Buying a house is super-exciting, but if it’s your first time (or even if it isn’t) it can be very confusing, too. From gazumping to negotiating a better price following a survey, it’s fair to say that the conveyancing process is a steep learning curve that comes with its fair share of ups and downs.
Needless to say, many buyers of property only feel secure when they legally own a property.
The question is: at what point in the property does that actually happen?
In this article, we'll explore the nuanced process of buying a property and pinpoint the exact moment you become a legal owner.
When do you legally own a property?
When you buy a property, you don’t officially own it until the purchase is registered at the Land Registry. Doing so solidifies your ownership rights and ensures the property is officially recorded in your name.
This is true whether you buy or inherit a property, although the process of doing so may differ slightly. You can register a property yourself or get a property solicitor or conveyancer to do it for you as part of the transaction.
What is legal ownership?
Legal ownership of a property, also called legal interest in a property, means you have proof on paper that you own it, can use it, and even sell it.
Proof of legal ownership comes from documents like deeds, contracts or titles which state you can live there, use it however you want, and sell it to someone else if you wish.
Legal Ownership vs Beneficial Ownership
Legal ownership is the official recognition of your ownership rights according to the law.
Beneficial ownership, also known as beneficial interest, is about enjoying the perks of a property even if, legally, it is in someone else’s name. So, you might not be the official owner on paper, but you still get to use and enjoy the property.
Legal and beneficial owners can be the same person, but not always. For example, if land or property is managed through a trust, the legal owner is like the caretaker. They hold the land in trust for the benefit of someone else.
Legal ownership in property transactions
Legal ownership is really important in buying and selling property. For buyers, it’s a guarantee that they’re getting a real and enforceable claim to the property and protects them from any disputes or other people claiming the same property.
On the flip side, sellers need to show they legally own a property to pass the rights on to a buyer. Therefore, legal ownership is the backbone of property transactions that keeps things clear and hassle-free for everyone involved.
Property deeds and title registration
Property deeds are the official papers that prove you really own a piece of land or a house. They include important information about the property, like its borders, restrictive covenants, right of way, and other rights tied to it.
Property deeds also create a kind of family tree for a property, showing who owned it before the current owner. This is called a chain of ownership, and it’s why registering ownership with the Land Registry is such a big deal. This public recognition helps prevent fraud, makes sure everyone knows who the official owner is, and makes the future sale of the property a breeze, especially in instances of selling probate property, where not a lot may be known about the history of the property or previous ownership.
They can also be invaluable in the course of neighbour dispute, for example if you're wondering which fence is yours and what rights you have when it comes to changing or renovating certain areas of your property or land.
Legal ownership in the conveyancing process
When you buy or sell a property in the UK, you go through a process called conveyancing. This process makes sure a property’s ownership is passed from the seller to the buyer smoothly, with minimal hiccups along the way.
Conveyancing can be a lengthy and sometimes confusing process, with lots of different stages including:
Making an offer on a property;
Negotiating terms (i.e. price, completion date, etc);
Paying the deposit;
Transferring remaining funds;
Transferring legal ownership;
Handing over the keys.
For more on this, check out our top tips for buying a house.
But at what point in the conveyancing dance do you become legal owner?
Transfer of legal ownership
Completing the purchase of a property can sometimes feel like reaching the summit of a mountain.
Part of this process includes the completion date, which is when the remaining funds are transferred and legal ownership changes hands. The physical exchange of keys symbolises more than just opening doors - it marks the official transfer of possession and control from the seller to the buyer.
However, to make this transfer rock-solid, the buyer’s solicitor should register the transfer of legal ownership with the Land Registry, which includes submitting all of the necessary documents.
If a new owner or property solicitor doesn’t register a property correctly, it can leave homeowners vulnerable to land disputes or fraud. It can also make it difficult to sell, remortgage or transfer the property down the line if it’s not correctly registered.
Key considerations of legal ownership
Joint ownership and tenancy in common
In a joint tenancy, two or more people have equal ownership of a property. In a joint tenancy, if one person dies legal ownership is transferred to the surviving owner.
When you have a mortgage, the lender has a say in the property until you pay it off. If you miss payments, the lender can legally take back (repossess) the property. This could leave you homeless and have a big impact on your credit rating, which could make borrowing in the future very difficult.
Get help with conveyancing from Lawhive
So there you have it. You legally own a property when it’s been registered in your name with the Land Registry. However, there are nuances to this relating to things like beneficial ownership, which are important to take into account when you’re buying or selling a property either as a sole owner, joint tenant or tenant in common.
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