If you are purchasing or selling your home, you will likely need to hire a conveyancer to carry out the process of transfer of legal title (which is called "conveyancing"). The conveyancer can either be a solicitor or a licensed conveyancer.
The conveyancing process begins once the seller accepts the buyer's offer. However, you should know that an amazing one-third of property transactions fall through and the reasons for it happening so often are also abundant.
Sometimes the seller accepts a better offer, even though he or she may have accepted a lower one earlier. This act of the seller is called gazumping. It is perfectly legal in the UK as the parties are not bound by the deal till the exchange of contracts.
It is equally possible that the buyer may reduce their original offer at the last minute before contracts are exchanged. Forcing the seller to either accept the reduced offer or refuse the offer altogether. This act of the buyer is called gazundering.
When you start searching for a conveyancer, you will likely come across the term "no sale, no fee". Initially, you may think that it means you do not have to pay anything if the property transaction falls through. In reality, it may be a little bit more complicated than that.
This article takes a closer look at what is no sale no fee conveyancing. It discusses:
what should you expect to pay in conveyancing fees to a conveyancer that offers no sale no fee arrangement,
which type of conveyancers are more likely to offer such arrangement; and
elaborates the common reasons for property transactions falling through to help you decide whether you should choose a no sale no fee conveyancing arrangement.
However, before we can get to what is no sale no fee conveyancing, it would be wise for you to understand how much you should expect to pay otherwise and and why (i.e. if you don't hire a no sale no fee conveyancer). This has been discussed thoroughly in our article, conveyancing fees explained. We suggest that you give it a read before continuing with this article.
What is no sale no fee conveyancing?
No sale no fee is similar to "no win, no fee" legal services, where you pay only if you win the case.
In a no sale no fee conveyancing, you will not have to pay the conveyancer's legal fees if the sale or purchase of your property falls through. You may also come across the terms "no completion, no fee conveyancing", "no move, no fee conveyancing", and "no sale no fee guarantee". They all mean the same thing.
However, it is not the same as fixed fee conveyancing.
How does no sale no fee conveyancing work?
No sale no fee conveyancing does not mean that you will not have to pay anything. Only the legal fees component of the total conveyancing fees will be waived by the conveyancer.
Typically, you will be required to pay a small initial deposit. Further, you will have to cover the cost of disbursements, such as survey costs or local authority searches.
Disbursements are the cost incurred by your conveyancer on your behalf for third party services required in the conveyacing process. The conveyancer usually has no control over the expense of these third party costs. However, most of the third party costs are often fixed.
Disbursements have been more thoroughly discussed in our article, Conveyancing fees explained.
No sale no fee conveyancing may be more expensive
Additionally, many conveyancers that offer no sale no fee conveyancing charge more than the average rate for conveyancing.
This brings us to the next point of discussion: should you even be looking for a no sale no fee conveyancer?
Is no sale no fee conveyancing a good option for you?
While the answer totally depends on your personal circumstances, it would help you to know why sales fall through so often. If you can relate to any of the scenarios listed below, then you should be considering a no sale no fee conveyancer.
However, there is another pressing matter, which we will discuss first, that can impact your decision on whether you should consider a no sale no fee conveyancer. You have to make a decision on which type of conveyancer you need.
Do you need a solicitor or a licensed conveyancer?
A conveyancer can either be a solicitor or a licensed conveyancer. Conveyancing solicitors are licensed to practice all areas of law by the Solicitors Regulation Authority. In contrast, licensed conveyancers are regulated by the Council of Licensed Conveyancers.
While both will follow the same processes and procedures, there is a crucial difference between the two, which has been explained in detail in our article, what is a conveyancer.
Put simply, the difference between a conveyancing solicitor and a licensed is the breath of legal services each can offer. A conveyancing solicitor will typically tend to have experience in other legal areas as well. beside property law. In contrast, a licensed conveyancer's services will be limited to the conveyancing process.
Which type of conveyancers offer no sale no fee conveyancing?
In the past, no sale no fee conveyancing would typically be offered by online conveyancers only (which are often licensed conveyancers).
Today many traditional and independent licensed conveyancer firms are now offering this option too to remain competitive. Therefore, you are likely to find plenty of choices if you are particularly looking for a no sale no fee conveyancer.
Do solicitors offer no sale no fee option?
However, if your situation is more complex (for example, if you are in the middle of a divorce or if a dispute arises later because the buyer or seller refuses to complete the contract) for which you will require a solicitor rather than a licensed conveyancer, you may find it next to impossible to find a solicitor who offers no sale no fee option (although very rare exceptions may exist).
The reason behind it is that solicitors generally work with their own traditional fee structures.
Now we will move on to discussing the common reasons why property transactions fall through. It will help you understand the risk home buyers and sellers face, so you can decide whether no sale no fee conveyancing is for you.
Common reasons why house sales fall through
One-third of property sales in the UK fall through. We have already covered gazumping and gazundering above, so we will skip to the other ones.
Break in property chains
In a property chain, each transaction is linked to another and you will be relying on several other people. If one piece of the domino falls, so will the rest.
According to a recent report, there has been an increase in the number of property sales falling through. One of the main reasons has been poor survey reports. Issues with the property such as subsidence, damp, asbestos, structural issues, or Japanese knotweed found after home survey has been the cause of buyers pulling out.
Many people require mortgages, particularly if they are just climbing on the property ladder, to finance their home purchase.
However, according to a recent report, nearly 28% of property sales fall through due to the buyer being unable to arrange the finances. You may wish to read about the different types of mortgages, why mortgage offers are refused, and what should you do if you have been refused a mortgage offer.
No property transaction is certain till the exchange of contracts.
Sometimes sellers have multiple offers on their property. They may accept two or more offers and send a contract to them all. In such instances, who can exchange contracts and gets the deposit sent across the quickest seals the deal.
These are some of the most common reasons why property sale have been falling through. If you are the seller and want to financial secure yourself, you can consider taking out a home buyer protection insurance policy.
A few last words about no sale no fee conveyancing
You might be able to relate to the above-listed circumstances. Even if you cannot, to decide whether you should use a no sale no fee conveyancer, you must first weigh up whether the added protection of the no sale no fee option is worth the extra money or you are fine taking the risk.
The answer usually depends on the type of property you may be buying or selling. For example, if the property is an old listed property, you may consider a no sale no fee conveyancer. If the property is a new build, you may not. Similarly, if there is a property chain and you are worried, you may consider no sale no fee conveyancing.
One matter that can significantly impact your decision in choosing a no sale no fee conveyancer is the type of legal services you require (i.e. whether you require a solicitor or a licensed conveyancer).
So the bottom line is that your decision to choose a no sale no fee conveyancer should be made after weighing in all of your personal circumstances and requirements.