The Definitive Conveyancing Quotation 26 March 2006
Posted by Law-talking Guy in Guides.comments closed
In this article I will try to give you an idea of what you should be looking for in a quote for a residential sale and/or purchase.
Fees
Also called ‘costs’, this is what the conveyancer is going to make out of the transaction. Fees vary throughout the country and in general a higher fee means a better service. The majority of firms operate on a fixed fee basis but some do charge on a time basis. Fees are very, very low these days. If you take the fee and divide it by 10 that’s roughly what you’re being charged per hour. Check this against the fee-earner’s notional hourly charge-out rate and it will invariably be lower. No value element is included so you’re getting really cheap legal time. One reason for this is that conveyancing is a loss-leader for many firms and for estate agency groups in particular. One national group’s annual accounts show that their conveyancing business loses them over £1 million a year but they make 60 times that in related estate agency, surveying and financial services. Very few lawyers make any serious money out of conveyancing.
Because fees are so low many firms are tempted to hide their costs and I will talk more about these (and how to recognise them) below.
The best advice I can give you is to ignore whatever figure is quoted for fees. Anything you will be quoted is very reasonable and you are getting a great deal. In my opinion conveyancers should charge percentages like estate agents. If anything, go for the higher quote if you have to choose between two lawyers you think are equally good: chances are you would prefer the one with the higher price if their prices were equal. Select on quality!
Oh, and the second best advice I can give you is: If you are moving on a tight budget, don’t. You’re only feeding house price inflation by stretching yourself to the limit. Especially with leasehold property (and especially especially with shared-ownership) there is a big risk you will get into trouble with paying service charge (which fluctuates year to year).
Expenses
Also called ‘disbursements’, these are things the conveyancer has to pay out to other people on your behalf. As these should remain fairly constant it is possible to go into detail about what they should be. Let’s break it down. I’ll use these codes in combination: sale (S), purchase (P), leasehold (L) and unknown (U) to show what type of matter each disbursement applies to. Figures are approximate.
Official Copy Entries (S) – £4 to £8
Paid to the Land Registry for an up to date copy of the register of title.
Other copy documents (S U) -£2 to £70
Sometimes it may be necessary to spend extra money on other copy documents. Examples might be deeds or leases from the Land Registry, copies of planning or building regulations from the council, copy NHBC documentation if it has been lost, etc. If the cost is significant you should be consulted first.
Telegraphic Transfer Fee (S P U) – £20 to £30
Not really a disbursement but often listed as one. Needed when paying off the mortgage on a sale, sending completion money on a purchase and/or sending money to your bank account.
Local Search (P) – £150 to £250
Cost varies from borough to borough. This is the basic conveyancing search carried out with the council. It answers a number of important questions (e.g. road adoption, compulsory purchase orders, road schemes, planning history, listed buildings, conservation areas etc.). A ‘personal’ local search can be carried out by a private search agency but this should only be done where the council has a long delay and time is of the essence. Some cut-price conveyancing services use personal searches by default as they are cheaper.
Drainage Search (P) – £40 to £50
Should be done on any freehold purchase but often not necessary on blocks of flats. Checks connection to mains drainage and water and provides a map of the public sewers and water pipes around the property (there are serious implications if a public sewer runs under the property). Some firms use the water bill to check connection to the drains, but this doesn’t check the route of the sewers.
Environmental Search (P) – £30
Searches the land near the property for records of potentially contaminative uses. Features an opinion from an environmental consultant as to whether the land is likely to meet the legal definition of contaminated (with associated cleanup costs).
Planning Search (P) – £24
The local search only shows planning applications on the property itself. This search shows planning applications on nearby properties, of great interest to buyers.
Other Searches (P U)
Other searches may be necessary, such as coal or tin mining searches or a commons registration search, depending on the location of the property. Costs vary.
Stamp Duty Land Tax (P) – 0/1/3/4% of purchase price
Government tax on property purchases. If the price is below £125K you pay nothing. Up to £250K you pay 1%, up to £500K you pay 3% and over £500K you pay 4%. In some disadvantaged areas the lower limit is raised to £150K.
Land Registration fee (P) – £40 to £700 depending on purchase price
Fee paid to the Land Registry to register the purchase (and mortgage if applicable). Their fees vary (link to .pdf).
Land Registry Search (P) – £2
A search is made at the Land Registry after exchange to see if anything on the register of title has changed and to grant you a period of priority over any other applications for registration.
Bankruptcy Search (P) – £2 per name
If you are buying with a mortgage then this search will be done.
Landlord’s fees (P L U) – £5 to £200
With leasehold property there can be a number of obligations under the lease, like serving notice on the landlord with details of the new owner and mortgage, obtaining landlord’s consent to sell or entering into a deed of covenant. If there is a management company you may have to pay for a new share certificate to be issued. The costs can soon rack up but you won’t know what they are until your lawyer gets the draft contract.
Enquiries of Landlord or Managing Agent (S L) – £0 to £250
When selling a leasehold property it will be necessary to raise standard enquiries with the landlord or managing agent. They often charge a hefty fee for this.
