There is, in principle, no reason why parties who wish to buy and sell real property should do so in a way that is markedly different from any other form of sale and purchase.
There are, to be sure, certain formality requirements. In particular, the transfer of ownership must be formalized in a Deed, and the new owner must apply to the land registry to be registered as the new proprietor. However, provided these formalities are complied with, a house can be bought and sold as readily as a newspaper.
Of course, in reality, the purchase of any kind of real property is usually a Big Deal for the parties involved, and over the years a specific protocol has been developed to deal with most straightforward land transactions. In outline, the steps are as follows.
- The buyer and seller negotiate informally the main terms of the contract. Typically the selling price is agreed at this stage, although other matters may remain to be settled.
- The seller completes a standard enquires form providing information about the property. He is not, in principle, obliged to provide any information at all, but no sensible buyer would proceed in the absence of reasonable cooperation.
- The buyer arranges to have the property investigated for its structural soundness, and general sale worthiness. Professional surveyors may be instructed for this.
- The buyer carries out various searches and investigations to ensure that the property is going to be a good buy. In particular, the buyer will want to ensure that the property is not likely to be subject to a compulsory purchase order, and not subject to any other local land charge that will diminish the use of the property.
- The seller (or, more likely, his legal representative) draughts a contract of sale and passes it to the buyer for comment. The contract may pass back and forth for a while until a final agreement is reached.
- The contract is signed by the buyer and seller, and some money is paid by the buyer. If the amount is substantial it is usually set off against the final purchase price (and is, therefore, a deposit). In domestic transactions, it is common for the seller to ask for 10% of the purchase price. The contract will usually include a term to the effect that the deposit will not be repaid if the buyer unreasonably fails to settle the full amount. The contract will also specify a date on which the transaction is to be formally concluded, and what penalties are payable by a party who delays this date. This stage is usually referred to as ‘exchange of contracts’.
- The buyer investigates the soundness of the seller’s title. This will now usually require an inspection of the entry held by the land registry, but if the land is unregistered the buyer will want to inspect the title deeds.
- When the buyer is happy with the title, he draughts a deed of transfer to himself and passes it to the seller for comment. The seller may modify it and return it, and this too-and-fro process may go on until both parties are satisfied.
- On the agreed date the parties sign the deed of transfer and the buyer hands over the balance of the purchase price.
- The buyer registers the transfer with the land registry.