Buying a business from an administrator or receiver

You have been looking for opportunities to buy a business that compliments your existing business. It could be a competitor, someone in your supply chain or a business that adds value to your existing client base. You are aware of a potential target that is in financial distress. Do you wait and make a low offer when an administrator has been appointed or when a bank has appointed a receiver?

Like any Management Buy-Out or MBO's, a buy-out from a receiver will include the setting up of a purchasing company ("Newco") but there will be a number of significant differences from a normal buy-out.

Administrators and receivers are normally under great pressure to conclude a deal as soon as possible. The fundamental rule is to focus on making the deal work rather than completing a normal deal process involving the negotiation of heads of terms, a lengthy legal and financial due diligence process before negotiating complex legal documentation. This is particularly true when they are running a business as a going concern pending a sale. Key employees may exit and customers may move their account elsewhere.

As time is of the essence you will have to take a commercial view on many aspects of the deal which would ordinarily be dealt with in the legal documentation. There are certain aspects that your lawyer will be able to check (title to property, employee terms and conditions, whether any of the assets are subject to a charge) but the administrator or receiver are not the business owners but third party sales agents. As such they will not accept personal responsibility for anything and will not guarantee legal title to the assets. Normal contractual provisions such as warranties and indemnities and completion accounts (all of which would otherwise give rise to a post-completion price adjustment in the event of an unforeseen risk arising) will not be given and so this should be reflected in the price you offer. As a rule of thumb then the business is sold "as seen."

In terms of structuring the deal a buy-out should therefore involve the acquisition of the underlying assets and goodwill of the company rather than the shares in the company itself. This is because the acquisition of a company would mean Newco acquiring that company subject to all its historical liabilities whether or not known to the buy-out team. An asset purchase should involve acquiring only specifically identified assets and liabilities.

Given the timescales, raising finance for the purchase may also be difficult. Normal fundraising or venture capital finance has been more difficult to obtain during the recession so buy-out teams have had to be more innovative. Invoice discounting companies and banks providing asset-backed lending have moved into the buy-out market in recent years which may provide a useful source of funds. Members of the buy-out team may also be asked to put their own funds into the deal as evidence of their commitment.

The stock and assets of the business in administration or receivership need careful consideration. Many suppliers incorporate "retention of title" clauses in their terms and conditions of supply, the effect of which if properly incorporated, is for the supplier to retain title to the goods until payment has been received. The buy-out team may well find the supplier or another secured creditor asserting title to an asset which the administrator has purported to sell to Newco. In these circumstances NEWCO may be bound to return the goods and indemnify the administrator or receiver against any claims that have been made against them.

These are just a few of the issues that may arise on a buy-out from an administrator or receiver. Whilst there can be sound business reasons for buying an insolvent business it is vital that the buy-out teams are aware of the risks that the process involves and take appropriate advice from a suitably qualified expert.

For further information, please do not hesitate to contact the team at ORJ Solicitors, Lorraine Smith can be reached on 01785 275380 or email Lorraine.smith@orj.co.uk or visit our corporate webpage at www.orj.co.uk/corporate.php

Model Articles - Companies act 2006

Under the companies Act 1985 specimen articles of association were provided in the form of "Table A." The Companies Act 2006 provides a set of "model Articles" for companies.

Companies formed after 1 October 2009 will, in the absence of specifically tailored articles, be formed by reference to the Model Articles rather than Table A. Companies formed before1 October 2009 can (whilst there is no legal obligation to do so) choose to adopt some or all of the Model Articles.

Companies may wish to review, update and amend their articles of association in light of the 2006 Act and the Model Articles as the changes made under the 2006 Act attempted to remove much of the "red tape" for directors of OMB and SME companies.

For example the 2006 Act removed the concept of an authorised share capital in order to provide more flexibility for directors to issue shares.

In general the 2006 Act proceeded on the basis that a company can do various things unless a specific article prevents it from doing so. Consequently companies may wish to consider whether to add certain restrictions on powers which the directors will not otherwise have.

For more information and to contact us with regards to your company's articles, and that they are inline with the business needs of your company, go to www.orj.co.uk/corporate.php or call us on 01785 223440.

