How to avoid a property deal falling through
Residential property investment is very different to buying a home, and yet also shares many of the same attributes. One of these is the process of conveyancing. The success of property investment opportunities can be harmed, and even crushed if conveyancing goes wrong.
In this article, we explain conveyancing and how it could go wrong, and what to do if it does.
What is conveyancing?
When any property is purchased, the title must be transferred from seller to buyer. It’s a legal process, which sounds simple. In most cases it is. However, problems do occur, and on both sides of the deal – the buyer and the seller.
Conveyancing problems that could hamper a property investment deal
The problems that could hamper the transfer of property are many and varied. They could be caused by poor processes, human error, or be financial in nature.
· You don’t pay the deposit on time
You should never have this problem, but it does happen. It may be the fault of your bank, or the solicitor you are using. It doesn’t often cause the deal to fall through unless you don’t have the deposit. Usually, the seller will contact their solicitor, who will speak to your solicitor. It could be a temporary hold-up or something that takes longer to sort out. If the latter, you are likely to be charged interest on the deposit while it remains unpaid.
· The seller’s bank can’t settle in time
If you are making a residential property investment and buying a home which has a mortgage secured on it, you are partially reliant on the seller’s bank having its paperwork and processes all running smoothly. It could be that the property seller’s bank isn’t ready to accept the money (I know – a bank not ready to take money?). Some documentation that is needed is missing, or the person dealing with the sale is absent through illness. Often such a delay is very temporary in nature.
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· You’re not ready to complete
You may believe that everything is in order. You’ve filled in all the forms, sent them all off. Then you hear that the sale is delayed… because your mortgage documents aren’t in order! The bank has found an error, missing paperwork, or an unsigned document on the day that completion is due! The seller might be able to charge interest, and you should speak to your conveyancing solicitor to make sure that any such problem is dealt with immediately.
· You can’t get financing
The likelihood is that you are buying and exploiting the benefits of leveraging in residential property investment. However, you may have signed a contract with the condition that the sale is dependent on you securing financing by a certain date. The date comes, and you still don’t have confirmation of financing from the lender.
There are several things that might happen now. For example, the seller may decide to terminate the sale. If you still wish to go ahead, speak to your conveyancing solicitor and request they ask for an extension. Again, the lender may be delayed for a reason that is beyond your control.
· The property is in a worse condition than when you agreed on the investment
It is more common than you might think, both with existing and new build properties. When you make the final inspection, make sure you take someone with you and have the seller present. If there are any quality or maintenance issues, discuss them with your solicitor.
Should you use a conveyancer or solicitor or do it yourself?
It always amuses me that anyone would consider doing their conveyancing. Walk into a shop such as WHSmith or Google ‘DIY conveyancing’, and you’ll be able to pick up an ‘easy-to-do’ conveyancing pack. If you are desperate to save a few quid, maybe you shouldn’t be investing in residential property.
A property investment is probably the biggest single investment you will ever make. Is it worth risking such a sum by saving a miserly amount?
My advice is to use property experts and legal specialists throughout the process of investment. Doing so pays dividends in the long run.
What is the difference between a conveyancer and a solicitor?
A conveyancer has less training than a solicitor and specialises in property transfers. For ordinary residential property purchases, this is the specialist that most people will use.
A solicitor is qualified in law. They will offer a more comprehensive legal solution. It could be important to an investor, especially if you are investing in a more complex property investment deal such as off-plan property. However, you should still proceed with caution when hiring a solicitor – a generalist solicitor may not have the experience in property deals that you need. Read our advice on how to find an awesome off-plan property solicitor for more information.
A solicitor will almost always be more expensive than a conveyancer. But when the chips are down, and there’s a risk of an incredible investment in residential property falling through, I know which I’d want in my corner.
Contact one of our team today on +44 (0)207 923 6100. Our list of solicitors with extensive experience in property investment legal issues is one reason investors return to Gladfish time and again.
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