Buying a Property in the UK - Assignment Example

Legal Studies Introduction Many people in the UK purchase second hand homes either as an investment or for residential purpose. However, the trend ofowning a second house has been hindered recently by the economic slow down in the country as a result of the global economic crisis. When somebody is having more money than what he/she actually requires, the curiosity for investment arises. Numerous investment avenues are available both in the country and outside the country. Purchasing home and letting it out for rent is one way of putting the money among cash rich people. So house purchasing decisions are taken by the person individually or with the consultation of the investment managers. Whatever the amount of investment and type of house purchased, the act of purchasing and its related transactions and events should have legal enforceability as there is legislation in this respect in every country, called Law of Contract, which exclusively deals with the purchase and selling transactions. In addition to the Law of Contract, there are local government’s legal requirements to be followed by the parties engaged in the transactions of purchase and selling properties. The party purchasing the house cannot go and straight away purchase and own the house. There are some legal formalities to be complied with in conformity to the legislation of the country, especially Contract Act. In addition to the legal formalities, the purchaser has to take care of many other factors which you think is logical and genuine in the course of purchase and owning the house. This essay takes an examination of the fundamental legal matters to be considered by the purchaser before purchasing the house. In the given case, Mr. X is planning to buy a house with three bed rooms which he thinks is necessary for his family. But, when he approaches a real estate agent, there is no house with the agent satisfying the specifications which Mr. X is in need of. However, Mr. X is advised by the agent that there is a large 2 bedroom house located at No. 21, Desolation Row, which he thinks is fit for Mr. X’s requirements on making certain renovations. The agent has also guaranteed the possibility of renovating and modifying the house to three bedrooms type by extending one more storey. Mr. X is also found to be attracted by this decision and fixed an appointment of the owner for watching the house to decide whether the house is to be bought or not. According to the agent, the house has only one owner, Mr. Pound with whom Mr. X has to negotiate to finalize the deal. After satisfied by the location and present condition of the house, Mr. X decides to purchase the house. Before entering into contract with Mr. Pound, Mr. X has to make certain enquiries to ensure himself that he is free from all troubles and chaos of the purchase of the house. Also, Mr. X has to make sure that he can alter/renovate the house after the purchase to convert it into the one which he has been longing for. If he has not made any enquiries and decides to purchases the house as is where basis is, he will have to bear the loss and consequences that may arise from the negligence/ignorance of such factors. Therefore, the following factors are to be necessarily looked into by Mr. X for confirming himself that the house is free from all troubles and chaos. As it is mentioned in the website of Capital West, “buying a home is not only one of the largest purchases youre likely to make, it can also be one of the best single long term investments - so its important that you get it right. That means doing your homework and making sure that the home you are buying is the right one in terms of price, location, value, size and lifestyle” (Buying a property) 1. Inspection The first and foremost thing that Mr. X has to pay attention is that he has to inspect the house by a builder or architect to assess whether there are any damages or defects which cause any interruption for the life of the property. This is particularly important because Mr. X is seriously thinking of renovations/ alterations. Besides, other important things which Mr. X must look into are the size of the property; the location of the property in terms of his lifestyle requirements such as schools and access to public transport; and how much you can afford to spend. 2. Ownership The enquiry as to the real ownership of the desired property is the most important one as the purchase to be complete must result in the transfer of ownership from the owner(s) to the buyer. Mr. X here has to ask Mr. Patel that whether the house has singe owner or more than one owner. This point is stressed because Mr. X has got a suspicion that the house has got more than one owner when he accidentally watches lady’s dresses in the house. 3. Title Deed This enquiry is about whether the property is having title document which is the sole document as proof for the physical existence of the house. In the absence of a title deed, Mr. X cannot get the house in his name after the purchase. 4. Encumbrance Certificate An encumbrance certificate is one which is issued by the local authority/bank declaring that a property is free from debts and recovery. It guarantees the buyer that he can straight away go with the decision to purchase the property as the property is going to face any legal attachment or revenue recovery in future. 