5 Top Tips For Residential Landlords - ORJ Solicitors

Being a landlord in these uncertain times can carry enough risk without falling foul of technicalities that can befall the unsuspecting Landlord when they seek to obtain possession of their property.

Here are my Top tips for landlords some may appear obvious but it is common for landlords to fall into these traps;

 

1. This sounds obvious, but always ensure you have a written tenancy agreement. This clarifies the landlord and tenants responsibilities to each other and provided it is drafted properly engages legislation that is designed to make it quicker for a landlord to gain possession of their property when faced with a defaulting tenant. 

2. If you are taking a rent deposit, please remember to place this in an appropriate rent deposit scheme. Not only are you unable to start the process of obtaining possession until this is done but you avoid the risk of being liable to pay the tenant damages for failure to do so.

3. Always make sure that you serve the correct notice and that it is valid. On numerous occasions I have been instructed by clients after they have served the incorrect notice themselves and have been burnt when their possession claim has been dismissed for this.

4. Following on from 3. Make sure the dates are correct in the notice. Failure to do so will result in the claim being dismissed and a fresh notice having to be served, effectively starting again from scratch. Such an mistake can result in severe delays to obtaining possession. If the tenant has had legal representation, a dismissal of the possession claim can also result in a costs order against you!

 

5. Whatever you do and no matter how frustrated you get faced with a non paying or persistent late paying tenant, do not take matters into you own hands and kick the tenants out. This can result in a claim for substantial damages by the tenant against you for unlawful eviction. Such damages can be high so as to punish the landlord for the unlawful behaviour and to compensate for the distress caused to the tenant. 

6. Bonus time! If in doubt consult your solicitor to obtain the appropriate advice that is likely to save you time, money and take the worry out of the process. 

 If you are a Landlord and considering action, perhaps you have concerns with rent arrears, repossession, disrepair or breach of covenant, please feel free to contact me on david.edwards@orj.co.uk or call 01785 275 365.

ORJ SOLICITORS: FLOODING - YOU DON'T NEED TO BE BY A RIVER OR SEA

Given all the current news showing the flooding crisis in the UK at the moment, it shows more than ever the need to consider flood risk when purchasing a property.
The issue of insurability of properties is now a high profile issue which can potentially affect the cost you must pay to insure your home.

The Environmental Agency assess that 1 in 6 properties are at risk of flooding.  The most common types of flooding are:-

• Surface water flooding - occurs when heavy rainfall overwhelms the drainage capacity of an area.

• Sewer flooding - occurs when sewers are overwhelmed by heavy rainfall or when they become blocked.

• Groundwater flooding - occurs when underground water levels rise above surface level. This is most likely to occur in low lying areas underlain by permeable rocks.

• River flooding - occurs when a watercourse cannot cope with the water draining into it from the surrounding land.

• Coastal flooding - results from a combination of high tides, low lying land and, sometimes, stormy conditions.

ORJ Solicitors recommend that a Flood Risk Search is obtained when purchasing your property.  This will give further details as to insurability, based on the level of flood risk.  This search will also assess the risk of flooding from river, coastal, groundwater and surface water sources and will determine whether the property is in or within:

a. 250m of an area affected by flooding (Zone 3) or extreme flooding (Zone 2)

b. 250m of flood defences or area defences

c. National Flood risk assessment (NaFRA)

Furthermore, the report will identify where groundwater flooding could potentially occur based on the underlying geological conditions.

We also recommend that you sign up for flood warnings at http://www.environment-agency.gov.uk/homeandleisure/floods/31618.aspx 

Finally, we would strongly recommend that you always make enquiries with insurance companies as to cost and insurability before you legally commit yourself to your purchase.

Tania Zompi

www.orj.co.uk

ORJ Solicitors: Coal mining searches – Are they really necessary?

Working in a busy Conveyancing team at ORJ Solicitors we often get asked about the relevance of the searches that we carry out, one of which is relating to the coal mining searches.

If you have found that dream home to purchase, your main concern may simply be when the moving date will arrive. It must be stressed however that even if a property appears perfect on the surface, there may be hidden issues not immediately apparent from an initial inspection. A prudent buyer should always have various searches carried out against a property before taking the final plunge.