Note: This list will be completed soon
Hidden Costs
I will talk for a little while about hidden costs. For the reasons outlined above, everyone is trying desperately to make some money out of conveyancing. Recognising that many people choose a firm based on price alone, it can be tempting to quote low and then bump up the price later. There are a few ways this can be done.
One way is to include ‘disbursements’ that really go into your own pocket. A good example of this is ‘postage and telephones’, which should be included in the fees as they are overheads of the business (although if they have to send a 5kg package to Australia then of course it is perfectly acceptable to bill that separately, we’re talking about normal correspondence costs here). Another example of this is a so-called ‘indemnity contribution’ (not to be confused with an indemnity policy) of £40 or so on a sale. The idea is that this is a ‘contribution’ towards the lawyer’s professional indemnity insurance policy. This is an overhead; you contribute to it already by paying fees. It is not a legitimate disbursement. A pretty good test of a legitimate disbursement is whether you can see a receipt for it from the person the lawyer paid it to.
Another way is to charge separately for certain elements of the work being done. This is a tricky one, as it is perfectly reasonable to charge £50 + VAT to fill out the 20 page stamp duty tax return, £25 + VAT to arrange a bank transfer (required to pay off mortgage, transfer funds on completion etc.) or other extra fees where the property is leasehold, new build, unregistered or whatever because this really does involve extra work and we are already operating on practically zero margin.
The problem arises when clients are not informed of these costs up front (and some firms do hide them away in the small print – I worked out that one firm quoting £350 as a flat fee actually rose to £600 by the time their standard extras had been included). It’s always best to ask what extra fees you could be charged, especially if the quote is low. Be particularly cautious of any firm that would charge you extra money if completion takes place sooner than they would like. For example, I once worked at a firm with a policy of charging an extra £150 + VAT if completion took place sooner than two weeks after exchange. The idea was to deter clients from insisting on completing a few days after exchange, which creates extra work. In practice it was rarely charged (and I have since found that there are more effective ways of achieving this aim). However, one of my colleagues used to deliberately agree completion dates without reminding the clients of the penalty fee. The result was a surprise £300 + VAT on her clients’ bills (for a sale and purchase).
Online quotes
As you have seen, it’s quite easy to prepare a quote, given some basic information, and it follows that it is very easy to write a script to give quotes on your website (I have written some myself so I speak from experience). If a firm doesn’t have an online quote you might be justified in wondering if they are quite ‘with it’ technologically (although they might just be trying to hide their costs from the competition).
Conclusion
I hope this article has been helpful to you and welcome feedback via comments.
Choosing a Conveyancer 14 March 2006
Posted by Law-talking Guy in Guides, Trade Secrets.comments closed
Let’s begin at the beginning; how do you choose a conveyancing lawyer? The Law Society has some helpful general guidelines you can follow, but let’s get more specific.
You will want someone competent to act for you. Of course, the trick is… how do you know if they’re competent or not? Answer: ask a friend. There really is no substitute for a personal recommendation. Estate agents may recommend someone decent, but on the whole they will refer you to lawyers who give them a commission (or kickback), particularly the larger chains (you must never use the agent’s own branded legal services – the agents literally own them). If you do use a firm the agent has recommended then ask them if they pay a referral fee to the agent (they will have to tell you).
Don’t pay peanuts, or you’ll get monkeys. Take into account value for money when choosing a lawyer by all means, but never go with the lowest quote. We really don’t want to deal with the type of client who rings round a bunch of solicitors asking “how much?” and nothing else. This kind of client is hell to deal with in general because they don’t value the work we do for them and, by extension, they don’t value us. When you’re paying for expert legal advice, you have to respect the person giving that advice, or you may as well advise yourself (DIY conveyancing will be the subject of a later post). So… forget the price, it’s not what’s important and it will tell you nothing about how good the lawyer is. Instead, try something like:
Can you explain a bit about the process please?
Hint: Does this cue a great, client friendly explanation or nervous waffling?Will you be handling the case yourself or will a team deal with it? What is your position in the firm/qualification/experience?
Hint: You will want to avoid the team style of working unless you like talking to people who have no idea who you are or what they’re supposed to be doing for you. Qualification is less important than experience. Look for at least 5 years experience.Do you have a direct line/individual email?
Hint: Efficient communication is key.Do you specialise in residential conveyancing?
Hint: Try not to use someone who does commercial property too. Avoid like the plague any lawyer who is also involved in any contentious aspect of law (e.g. litigation, family/matrimonial). Conveyancing is a co-operative process, if you get a litigation solicitor on the other side (or worse, your side) you may as well pull out now and save the search fees.Can I expect a full, written report on title before exchange? Roughly how many pages will it be?
Hint: This is very important as there are a few ways people do this. The correct way is to provide a full, written report on title (10-20 pages of A4) bound up with copies of all the title documents. It will be an inch or two (or three) thick. Some lawyers just send you copies of all the documents. This is no use to you as you won’t be able to understand them on your own. Some lawyers have you come in to their office and talk for hours about everything. This will not help you a few years down the line when you can’t remember any of that. Get a written report.How busy are you? Have you got any holiday coming up?
