What not to do?  


     The most important thing we would stress to you is that you should NEVER SIGN ANYTHING until you have had it checked by your lawyer. If you do sign you will be committed to a contract that you may not understand, that may be totally unfair or unsafe and that could be structured, financially, in a way that is totally unsuited to you and tax inefficient. Sometimes in today's "boom" climate you may have no option but to sign some form of document in order to secure the property. This could be:
     An official offer to buy the property. This is a formal letter of offer. If the seller accepts your offer this creates a legally binding obligation to proceed. You will usually, at this point, pay over a small deposit of, say, 596 of the value of the property. This is rare.
     A Reservation Contract. This takes the property off the market for, say, 2-4 weeks during which time your lawyer can make all the necessary checks on the property. You pay a Reservation Fee of, typically, £2,000-£3,000. If you do not proceed because of a legal problem you should be contractually entitled to the return of your deposit though this is not always so and, even if it is, getting the money back can often prove difficult. If you do not go ahead simply because you have changed your mind, you will usually lose this deposit. If you do go ahead the deposit is treated as a part payment of the price of the property.
      Preliminary Contract. This is a full contract to buy the property. It binds you to the purchase, whatever you might find out later. When you sign this preliminary contract you are likely to be asked to pay a preliminary deposit. This is typically 1096 of the price of the property. We think that it is best to sign no more than a Reservation Contract at this stage.

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