A coal mining search will often be essential for anyone buying a property in an area with a history of coal mining. Surface and underground coal mining played a huge part in the industrial history of Britain, a role which continues today. Previous coal mining activity can pose various risks when you are planning on purchasing a property. A house may have been built over or near to old coal mineshafts and there may be a risk of subsidence (the gradual caving in or sinking of an area of land). In Cheshire, brine has been extracted by a pumping process for several centuries. Underground cavities created by the pumping may ultimately collapse, causing serious damage to any property above. Cases are often reported of old mine shafts collapsing due to not being capped or filled-in properly and causing serious damage to houses. There may also be environmental issues, such as soil contamination, mine gas emissions and the build-up of dangerous elements.

Because of these risks, it is vital that a mining search is carried out when purchasing a property in an affected area. If you are having a mortgage, your lender will insist on having the search carried out in order to protect their interest in the property. The value of a property can seriously diminish if previous mining activities are discovered and buildings insurance premiums are also likely to be affected.

Mining reports are prepared by the Coal Authority. The Coal Authority owns the vast majority of the coal in the UK (along with former coal mines) and is responsible for licensing coal mining in Great Britain. The Coal Authority Report reveals information regarding any past, present and future mining and highlights any environmental and stability risks which could affect the property. The search also provides details of any subsidence remediation claims, shaft locations, reported hazards and mine gas emissions. Mining reports cost approximately £35 and are generally prepared relatively quickly (usually less than a week). 

For an additional fee, the Coal Authority can also provide a supplementary Mine Entry Interpretive Report. This report goes into greater detail regarding any mine entries revealed and highlights the likelihood of mining subsidence damage arising as a result of the entries. The Interpretive Report also provides details of any remedies available for subsidence damage.

The Coal Authority website contains further useful information and has an interactive map which can be used to determine whether the property you wish to purchase is located in an area with mining history. The website could aptly be described as a mine of information!

When purchasing a property, your Conveyancing Solicitor will advise you whether a mining search is needed. Once the search has been obtained, your Solicitor will explain the results to you. In the majority of cases, the search will not reveal any serious issues but will importantly provide you with peace of mind and satisfy your mortgage lender.

Find out more - http://www.orj.co.uk/residential-conveyancing.php

ORJ Solicitors - Enterprise Management Incentive Schemes (EMI’s)

Enterprise Management Incentive (EMI) options are a type of discretionary share option scheme commonly used by smaller private trading companies to incentivise and retain key employees. EMI options are HMRC approved and provide excellent tax benefits for both employees and employers alike.

EMI qualifying criteria for the company

EMI’s are subject to various qualifying criteria. To qualify to grant options, a company must be an independent trading company (it must not be a 51% subsidiary) with gross assets of no more than £30 million (at the time options are granted) and a workforce of no more than 250 employees.

It must carry on a qualifying trade on a commercial basis with a view to making profits. In terms of a qualifying trade it should not consist substantially (ie more than 20% of turnover) of certain excluded activities. Broadly these include providing professional services, property development or dealing in securities or other financial instrument or managing property (including nursing homes or residential care homes). ORJ Solicitors can advise you on whether your company meets the relevant qualifying criteria and an alternative employment incentive schemes if you do not.

EMI qualifying criteria for the employee

The employee must satisfy the relevant working time requirement. Three different descriptions of employee can satisfy the requirements to receive EMI options:

1) Employees who are required to spend more than 25 hours a week in the business of the EMI company, regardless of whatever other economic activity they are required to undertake.

2) Employees who are required to spend an average of less than 25 hours a week in the business of EMI company if the employment makes up on average at least 75% of the employee’s working time and  who are also self employed or work elsewhere.

3) Employees who have no other renumerative employment or self employment no matter how little time per week they required to spend in the business of the EMI company.
Benefits of EMI’s to qualifying employees.

Employees satisfying the above criteria may be granted the right to buy shares up to the value of £250,000 at a price fixed at the date of the grant. There is a total limit of £3m that can be subject to unexercised EMI options. There is no limit to the number of employees that can be granted options provided the overall limit is not exceeded. No tax or national insurance contributions are  payable for either the grant or exercise of the option, provided the exercise price meets or exceeds market value at the date of grant.

