Often described as one of life’s more stressful events, the process of buying and moving into a new home can be made even more frustrating with unexpected curveballs, such as gazumping.
This five-minute read is designed to help you and your client understand the divisive tactic, as well as ways to keep the conveyancing process on track and prevent one less house buying headache.
1. What is gazumping?
“One particularly painful gazumping came when our offer had been accepted and then someone swooped in with £80,000 more than us and the seller quite understandably switched buyers.”
- Gazumping is when the seller, who has already verbally agreed one offer subsequently accepts a higher amount from another.
- On paper, the house buying process is uncomplicated: a potential buyer finds a property for sale, arranges a viewing, and puts in a verbal offer. This gets accepted, and the process can move along the stages.
- However, it’s rarely that straightforward; the local area may be subject to increasing demand, or on a wider scale, a housing shortage may mean the market leans more in favour of the seller. This means a) they’ll be a lot more potential buyers hunting for homes, and b) some may be able to bid higher amounts.
2. Is it legal?
- Frustratingly for buyers, it is legal. If a legitimate bid is put forward on a house listed for sale, there is a legal obligation for the vendor to be made aware of it.
- This is possible because verbal agreements are not legally binding. Once it becomes a written agreement, the sale can be enforced.
- However, the process of preparing contracts takes time, and often won’t be until surveys and checks are carried out, at a cost to the potential buyer.
3. Can it happen in reverse?
- It can: gazundering occurs when a buyer waits until a sale is almost complete before withdrawing their first offer and making a lower one.
- This tactic may be used to call the bluff of the seller: accept the new amount or risk a loss of a sale, or worse, collapse an entire chain of property sales.
- Whilst previous thought as the less common tactic of the two, In August 2022 claims were reporting that gazundering was occurring as regularly as once in every two transactions.
4. What does gazumping mean for my clients?
- The decision that follows a gazumping is the hardest for the buyer: match or better the increased offer or walk away. The latter may come at a cost if non-refundable fees for searches have been processed, or worse – they have agreed the sale of their current house or given notice to leave rented accommodation.
5. What can be done to prevent gazumping?
- There are methods that can be put in place at the start of the journey to buy, such as arranging a mortgage in principle, or working with a mortgage advisor or broker. These are designed to speed up the buying process, allowing for less time for any gazumping.
- For our clients, we offer OneSearch Pledge: a warranty product that, if purchased along with your other search products from OneSearch, means we will reimburse search costs up to a maximum of £300 if the purchase of a new property falls through because of any of the reasons listed within our terms*.
- To learn more about OneSearch Pledge, and to see the full terms, you can download the product card here, alternatively or you can email firstname.lastname@example.org or call 01782 433270.
* N.B. OneSearch Pledge is not an insurance product. It is a warranty add-on provided with a bundle of searches purchased from OneSearch Direct. The cost of purchasing this product will not be included in any reimbursement. Only products included in the same order as OneSearch Pledge will be covered under these terms, and to a maximum value of £300.
As the risk surrounding identity fraud and money laundering evolves, so too does the technology used to fight it. The introduction of a new industry benchmark from HM Land Registry has pulled ID verification into the 21st century.
This quick five-minute read will get you up to speed with this new touchstone, and the technology which has made it possible, detailing why its adoption can be of huge benefit for law firms and conveyancers.
What is the HM Land Registry Digital ID Standard?
- In March 2021, HM Land Registry presented new guidance for a higher standard of identity verification within the industry.
- This new benchmark encouraged the use of both biometric and cryptographic technology checks, which would offer a greater level of fraud prevention, as well as enhancing efficiency and convenience during client onboarding.
- Upon conducting these checks, the conveyancer would have reached ‘Safe Harbour’ status for that case.
Why was it brought in?
“The current processes in conveyancing do not feel very 21st century and they have proved difficult to maintain in the current crisis. What can we do about it?”
- A Land Registry blog post from May 2020 raised concerns around fraud prevention and identity checking practices within the industry.
- The article spoke of the “inconvenience and inconsistency” of outdated, manual verification methods which relied on the variable factor of human ability, compared to the more modern electronic passport checking methods.
- Fuelled in part by the COVID pandemic, embracing these modern methods would not only greatly reduce the need for face-to-face meetings, but allow the conveyancer to complete checks in a more efficient, convenient way.
What is Safe Harbour?
- If solicitors and conveyancers adopt and adhere to these new guidelines, either for residential or commercial transactions, HMLR will consider them to have “taken reasonable steps” to verify customer identities, and they would have reached Safe Harbour.
- This means that HMLR would not seek recourse against the conveyancer should the identity of their client confirmed later in the process to be inaccurate.
How do you reach Safe Harbour status?
- The three stages are: obtaining evidence from the client, checking the validity of the evidence, and matching the identity to the evidence.
- A fourth requirement is an additional check to be carried out by the conveyancer who represents a transferor, borrower, or lessor in the transaction.
What are the benefits to law firms?
- Embracing this new yardstick of verification can provide an efficient, cost effective, and reliable approach to legally verifying if a person is genuine when buying or selling properties.
- Advances in technology such as NFC in smartphones speed up the process, whilst AI authenticity checks can spot fake documents with fast and reliable ease. With these advances bringing peace of mind to a once problematic area of conveyancing, it’s understandable why these guidelines are being adopted in many law practices.
Now available on the OneSearch order portal is Biometric AML with NFC, our Safe Harbour-compliant identification check product, which uses encrypted, digitally signed data for an increased layer of credential authentication, giving you a stress-free and fully compliant AML check solution.
To find out more about Biometric AML with NFC, and ensure you reach Safe Harbour status for all your ID verification needs, check out the product page here, or call our Service Introduction Team on 01782 433 270 or email email@example.com
Japanese knotweed is a rare but all-too-real challenge to the conveyancing process. And, as spring has now sprung and this problematic weed enters the fast-growing season, it’s worth conveyancing professionals’ time to ensure they’re up to date and fully informed about the latest guidance.
We’ve put together a five-minute read to help you keep the conveyancing process on track and prevent you and your customers from getting tangled up in Japanese knotweed confusion:
1. What is Japanese knotweed?
- Japanese knotweed is a fast-growing, invasive rhizome plant with deep, strong, and notoriously destructive roots
- It affects around 5% of UK properties
- It typically requires costly, specialist removal when detected
2. Why does it matter to the conveyancing process?
- Japanese knotweed is mentioned in the TA6 property information form that property sellers must complete
- The presence of Japanese knotweed on or near a property tends to cause panic, not only because it requires specialist removal, but also because homeowners can be fined if they fail to contain and safely dispose of it
- This can lead to additional queries in the conveyancing process, problems with mortgage applications and in many cases, a complete change of heart on the part of the buyer
3. What’s new in RICS and Law Society guidance?
- RICS has recently published new guidance which abolishes the 7-metre rule used by valuers to assess risk and which proposes a ‘more nuanced’ view of the problem
- As a result, valuers and surveyors are likely to advocate careful management, rather than complete eradication, of the weed
- Nevertheless, the TA6 form has been updated to require sellers to declare with absolute certainty whether Japanese knotweed is present or not – and in the case of a ‘no’ response, will be held liable on that basis
4. What does that mean for my customers?
- It’s incumbent on conveyancing professionals to ensure that their customers fully understand the TA6 update and their liability regarding their declaration on Japanese knotweed
- There are, however, specialist indemnity products available via our OneSearch order portal to mitigate future claims risk, such as CLS PI.
5. How can I learn more?
- Register for our free webinar, Japanese knotweed and its impact on the conveyancing process, on Tuesday 29 March 2022 at 11:00 BST here.