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Disbursements | A conveyancing guide
The definition of a disbursement is a payment that has to be made to a third party for a service provided or for a statutory required action (e.g. searches or land registry fees).
At In-Deed we aim to be as transparent as possible and therefore have created this guide detailing what are the standard conveyancing disbursements are, together with an explanation of what the payment is for.
If you are buying or taking an interest in a property and it is liable for stamp duty the amount will be shown as a disbursement or third party payment. Stamp duty is an unavoidable government tax levied when a property is transferred and the price paid exceeds the current stamp duty threshold. This tax is payable by the buyer of the property or a share in the property.
For current stamp duty rates and details of stamp duty exempt areas visit www.inlandrevenue.gov.uk
If you take a new lease to a property there will be a small amount of additional stamp duty payable depending on the terms of the lease and the rent payable. The solicitor will notify you of your stamp duty liability at the earliest moment.
HM Land Registry fees
When you buy a property, take out a new mortgage or transfer a share in a property the transaction must be registered at the Land Registry. The Land Registry charge a compulsory fee for registering the change and this is on a sliding scale depending upon the price of the property or mortgage. To check the current Land Registry fees visit www.landregisteronline.gov.uk.
Official copy entries and filed plan
When you sell a property your solicitor will apply to the Land Registry for an official copy of the deeds and an official copy of the filed plan. If these copies refer to a document that is not set out in the official copies then your solicitor will also have to obtain an official copy of that document. Sometimes when you are buying your solicitor will also obtain an official copy of the filed plan to use for search purposes or alternatively you may see an additional “disbursement” referring to the “Search Plan”.
When you buy a property or take out a new mortgage you will have to have certain standard legal searches carried out against the property. There are many types of search required throughout the legal process of conveyancing but the most typical are:
The local authority search
This is a search of the registers kept by the local authority detailing their provisions for highways, footpaths, planning entries, and other local land charges such as tree preservation orders, conservation areas etc. The local authority may also answer specific additional enquiries raised by your lawyer.
This is a search of the registers of the relevant water authority responsible for the area in which the property is located to check whether the water supply, sewers and drainage at the property is maintained at public expense or is a personal liability.
An environmental search is carried to check whether the land upon which the property is built has been in any way contaminated previously and whether remedial work is required or has been satisfactorily completed.
There are various types of mining in the UK today both present day and historically. These include coal, brine, chalk and tin. Your lawyer will check if the property you wish to buy is in a current or former mining area and if so will carry out the relevant search to establish whether the property has been/will be adversely affected by the mining activities.
Chancel repair check
In the past when the Church sold off or gifted land they sometimes required the new owner to pay towards the upkeep of the church or its lands. Some property is still subject to this liability and lawyers often carry out a chancel repair check. Alternatively for a small premium they can obtain on your behalf chancel repair indemnity insurance to protect you against any potential claims resulting from a chancel repair liability.
Commons registration search
Some land was formerly ‘common’ land. This means that the public have rights to pass over it and occasionally to graze sheep and cattle, gather wood etc. This search is typical upon properties that front a village green or common land.
Land registry search
When you buy, transfer or mortgage a property your solicitor will search the Land registry to check that no one has registered a claim or a right in or to the property since the Official copies were issued by the Land Registry. This ensures that you do not buy a property that has an impending financial charge or other adverse right registered against it.
Land Charges search (also known as a bankruptcy search)
When you buy or mortgage a property your solicitor will carry out a search against the names of all buyers and borrowers in the Land Charges register. This search will reveal if any of them are currently bankrupt, are an un-discharged bankrupt or are about to be made bankrupt by virtue of any pending court actions.
Local search indemnity insurance
If you are a cash buyer or if your lender agrees, it is possible to a buy a property without a full local search being carried out. To do this your lawyer may recommend that you obtain local search indemnity insurance to protect against any problems that might have otherwise been revealed in a local search.
Other indemnity insurance
Indemnity insurance is widely used by solicitors to deal with problems in deeds, leases, insolvency, restrictive covenants, missing landlords etc. This insurance is arranged by the solicitor and the premium is paid by you. Premiums will vary depending upon the type of indemnity and the level of cover required.
Leasehold : Landlord’s notice fee
This is a fee, usually reserved by the Lease, which is payable to the Landlord or his agent for registering you as the new owner and your lender as an interested party . If any of the obligations under the terms of the lease, including the payment of the rent, are not met the landlord needs to know who to contact and where in order to take appropriate action. If there is a separate management company you may have to pay a similar fee to Management Company To secure repayment of the service fees.
“Leasehold Pack” or “Management Company Information”
If you are selling a leasehold property, which is subject to management company rules and the payment of ground rent and service charges, your lawyers will be required to obtain particular details from the landlord and/or management company. Details will include the state of the management company accounts, whether payments in respect of ground rent and service charges are up to date and whether there are any anticipated large scale works to the building that will result in increased service charges in the future. The Landlord and/or management company will make a charge for providing this information. This fee will vary from one company to another.
Ground Rent/Service Charge
Sometimes the seller of a flat or apartment has paid the ground rent or service charges in advance to the end of the year. If this is the case the payment is usually “apportioned” and you will reimburse the seller with the amount that would be payable by you from the date you take ownership of the property to the date the payment has been made up to.