The shares themselves can be with or without restrictions (including non-voting) but must be fully paid up. Performance conditions (set at the date of grant) can provide tangible medium or long term incentives (typically targeted to be achieved 3 – 10 years from the date of grant).

If you are looking to incentivise and retain key stakeholders in your business an EMI could prove ideal. For more information and expert advice on setting up and managing an EMI scheme get in touch with the experts at ORJ Solicitors. We can also review existing incentive schemes or bonus arrangements currently in place to ensure they are tax efficient and achieve your commercial objectives. We are also able to provide expert advice on buyback procedures should any of your key employees wish to exit the business.

ORJ Solicitors Discuss Buying Repossession Properties

At ORJ Solicitors we have seen an increase in the number of buyers looking to purchase a repossession property and the guide below highlights that there are some considerations to take into account when buying such a property. Since the economic downturn there has been a noticeable rise in the number of repossession properties being offered for sale. Essentially, a property may be repossessed by a mortgage lender (the Bank) if the homeowner fails to keep up with mortgage repayments as they fall due. Whilst there are companies which purport to be specialists in the sale of repossessed properties there are plenty of repossessions advertised through estate agent and auctions.

Do your homework:

Whilst buying a property can be stressful at the best of times, buying a repossessed property can be even more harrowing with the imposition of strict deadlines and the all too familiar possibility of being gazumped! 

We all love a bargain, but buyers should be careful not to fall into the myth that all repossession properties are being sold at a knock down price. Even if the price tag is “too good to be true...” buyers should always be prudent and carry out research before making an offer. Your due diligence need not be expensive or be laborious; conducting a search of the web may give you an indication of prices of similar properties for sale advertised or even allow you to compare previous property sale prices by carrying out simple online valuations. These initial investigations coupled with a viewing of the property should give you a clearer indication of whether the property is a bargain or whether you’d need to be a DIY enthusiast with deep pockets, and the willingness to take on a challenge.

Making an offer: 

Once you’ve done your homework (including working out your finances) you should not delay in making an offer. You must be mindful that the Bank is under a legal obligation and has a duty to obtain the best possible price - even if your offer is the first or only offer. Once your offer has been accepted it is usual for the Bank to impose strict deadlines, commonly a buyer will be given 28 days to exchange contracts. Once your offer has been accepted it is imperative that you instruct a Solicitor to act for you in your purchase. The sooner you instruct a Solicitor, the quicker searches can be put in hand and well ahead of the deadline to exchange. If you are taking out a mortgage it would also be wise to ask the Solicitor whether they are also on the panel for your mortgage lender. If they are not, it is likely a separate firm will act for your mortgage lender which is likely to cause delays in meeting that all important deadline. Buyers must always remember that speed really is of the essence. Whilst your offer may have been accepted, the Bank will never agree to take the property off the market. It is therefore important that you are aware that you could be gazumped at any time before contracts are exchanged, even if you have paid for searches and surveys.

Condition of the Property: Buyer beware

When purchasing a property in England and Wales the basic principle of “caveat emptor” (let the buyer beware) applies, whether your purchase is a repossession or not. In short, the onus is firmly placed on you the buyer to carry out all necessary inspections and surveys before buying. The seller is under no duty whatsoever to reveal any physical defects in the property, as it is your responsibility to discover them. There should be no delay in making your investigations as on exchange, you are deemed to have accepted the property in its present state and condition. Often repossession properties are in poor condition. Therefore, your investigations are even more important as the Bank is unable to provide any answers that a regular seller may be able to provide.  

A prudent buyer should always have the property surveyed by a Chartered Surveyor (as opposed to a valuation) and have the services (eg. central heating, electrical wiring, plumbing etc.) inspected and, if need be, tested by an expert prior to the exchange of contracts.  You should note, if you are having a mortgage, that a lender's valuation will be carried out for the lender's purposes only and not for you.  If the lender's valuer has made a mistake, you will rarely be able to pursue an action against that person.  In any case the lender's valuer is employed to consider whether the property is worth more than the amount to be lent on mortgage and not whether the property is worth what you propose to pay for it.