Hint: You want someone who is popular enough to be comfortably busy but not snowed under. Lawyers may not tell you how busy they really are, so be alert to any sign that the lawyer is overloaded as this means your matter will take a lot longer. If you have a timescale to meet you MUST run it by the lawyer now and ask them honestly if they will be able to meet it (assuming all goes well). If your timescale is anything under 12 weeks then you are being needlessly optimistic. Refer to the Golden Rule below.Have you dealt with properties in this road/block before?
Hint: Especially when it comes to leasehold property, local knowledge makes all the difference. If I frequently act on sales and purchases in a particular block of flats then I can check the title much more easily (and therefore faster). I may also be able to use the documents from my other files and, most importantly, I already have a report on title written for the particular form of lease used in the block, which means you get it faster.
While talking to them you will be able to form an opinion about the type of person they are, how well they communicate and how much they know about the law and practice of conveyancing. Make sure you like them!
If you must then you can ask how long it will take, but I can tell you now if you like. The answer is: I don’t know and neither does anyone else. However, a normal freehold matter will take around 8-12 weeks. Leaseholds will always take longer (this includes ‘share of freeholds’, which are in fact leaseholds whatever the agent may have told you). It could take much longer than 12 weeks and is very unlikely to take less than 6 weeks. If there is any kind of lease extension or similar then triple this estimate. Yes, I know you’ve heard about completions taking place within a week, but these are very special cases where weeks and weeks of work have been done before the sale was agreed. Trust me, if we could do it in a week, we would be VERY glad to. Do you think we LIKE you chasing us up all the time telling us how you’re going to be homeless on the 5th?
Please remember the Golden Rule: “Never, never, even in fun, make any kind of commitment that depends on the sale/purchase until after exchange.”
The Silver Rule is: “It will often take longer than we said, usually take longer than you thought and always take longer than the agent told you it would.”
My advice would be to avoid online conveyancing services. They all work on the ‘factory’ model and usually offer low quality services delivered through teams of unqualified people.
If you are buying a newbuild property from a large developer then use the solicitor the developer recommends, even if you normally use another firm and they are the best firm in the world. The recommended solicitors have already got a report prepared and your solicitors will not thank you for dumping a one-off newbuild on them.
To sum up, when choosing a solicitor/licensed conveyancer you must select a friendly and professional individual who will be available when you need them, has capacity in their workload to deal with matters promptly, is knowledgeable and competent and has the necessary experience. Most importantly, choose someone you get on with.
The Truth About Conveyancing 13 March 2006
Posted by Law-talking Guy in Conveyancing Wars, Trade Secrets.comments closed
Good morrow, and welcome to the web log that will change your mind about conveyancing. I’m your host, Law-talking Guy, an 8 year veteran of the Conveyancing Wars. If you don’t know what conveyancing is, head over to Wikipedia for a précis (and count yourselves lucky). Back already? Well, as you can see, this short entry does not do justice to the monstrosity that is conveyancing in England and Wales. Not for nothing is moving house said to be the most stressful thing you can do, and a big part of the reason for this is conveyancing.
I am fed up to the back teeth with people who know nothing about conveyancing spouting off glibly about it as if it were the easiest thing in the world. Things like “there is some paperwork that must be processed before you can move in” or “the solicitor makes a Search in the Deeds at the Land Registry Office of Deeds and Registers to make sure no Mice have got into the Deeds Packet” (always beware of people who capitalise common words like ‘deeds’ or ‘search’ – they have an exaggerated idea of their own importance).
So here it is, the truth, what no conveyancing solicitor will tell you, straight from the horse’s mouth:
Conveyancing is very hard, highly skilled work. It makes us die a little inside every time you tell us to “just process the paperwork” or “chase up the other side cuz I want this all done yesterday” or ask “can’t I do without a local search?” or “do I have to extend my lease?” or “can I have a discount?”. Do you have any idea how much crap we struggle through every day on your behalf? How many rules there are and how often they keep changing? How easy it is to miss something important? How hard it is to do a good job under a large caseload? How much concentration and skill go into checking the title to your property? How much risk we take (because, let’s face it, for all your pushing for us to break the rules, you’re still going to sue us if anything goes wrong)? How many things we have to do for your lender? How little we get paid? How unique most transactions really are? How much we hate leasehold property?
I’m sorry if I sound bitter, but I am. This profession is a joke. We are held up to the highest standards of professionalism but are paid ten times less than the least professional people on earth (estate agents). Yes, I know some of you are willing to pay for quality, and for that I thank you. But others among you may think that £800 is expensive for conveyancing. What planet are you living on? It’s cheap at ten times the price (if done well)! The reason it is so low is… well that’s best left for another post. Of course with conveyancing, as with everything in life, if you pay peanuts, you get monkeys.
There is a lot more to conveyancing than you will ever know, but this blog aims to change that. However, in the words of Morpheus:
“Remember, all I’m offering is the truth. Nothing more.”
The Matrix
Well… you get my opinion thrown in for free.
