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Frequently asked questions about
HIPS
HIP UPDATE:
From 6th April 2009 all residential
property must have a Home Information Pack in place
prior to marketing commencing. The HIP must contain the
following items on the first day of marketing:
Index
· Property
Information Questionnaire (PIQ) completed by the seller
· Energy
Performance Certificate or Provisional Energy Assessment
for new homes (which must be updated with an Energy
Performance Certificate when the home is built)
· Sale
statement
· Evidence
of legal title - i.e. Official Copy Entries and Filed
Plan or Official Results of the Index Map Search and an
Epitome of Title with copy title documents
·
A
Certificate or interim Certificate for new build
properties only which shows the sustainability of the
home, where it complies with the standards under the
Code for Sustainable Homes, or a nil-rated certifcate
where the property has not been assessed against the
code. This will be provided by the property developer.
From 6th April 2009
the HIP must include the following documents within 28
days of the first day the property was marketed:
Local
Authority Search
· Water
Authority Search
· If
leasehold copy lease.
· If
commonhold copy commonhold documents.
Any documents that are not included in the HIP on the
first day of marketing must be noted in the index. An
explanation must be given as to why they are not
included and what is being done to obtain them. The
Index must be updated once the documents are included.
Q. What will be included in the HIP?
A. The Home Information Pack will consist of a number of legal
documents, searches and energy performance documents. If the property is
leasehold or commonhold it will include lengthy documents such as the lease or
the commonhold community statement and complex financial documents such as the
management information. The pack could run to several hundred pages.
Documents that MUST be included in the HIP
- An index detailing the contents of the pack and the
date each document was included.
- An Energy Performance Certificate and recommendation
report, or if the property is recently built an Interim Energy Assessment,
or if the property is incomplete and being sold off-plan a Predicted Energy
Assessment.
- A local authority search result.
- A water and drainage search result.
- Evidence of the seller’s legal title to the property
which in the case of registered land will include an Official Copy of the
individual register relating to the property and the filed plan. In the case
of unregistered land title will consist of the results of an Official Search
of the Index Map and an Epitome of Title consisting of copies of all the
unregistered deeds required to prove title to the property.
- A sale statement.
- In the case of a sub-divided property where part is
being sold with vacant possession and part subject to a tenancy, a copy of
any lease or licence affecting the property.
- For leasehold property a copy of the lease and copies
of the most recent management information relating to service charge, ground
rent and insurance for the 36 months preceding the date of marketing the
property.
- For commonhold property a copy of the commonhold
community statement and copies of the most recent management information
relating to commonhold community charges for the 36 months preceding the
date of marketing the property.
Documents that may also be included in the HIP
- A Home Condition Report (a type of mid-range survey
carried out by a Home Inspector).
- The Property Information Form and Fixtures and
Fittings Form (or similar forms).
- Additional conveyancing searches.
- Any guarantees, receipts, warranties or insurances
that relate to the property or its contents.
- Any plans, photographs or maps which identify the
property.
- Official copy documents relating to the property.
- Additional leasehold or commonhold documents relating
to the property.
- A legal summary of the HIP documents.
- Information referred to in the search documents such
as planning and building regulations consents, enforcement notices, road and
sewer agreements etc.
- Any other information relating to the property which
would be of interest to a prospective purchaser.
Q. How do I know what to look out for in the HIP?
A. Legal documents and searches sometimes contain conditions
that would affect a buyer’s decision to buy. For instance, some documents
restrict development of a property, or the keeping of pets, other properties
have rights affecting them that might affect your enjoyment of the property.
With leasehold or commonhold properties a buyer may find that the service charge
payments are extremely high or that the Landlord is about to embark upon a
redecoration and improvement scheme which would greatly increase the service
charge payments. Generally speaking, these conditions are not obvious to the
layman but would be spotted immediately by a qualified solicitor or property
lawyer.
Q. Should I seek legal advice on my HIP before making an offer
to buy?
A. The majority of buyers will not understand the complex
documents and will need to seek an independent opinion from a solicitor or
property lawyer before making a decision to buy. Most buyers will look at
several properties, and therefore several packs, before making a final decision.
Instructing a solicitor in the normal way to assess each pack and to give formal
written advice could mean that buyers run up hundreds of pounds of legal fees
before finally making an offer and having it accepted. That is why CMS have
devised a fairer system ‘The CMS HIP service for Buyers – see above’.
Q. What happens if there are documents missing from the HIP?
A. In order to avoid delay in getting the property to market
the regulations allow the seller to market the property without a HIP or without
some of the HIP documents provided the seller can prove that the HIP has been
ordered.
Q. Which documents may not be included in the HIP
A. The HIP must not include any documents apart from those
listed above. In particular the HIP should not include documents that advertise
the services of third parties such as estate agents, mortgage advisors,
insurance providers, removals etc.
Q. Must I use the solicitor or mortgage provider recommended
by the estate agent who is supplying the HIP?