Completion and beyond

Once you have exchanged contracts, you are legally bound by contract to complete the deal. Usually, the Bank will require completion to take place within 7 days of exchange and it is therefore important to ensure the balance of monies required from you to complete the purchase are with your Solicitor in good time. It is also essential that upon exchange your home insurance is in force as under the terms of the contract it is likely that any ‘risk’ will pass to you the buyer. On completion, your Solicitor will transfer the purchase monies to the Bank’s Solicitor. Your Solicitor will call you to confirm completion after which the selling agents will release the keys to you. Once you have the keys to your new home, you will need to deal with any disconnected utilities and make the necessary arrangements to have the accounts transferred into your name. In addition, it would be sensible to change the locks and when doing so unscrew the letter box to allow the postman to deliver your post!

At ORJ Solicitors our conveyancing team have developed a great reputation in Stafford as well as across the country. We understand that moving home is a life changing experience for you and your family and we will advise you every step of the way. Every single home sale, home purchase and remortgage is different which is why our dedicated and approachable residential conveyancing team take the time to understand what you want. For a no obligation quotation tailored to your requirements please contact our conveyancing team on 01785 223440.  For more about ORJ Solicitors and the conveyancing work carried out,please follow the link: www.orj.co.uk/residential-conveyancing.php

ORJ Solicitors - Key questions to ask when buying a business

Are you buying a limited company or the right to business?

Acquiring the shares in a company involves the acquisition of a legal entity in its own right and accordingly inheriting all the legal liabilities and obligations that the company has incurred since the date of its incorporation. Acquiring a business allows a purchaser to “cherry pick” the various assets and ring fence the liabilities it is prepared to take on board. For those selling their business they have the same choice, to sell shares in the company that owns the assets of the business or to procure that the company itself sells its assets. Factors that are often considered when deciding which route to take include:

Tax

A sale of shares will normally give rise to a capital gain for an individual shareholder, but if a company sells its assets, the company will pay corporation tax on any net gains and it will be difficult to pass the proceeds of the sale onto individual shareholders without further taxation. Sellers will typically wish to sell their shares in the company rather than procure the sale of its assets and as a purchaser you may wish to preserve the benefit of tax losses available on an acquisition of shares rather than assets.

Liabilities

A company is a legal entity in its own right and capable of incurring contractual, tortious and even criminal liability all of which will need to be evaluated before any purchase. A purchase of assets allows you to select only those assets and liabilities you wish to inherit (with the exception of employees and certain property and environmental liabilities). So an assets acquisition is more favourable where the trading history of a company is uncertain or there is some doubt about the liabilities it has incurred.

Non Transferable rights

In many circumstances (for example the transfer of a leasehold property) the rights in certain contracts or licences cannot be transferred without the consent of a third party. There may be a significant contract with a major customer which contains a similar clause. The business may benefit from significant intellectual property which is owned by a third party. In these situations the acquisition of the shares in a company doesn’t change the entity which has the benefit of such contractual rights whereas the acquisition of assets may trigger such pre-emptive rights which could scupper a disposal.

Partial Disposal

It may be that sellers only wish to sell a share of a business. In this case a purchaser may acquire a percentage shareholding in the company which would give certain rights to participate in profits in the company by way of dividend. You would typically put in place an agreement between the shareholders protecting your investment and giving certain contractual protections in the form of veto rights depending on the percentage shareholding you acquire. If the sale is of a particular division of a company an asset sale may be the only practical choice.

While all these factors will affect the structure of the deal typically one or more will often be compelling but agreeing the principal form of acquisition structure at the outset is important as it will dictate the structure of the legal documentation that is put in place to eventually complete the deal.

Due Diligence

Whatever the structure of the deal you will want to carry out your own commercial, financial and legal investigations to ascertain to the greatest extent possible what assets the company or business purports to own and what liabilities it has incurred which may or may not transfer to you, the purchaser. Call for all the trading accounts, audited accounts (and management accounts since the last set of audited accounts), stock inventories, balance sheets, profit and loss accounts, bad debt policy and policy for depreciation. Instruct an independent accountant (not the accountant who has produced the accounts) to review them and raise any issues as soon as they become apparent. Any irregularities could affect the purchase price or the decision to proceed at all.

