Solicitors' Charges for Buying and Selling Property
In practice clients rarely have many complaints over the amounts which they are charged by solicitors (or licensed conveyancers) to buy or sell ordinary residential property in England. This is because it is a very competitive market. Also, of course, when a client buys a property the legal costs are low in comparison to the estate agent's commission and/or Stamp Duty. Most clients can soon find the going rate for such services in their area by telephoning around and asking for quotes which are normally very easily obtained. In fact, the Law Society is very concerned that the prices charged for conveyancing are sometimes too low because if the solicitor skimps on the job there may well be a call on the profession's compulsory public indemnity insurance for which the whole profession pays. Mortgage lenders do not hesitate to make such claims.
Such insurance claims have been increasing at an alarming rate in recent years and this would tend to suggest that the Law Society is correct - conveyancing charges tend, if anything, to be lower than they should be rather than higher. Naturally, this is good news for clients. It is only fair to point out, though, that if solicitors do have to cut corners in this area because of the cut throat competition they do also sometimes have to cut those corners in terms of client service and so the client may not be as well informed about the progress of the transaction as he would wish. This isn't always the case but in this field as in many others a client often gets what he pays for and a rock bottom price doesn't necessarily ensure a top of the range service. Trade offs do have to be made and the choice must ultimately rest with the client as to what sort of service he wants.
As well as the legal costs (quotes for which can easily be obtained by telephone from any number of firms) there are so-called "disbursements" involved in buying or selling properties. These are sums paid by the solicitor to third parties as necessary expenses in property purchase and they vary slightly depending on whether one is buying or selling a property. Of course, if one is selling one home in order to buy another both sets of disbursements will be incurred. Since these are sums paid out by the solicitor to third parties they will remain constant from solicitor to solicitor and they are inevitable and unavoidable expenses in the great majority of instances.
Selling a property.
The normal disbursements are:-
(1) The cost of obtaining the title deeds. Some Banks or Building Societies charge for this although the charge is not always obvious because it simply gets added to the mortgage debt in most cases and is paid when the mortgage is redeemed. If it is charged it is normally in the region of £25 or so.
(2) It is the seller's obligation to provide so called "office copies" of the title to the purchaser's solicitor. These documents are obtained from the Land Registry and the fee is about £5 although the Land Registry periodically changes its various charges.
(3) Very often there are quite large sums of money involved in buying and selling properties so the client will be anxious to receive the money due to him as soon as possible. For this reason (and for other practical conveyancing reasons) money is usually transferred by "telegraphic transfer" and the banks charge for this service. Normally they charge in the region of £20 - £25.
(4) The estate agent's commission. This is normally a percentage of the sale price and will have been agreed between the client and the estate agent beforehand. It almost invariably dwarfs all other disbursements (and the legal costs).
There are more expenses involved in buying a property particularly if the property is being bought with the assistance of a mortgage. Clients do not always realise that in the latter case their solicitor is usually also acting for their lender. (This is done to save costs. Basically, to prevent the client having to pay separate legal costs for his own solicitor and for the lender's solicitor because the lender would almost certainly make payment of its legal costs a condition of the loan). Nevertheless, because the solicitor is also very often acting for the client's lender it means that it is not possible to cut corners. The solicitor owes a duty of care to the lender as well as the purchaser and so he must be particularly careful to investigate the title thoroughly. Lenders can and do very frequently sue solicitors where this has not been done and all conveyancing solicitors are acutely aware of this risk.
The main disbursements on buying a property are therefore:-
(1) The local authority search (necessary in order to find out, for instance, whether the local authority intends to build a road through the front garden). The cost of this varies from local authority to local authority but it is in the general region of £100.
(2) Stamp Duty. This is typically a large disbursement because it is based on a percentage of the value of the property. Properties worth under £60,000 (currently) are exempt while properties over that value have to pay a percentage of the value of the transfer as Stamp Duty. More expensive properties have to pay an even higher rate. The Land Registry will not register details of a property transfer if the Stamp Duty is not paid nor can the transfer be used as evidence in any court proceedings. There are also penalties payable if the duty is not paid within 30 days of the transfer. In practice, therefore, the duty must be paid. Sometimes, on properties at the boundaries of the exempt or higher rate bands of Stamp Duty it may be possible to save considerable sums by attributing a proportion of the purchase price to "contents" and so reducing the value of the transfer. However, this only applies to properties near the relevant price boundaries and, of course, the apportioning of value to the "contents" has to be done in good faith.
(3) Land Registration fees. Once a property has been bought it will need to be registered at HM Land Registry and a lender will certainly insist on this. There are scale fees for such registrations which vary depending on the value of the property. In effect they range from approximately £40 for properties of modest value to hundreds of pounds for more expensive properties.
(4) In order to obtain "priority" for an intended registration it is necessary to do a special type of Land Registry search before the formal registration. (If the property was sold to someone else as a result of not effecting this protection the client would not be very pleased). The cost of this is approximately £10.
(5) Where a property is being bought with the aid of a mortgage the lender will insist on a "bankruptcy search" being carried out against the borrower. The cost of this is quite modest (less than one pound) but if it were not done there would be a risk that the sum advanced by the lender to purchase the property would end up paying the borrower's creditors.
(6) Bank charges as in the case of selling a property.
It has to be said that these are the minimum disbursements in most cases. In some cases there are rather more. Leashold properties, for instance, often require payments of sums of money to register the new owner and the lender with the freeholder and the managing agent may need to be paid to provide copies of the service charge accounts. The precise sums due will depend upon the terms of the lease but it is certainly the case that there will normally be higher disbursements in the case of a purchase (or sale) of a leasehold property.
Even in the case of freehold properties there may be additional disbursements in certain circumstances. In Cornwall, for instance, it is quite common to have to do a "mining search" to establish whether the property might be situated on an old mine working and it can readily be seen that local and particular circumstances such as these might come into play in any conveyancing transaction. The client may be sure, though, that the reason for such a disbursement will be given and that they are almost invariably necessary and/or advisable if the circumstances are such that they come into play.
Conveyancing charges are rarely a problem for clients but nevertheless you should always ensure that they are agreed in advance. A client who does not do this runs the risk of paying a "reasonable price" and in this field a reasonable price may actually be higher than the market rate.
Please note that all of the above is for information purposes only. In fact this firm does not undertake any kind of conveyancing work and we deal only with divorce and related issues.
