So if you’re buying a house, possibly for the first time, you’re going to need lots of legal advice – but why? When I buy a car, I can go into the show room, choose ‘the blue one’ (or whatever car you like) get a loan, put down a deposit, buy the thing and drive off in it with some insurance. Frequently, the deal is done in a day – you can walk in and drive out in a matter of hours, or days at the worst.
Potentially – you can spend more on a car than on a small home and you don’t need legal advice to buy a car (but maybe you should!). But, at least here in the UK, when you buy a house – and the process basically the same as buying a car – it can be months and months of waiting. You have to do it all through a legal advisor [whether you like it or not] AND you have to pay for this advice which you may not actually want. If you’re going to buy the house anyway, why get advice about it?
And, although the average price of a house is undoubtedly much greater than the average car, if I was lucky enough to have £150,000 to buy a house or a car why does one thing takes days and the other thing takes months. Surely it doesn’t make sense, Does it?
The answer is that houses, mortgage and land law have been around for much longer than cars and finance on cars. Legally, cars and vehicles are relatively straight forward. The log book on a car for example does not record legal ownership. It meerly records the registered keeper. i.e. the person repsonsible for doing the admin – getting tax, MOT, insurance, pay fines etc. Outstanding finance on a car is secured by a form of bailment, so if you buy a car with an outstanding debt on it you buy the debt, even if you’re not aware of it. Them if the debt is not repaid the bailifs perform the bailment to recover the debt. And, it is relatively easy to check if there is outstanding debt on a car.
However with a house, there are many more things (or “interests”) which can adversely affect the value of the house and potentially take out the debt or mortgage altogether. If there is a risk of this happening, the bank will not lend. The bank will check there is no risk to their debt by getting a solicitor to give them a “certificate of title”. This will usually be the same solicitor which does your conveyancing when you buy your house. The solicitor warrants to the bank that the bank will get the first legal charge on the house AND that the legal title is marketable should the bank need to sell the property to recover their debt [if you don’t make your payments each month]. Since there is much more debt attached to land (remember 2009?) AND there is so much more case law about houses and mortgages then there are much more extensive checks for the solicitor to do. This is also the reason the solicitors have extensive insurance in case things go wrong. There is almost no limit to how much financial damage can happen if the checks are not done properly.
Next time – how to avoid paying your mortgage entirely!