In terms of legal due diligence you will need to instruct a solicitor to raise a whole host of questions concerning the business, what property it owns, are there any charges registered against the company at Companies House? Will these be discharged at completion? Who are the shareholders? Are the shares freely transferable? Is the business a subject of any litigation or under threat of the same? Are there any bad debts? Are there any employees that will transfer over to you by operation of law? Do any of them have any grievances against their current employer? 

Although investigation will go some way to establish whether or not the target owns the assets it purports to own, the most intensive and searching enquiries cannot conclusively establish the extent of the liabilities which the target owns. It is therefore customary to include a comprehensive set of warranties or contractual statements about the target and its business in the legal documentation which if they subsequently prove to be false will permit the purchaser to sue the seller for the loss it has suffered as a result.

Valuing a business

Probably the biggest concern for a purchaser is paying too much for a business. Whilst this is understandable it has more to do with misinformation and your approach to the due diligence process than being an expert at valuations. What someone is prepared to pay for a business is entirely subjective. Whilst there may be cases where a purchaser may not have negotiated the best price payable for a good business it stands to reason that no price is cheap enough if you buy the wrong business. In time a good business will always justify the purchase price whereas a bad one may never allow you to recover financially.

There are two main valuation methods which could be the subject of a separate article in their own right. These are asset based valuations and cash flow multiples. In the former a value is attached to all the assets of the business (machinery, equipment, property etc.) and you purchase the the assets accordingly (possibly subject to a completion accounts adjustment mechanism to verify the value). For cash flow based multiples a formula is used that combines the targets profits, owner benefits, adds back certain expenses and then applies a multiplying factor (possibly based on the industry sector) to this number to establish a purchase price. This is the method that is most commonly used and a general understanding of accounting principles is required to make this calculation. As a rule of thumb the multiple is typically equal to three times the cash flow.

Structuring the purchase price

Is the purchase price to be paid in full on completion? Is this going to be funded from your own cash flow or is there bank funding required? If so, what will the bank want to see in terms of its own due diligence before it sends the proposal to its Credit Committee to approve the loan? Will it want security over the assets of the target going forward? Will it look for a personal guarantee from the individual purchaser over their personal assets (most importantly the family home)?

If there is any doubt over the value of the assets of the target that is being acquired you may wish to incorporate a completion accounts mechanism whereby the assets are valued by an independent accountant at completion and the purchase price adjusted  accordingly by reference to an agreed benchmark figure.

If it’s a company purchase and there is some doubt over certain as yet un-crystallised liabilities you might consider paying a proportion of the purchase price into a separate escrow account pending the happening of certain events or the or the lapse of an agreed period of time during which the perceived liability may or may not come to fruition. This method ensures the purchaser is protected should the perceived liability materialise and the seller is given the comfort the money is available provided the liability does not arise) and the purchaser is not just making up spurious reasons for reducing the purchase price.

Do you want the key stakeholders to remain in the business?

It may be the case in a small family business that a lot of the goodwill, know-how, customer relationships etc. rest in the hands of certain key shareholders or employees. Whilst you want to acquire the target and have free rein to run your business as you see fit following completion you might wish to retain certain individuals for a short period of time to enable that knowledge base to be transferred for customer or supplier relationships and other key contacts to be embedded with you as the new owner of the business. 

Similarly if part of the purchase price has been structured by way of deferred consideration or earn-out (where a proportion of the purchase price is calculated by reference to the future profitability or turnover of the business) the seller may want to remain with the target for that period of time to ensure the target’s performance in order to maximise their subsequent payout. 

For more information on mergers and acquisitions, buying or selling a business, follow this link: http://www.orj.co.uk/corporate.php or contact Partner Lorraine Smith on 01785 223440, Lorraine.smith@orj.co.uk

ORJ Solicitors - A Brief Guide to Moving House

We have all heard it said that moving house is up there in the top three most stressful experiences of your life. Although the reasons for moving are often positive, these reasons can often be forgotten and what should be an exciting new start can rapidly turn into a difficult and bewildering trial.

