirements are.
Secondly, what management information is available? A buyer will want to know how a block of flats is run and will need to see information such as the service charge accounts, insurance polices and details of any impending works. It is therefore prudent to write to the managing agent (or landlord) at this early stage to check their fees and timeframes to provide such information.
As neither the landlord nor the managing agent is directly involved with the transaction, there is no incentive to respond quickly and this is often a reason why the sale is delayed. Solicitors familiar with the requirements can liaise with these parties and should be able to procure this information at the start of the deal to avoid later delays and disappointment.
These forms are provided by solicitors and are an integral part of the contract package. They include property based forms (that have been devised to provide basic practical information to the buyer; for example, have any works been undertaken to the property, are there any ongoing disputes concerning the property?). There is also a fixtures, fittings and contents form which denote what items (e.g. curtains, carpets, light fittings) are included or excluded from the sale. These papers can take some time to complete and although practical in nature, solicitors being familiar with them are in the best position to provide assistance. They often act as a trigger for other issues/documents that may be relevant such as copies of planning permissions, electrical certificates, gas certificates, building control compliance certificates. These are all documents that a seller will most likely hold, but if any items have become mislaid or are not available, then solicitors can suggest solutions that will be acceptable to buyers. It is always better to be forewarned and prepared so that there are no eleventh hour surprises.
Although within the demise of the HIP requirement, it is no longer the responsibility of the homeowner to provide "searches". It is advisable however to consider with your lawyer putting in hand certain searches in advance so that a full package of information can be provided early on. Some Local Authorities can take over 3 weeks to return searches which can be a frustrating and unnecessary lapse in time for both transacting parties.
Every property is different, as is every transaction, and a discerning seller will always put their "legal house" in order prior to the actual sale being negotiated. There is no doubt that a proactive approach is better than a reactive one. Most practitioners would agree having the full facts to hand is vital, particularly in this economic climate. Although no one can definitively predict what market forces will be like in the next 6 months to a year, we can assume that every transaction will remain competitive. It is therefore important to have your legal documentation in place at the start, thus putting you "ahead of the game" and ready to transact.
Do not lament the passing of the HIP; with sensible planning as described sellers can achieve the results they are looking for without the additional costs of the compulsory HIP.
For more information please contact Poornima Andrews at firstname.lastname@example.org