5. No objection Certificate from the Local Authority It is also necessary for Mr. X to enquire about whether the owner has obtained No Objection Certificate (NOC) from the local authority/government to construct the house at the specified place. 6. The possibility of Extension/Alteration without harming Mr. Eliot’s personal likes In addition to checking the condition of the house by an architect to ensure that it is free from damages, Mr. X has to seek the help of an expert as to whether renovation/alteration is possible or not. It is highly essential because one of the points of satisfaction by Mr. X is the viability of renovation. 7. Availability of Victorian fireplace, and an antique freestanding dresser along with the house. During the visit at the house, Mr. X has noticed an ancient Victorian Fireplace and a free standing dresser. Before making the deal, Mr. X is worried about the inclusion of these articles along with the purchase of the house. 8. Negotiation on the issue of disposal of garden hanging on the fence of the house 9. Establishing the Price In establishing the price, the following statement is worth noting “Before bidding or making an offer, it is advisable to inspect similar properties in the same area as where you are looking. This will familiarize you with the variety of property for sale in the area and give you a better idea of what is a realistic price to pay for the property” (Buying the property). 10. Cost Mr. X must know all costs incurred in connection with the purchase of the house in addition to the price of the property, for which he is liable. Usually the cost involves the following (Buying the property). Legal/conveyance fees Stamp duty on transfer of property (see stamp duty table); Stamp duty on the mortgage; Loan application fees; Disbursements such as a pest control inspection report; Insurance, title search fees, rates and taxes. Question No.2 Explain briefly the aims and objectives of the introduction and development of a comprehensive system for the compulsory registration of interests in land in England and Wales, and the extent to which the system adopted has achieved those aims and objectives. Land Registration is mandatory in all countries on earth. Land registration is the process of authenticating the transfer of ownership of a land from the seller (owner) to the buyer (potential owner). The rationale behind land registration is made compulsory is because the authority/government needs to ensure that the transfer of all properties in the country is as per the legal requirement s and no king of cheating would take place. As specified in the Land Registration Bill of Lords “land registration has necessarily sat alongside the essentially historical process of unregistered conveyancing, which derives a relative title from the deeds and other papers relating to the property, and from what is known about the land, its history, its current condition and occupiers”(Land Registration Bill, 2001). The Bill has the following objectives as specified in the Electronic Report of the Bill. “The fundamental objective of the Bill is that, under the system of electronic dealing with land that it seeks to create, the register should be a complete and accurate reflection of the state of the title of the land at any given time, so that it is possible to investigate title to land on line, with the absolute minimum of additional enquiries and inspections” (Law Commission Report, 2001). In addition to the above fundamental objective, the Bill has incorporated the following objectives too: “First, the Bill will lead to more land and more interests in land being protected by registration. Some valuable interests—for example, fishing and shooting rights—will, for the first time, be registrable voluntarily. Secondly, the scope of compulsory registration will also be increased, in particular by bringing most leases and, therefore, most commercial property transactions, within its reach. Thirdly, what the register tells us about the land will be extended and improved, most notably by reducing the number and scope of interests that can impose burdens without appearing on the register. The benefits of the registered system will also be extended. The procedures protecting the rights of third parties over land will be simplified and strengthened. The protection that registration offers to registered owners against squatters will be improved” (Land Registration Bill, 2001). References Buying a property, Capital West, Mortgage Group Pvt. Ltd, capitalwest .com, Viewed 6 January 2009, http://www.capitalwest.com.au/mortgage-information/buying-your-first-home.htm Land Registration Bill (Lords), 2001, in the Chair of Mr. Mike Hancock, House of Commons, Publications and Records, parliament.uk, viewed 5 January 2009, http://www.publications.parliament.uk/pa/cm200102/cmstand/second/st011129/11129s01.htm Law Commission Report, 2001, Law registration for the Twenty-First Century: A Conveyancing Revolution, viewed 5 January 2009, Home Buyers Tips and Tricks, The Easy Way to Get Your Best UK Mortgage, Mortgage sorter, viewed 6 January 2009, http://www.mortgagesorter.co.uk/home_buyers_tips.html#proactive Help and Guides, Top Ten Tips for Buying in the UK, myhome.ie, viewed 6 January 2009, Read More