Remember that your conveyancer is there to help; not just with the technical legal work to ensure that you don’t acquire a property with a problem, but also to ensure that the transaction is as swift and smooth as possible, and to iron out any issues that arise during the course of it. It helps to know what happens during the transaction and set out below is a brief guide outlining the key steps:

Selling a residential property

1. Once a buyer is found and the price agreed, the estate agents will provide a sales memorandum to all the parties giving details of the transaction, i.e. buyers, sellers, their conveyancers, price and situation of the parties.
2. The estate agents will also provide an Energy Performance Certificate for your property that they probably commissioned on your behalf when the property was being marketed
3. Your solicitors will draw up the draft contract and ask you to complete several property information forms, which will all be sent to the buyers’ conveyancers together with any other relevant paperwork you have pertaining to your property, e.g. guarantees, planning permissions.
4. Your solicitors will ask you to provide details of your existing mortgage if you have one so that they can apply for any title deeds your lender might be holding and a note of the amount outstanding on your mortgage.
5. The buyers’ conveyancers may request further information and your solicitors should will liaise with you to deal with their queries.
6. Once the buyers are ready, a completion date will be negotiated. Your solicitors will ask you to sign the documentation in readiness for exchange of contracts, which is the point at which the deal becomes legally binding. Until exchange of contracts either party is free to withdraw from the transaction for any (or no) reason. Your solicitors can try and work towards a completion date, but cannot guarantee this will happen until contracts have been exchanged, nor can your solicitors be responsible if the buyer fails to complete in breach of contract
7. On the day of completion, you will move out if you have not already done so, the buyer’s conveyancers will send your solicitors the sale price, and ownership of the property passes to the buyer.
8. Out of the sale proceeds we will repay your mortgages (if you have any), legal costs and disbursements, and the estate agent’s bill. The net proceeds will either be sent to you or, if you have a related purchase, put towards that transaction.
9. On average, a transaction will take 6 weeks to complete from the date we receive the sales memorandum.  However, this cannot be guaranteed because your solicitors do not know how quickly the buyers' conveyancers will deal with maters or whether any complications will be encountered along the way.

Buying a residential property

1. As with a sale, the first step is to negotiate the price and then the estate agents will circulate details of the deal to all the parties involved.
2. Your solicitors will liaise with the seller’s conveyancers who will provide your solicitors with the draft contract and property information forms filled in by the seller.

3.    There are three main elements that your solicitors need to have in place before exchanging contracts:

a.    The searches – these will need to be applied for once your solicitors have received payment from you as set out in our initial letter to you.

b.    The finance – if you are having a mortgage, your solicitors will need to have the offer in their hands and check for any special conditions that need to be complied with. Please note that your lender will also require your solicitors to act for them and they may request more information than you want yourself

c.    The title – this will cover not only matters relating to ownership of the property but also general information such as boundaries, restrictive covenants, guarantees, planning. If necessary, further enquiries will be asked of the seller.

4. Once all these are in place, your solicitors will invite you to sign all the documentation and discuss completion dates. It is common practice now for exchange of contracts and completion to take place within a short space of time, and sometimes even on the same day. Your solicitors will provide you with a financial statement at the earliest opportunity to enable you to put your solicitors in funds to complete the purchase. Until exchange of contracts either party is free to withdraw from the transaction for any (or no) reason. Your solicitors can try and work towards a completion date, but cannot guarantee this will happen until contracts have been exchanged nor can your solicitors be responsible if the seller fails to complete in breach of contract
5. Once all the above has been dealt with the completion date is agreed and your solicitors have funds, contracts will be exchanged.
6. Your solicitors will apply to your lender for the mortgage advance and carry out the pre-completion searches and formalities to gear up for completion.
7. On the day of completion, your solicitors will send the purchase price to the seller’s conveyancers and the property becomes yours once they receive it.
8. Your solicitors will deal with submission of the stamp duty land tax return to HMRC, register your ownership (and any mortgage) at the Land Registry, and send you and your lender a copy of the title information document to conclude matters.

On average, a transaction will take 6 weeks to complete through ORJ from the date we receive the contract pack from the sellers' conveyancers. However, this cannot be guaranteed because we do not know how quickly the sellers' conveyancers will deal with any issues raised or whether any complications will be encountered along the way.

For any more information on the conveyancing process, or ORJ Solicitors, feel free to contact us on 01785 223440 or to view our website www.orj.co.uk/residential-conveyancing.php