A. The provision of the HIP does not entitle the seller or
their estate agent to insist that a buyer uses a certain conveyancer/surveyor or
mortgage lender. The buyer has the right to shop around the market for these
services and to choose the service provider that offers the best deal for them.
Q. Who is responsible for supplying the HIP?
A. If a seller is selling via an estate agent it will be the
estate agent’s duty to supply you with details of the pack. If the seller is
selling without an estate agent it is the seller’s duty to supply the pack. The
pack will come in various formats and you may be given details of how to view
the pack online, or via CD on your computer. However, if you are not online and
do not have a computer you are entitled to ask for a paper copy of the pack.
Q. How soon must the seller or the agent supply the HIP after
I have asked for a copy?
A. The seller, or their estate agent if they are
using one, is obliged to provide you with the pack within 14 days of your
request. If the HIP has been ordered but has not been completed the seller or
his agent must provide you with a copy of the HIP as soon as possible.
Q. Can the seller or the agent charge me for a copy of the
HIP?
A. If you request a paper copy the seller, or the estate
agent, is entitled to charge you a small fee to cover the cost of copying the
pack and posting it if requested to do so.
Q. Can the seller or the agent refuse to supply the HIP or
impose conditions before it is supplied?
A. The seller, or the estate agent, are entitled to impose
certain conditions before agreeing to deliver a pack to you as follows:
- They may require payment for a paper copy of the pack.
- They may require evidence that you can afford to pay
for the property.
- They may require evidence that it is the type of
property you are seeking to purchase.
- They may ask you to sign a document concerning
disclosure of the pack contents.
The seller is not obliged to supply anyone with a pack who
the seller would not consider selling to. This does not entitled the seller to
discriminate on the grounds of race, sex or gender but rather may relate to
certain types of property such as retirement property where there is an age
specification or to agricultural property where the buyer must be employed in
the agricultural sector.
Q. Can I rely upon the HIP without making further enquiries?
A. Although the pack will provide buyers with much more
information at the early stages of the transaction it is still the buyer’s legal
obligation to satisfy themselves as to the legal documents and the physical
condition of the property. Buyers must appoint a solicitor or conveyancer to act
for them in the purchase in the usual way. If a Home Condition Report is
included in the pack the buyer may rely upon it in law as though the buyer had
ordered and paid for the survey. This means that if the Home Inspector who
carried out the report is later found to have been negligent the buyer will be
entitled to seek compensation directly from the Home Inspector. Full details of
the complaints procedure and redress scheme will be included in the Home
Condition Report. Buyers are not obliged to rely upon a Home Condition Report or
Energy Performance Certificate and are entitled to request an independent
survey, at their own cost, in the usual way.
Q. Will I still need a survey if the HIP contains a Home
Condition Report?
A. Mortgage lenders do not accept the Home Condition Report
for valuation purposes and will still insist upon a mortgage valuation being
carried out.
Q. Will I still have to pay for the legal searches?
A. The buyer may rely upon the results of the local authority
and drainage search contained in the pack as though they had ordered and paid
for them. Provided the searches are not out of date by the time the sale
proceeds, the buyer should not have to have the searches carried out again, in
most cases saving several hundred pounds. Searches have a shelf life of around
three months and searches that are older than this will not be acceptable to a
buyer’s solicitor or a lender.
Q. What costs should I budge for in my purchase?
A. The HIP may save buyers the cost of certain searches and in
some cases the cost of having a survey carried out. Buyers must still pay for:
- Conveyancing fees and disbursements.
- Additional searches.
- Additional survey.
- Lender’s fees for survey and mortgage arrangement.
- Mortgage advisor fee (if any).
- Landlord’s notice fee (on leasehold property)
- Ground rent and service charge (on leasehold
property/where applicable).
Q. How much
will the HIP cost
A .
You can buy a HIP from CMS Ltd. For a freehold HIP the
cost is £249.00 plus VAT and leasehold £269.00 plus VAT.
Q. What are
the benefits of buying my HIP from CMS?
A. CMS
will provide a quality HIP that complies with the
regulations at all times. The HIP is readily
available to you, your potential buyer, your estate
agent(s) and your solicitor via e mail or web link. With
a CMS HIP you retain the independence to change
estate agents or solicitors should you wish to leaving
you free to shop around for the best deals or change
your estate agent if you are unhappy with the service
received. Quality of service and information. The
CMS HIP is delivered quickly and efficiently by our
associate provider MDA the largest HIP provider in the
UK you can be sure of a legally compliant HIP. MDA is a
member of AHIPP and the PCCB.
Q. How long will the HIP take to
prepare/arrive?
A. The
basic required HIP is usually delivered within 3-5 days
by web or e mail link. The seller must have completed
and delivered the PIQ. This will allow the property to
be marketed. The standard searches and the lease will
follow within the required 28 day period.
The above list is not exhaustive but will
give buyers a general idea of what to budget for when buying a property
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