Internet Newsletter for Lawyers
January/February 2006, by Delia Venables

Here are main points:

• No other documents other than those that are “required” (i.e. must be included) or “authorised” (i.e. may be included) are to be included in the HIP

• Copy documents must be accurate and colours, maps and drawings must be reproduced carefully

• The new HIP logo must be displayed throughout the pack

• The “responsible person”, i.e. the person marketing the property must have a HIP in his possession or under his control when a property is “put on the market”

• A copy of the HIP must be produced (except in a few circumstances) within 14 days of the date of the request

• The HIP cannot be supplied electronically unless the potential buyer consents

• A reasonable charge can be made for copying/posting a HIP

• A tenanted property does not have to be marketed with a HIP, but a part tenanted property (with a let or a granny flat for example) does

• Some documents i.e. searches, office copies and the Home Condition Report (HCR) must not be more than three months old at the first point of marketing

• If a property is taken off the market for 28 days or more the first point of marketing becomes the day when the property is put back on the market and in some cases new searches, office copies and an HCR will be required. However, if the property is off the market for more than 28 days because an offer has been accepted but that sale does not proceed HIP documents will not need refreshing

• Where, despite all reasonable efforts, certain required documents cannot be obtained within 14 days, marketing may commence but continued efforts to obtain those documents must continue

• HIP legislation is only intended to cover the sale of properties that will or could be used as a home by the owner and where the sale is likely to form part of a chain of transactions; business premises are exempt as are some mixed sales (business and residential), dual use properties, portfolios of properties, unsafe properties and properties marketed for demolition

• Penalty charges can be made for a breach of HIP duties; the charge shall not exceed £500 but is set initially at £200

• The OFT could, in certain cases, issue a banning order preventing some agents from continuing to trade

• The HCR must specify any business or personal relationships between the home inspector and anyone involved in the sale

• Further details of the home inspector certification scheme will be published by the ODPM in January 2006.

The "Required" documents

• A sale statement (new form)

• Home contents form (HCF, replacing the Fixtures Fittings and Contents Form) completed, partially completed or blank

• A home use form (HUF, replacing the Sellers Property Information Form) completed, partially completed or blank

• If the property is registered, official copies of the register and plan

• If the property is unregistered, an index map search and a “good root of title” with either an abstract or an epitome of title

• If the property is leasehold or commonhold a whole host of other documents too numerous to list here

• If part of the property is let, copies of any leases or tenancy agreements

• If the property is physically complete, either an HCR or (if the property is new) an acceptable warranty

• Other HCRs completed within the last 12 months unless completed for a previous seller or his agent

• A energy performance certificate, if not included in the HCR

• If the property is not physically complete before the first point of marketing, a report on a home not physically complete (new form)

• A land charge and local authority search and a water and drainage search.

Some of the "Authorised" documents

• Documents referred to in the HUF or of interest to potential buyers (as listed in paragraph 2 of schedule 5 of the Regulations)

• Copy documents referred to in the official copies

• Further leasehold and commonhold documents

• Documentary evidence of repair or maintenance work carried out since the date of the HCR

• Copy warranties, guarantees or policies

• Further searches i.e. relating to mining, ground stability or relating to common land etc

• Searches relating to other land or property in the vicinity of the property which would be of interest to potential buyers of the property.

HIPAG and a trial of HIP production

HIPAG will be commencing a trial of HIP compilation shortly, the Pre-Sale Legal Pack. A number of member firms have already volunteered to take part. In order to be compiled in the way that HIPs will eventually work, the trial will have to take place electronically, so firms taking part need to have a good quality fax machine or scanner; Win98 plus a PC; Email facilities; a Broadband Connection and IE Browser 5.5 or higher. The firms will also be involved in online activities, such as creating and uploading pdfs.

Our HIP production will be as follows:

The HIPAG associated estate agent will visit the property, value it and be instructed to sell it. The agent will explain to the seller that a HIP needs to be put in place before the property can be marketed.

Assuming that the seller wishes to order a HIP from HIPAG (because it will combine three essential elements, speed, quality and value for money) the agent will contact the HIPAG hub (by phone, text, fax or e-mail) where HIP production takes place. All the agent will need to do is provide the name of the owner and full postal address of the property. With that information the hub can request and obtain, immediately from the Land Registry, the Official Copies and a File Plan. Once the plan has been obtained the Searches (Local, Water and Drainage) can be requested. All of this work could/should be carried out whilst the agent is still at the property.

The agent will leave, with the seller, the new Home Use Form (HUF), Home Contents Form (HCF) and HIPAG’s standard additional enquiries. He will recommend to the seller the local HIPAG solicitor that he has a business relationship with and ask the seller to take those forms, duly completed, to that solicitor as soon as possible.

The HIPAG hub will notify the chosen HIPAG solicitor and a local home inspector that the seller wishes to instruct them to act for him. The solicitor will send his quote/client care letter to the seller asking him to return their instruction form and at the same time deliver to them the completed HUF, HCF and standard additional enquiries. The solicitor will, after checking the forms, either post, fax or send electronically (after being scanned) those forms to the HIPAG hub.

The home inspector will arrange to visit the property and will carry out his inspection. Once his report has been prepared he will send it to the HIPAG hub electronically.

Within less than five working days the HIPAG hub will have, the Official Copies and File Plan, the completed HUF, HCF and standard additional enquiries, the results of the Searches and the Home Condition Report. The hub will add to those documents the Index, Sale Statement and any other “required” document. The hub will then send to the agent, in whatever format he requires, pdf, disk or hard copy etc the basic HIP (or the IMP, Initial Marketing Pack, as we will call it). The agent can then begin, legally, to market the property.

Unlike other HIP providers HIPAG’s work will not end there. The hub will also send the IMP to the seller’s solicitor. The solicitor will review the IMP for obvious defects, of a legal nature for example, and begin rectifying those defects whilst the property is being marketed. By the time a buyer has been found, the solicitor will have turned the IMP into a QCP, a Quality Conveyancing Pack.

The solicitor will send his contract, the IMP and any additional documents, forming the QCP, to the buyer’s solicitor. The buyers solicitor will check these documents and advise the buyer that all is in order and either exchange contracts or wait for a mortgage offer to appear or wait for the rest of the chain to catch up, voila!

In a future edition of this newsletter, I will report on how the trial is progressing together with the latest information on e-conveyancing.

If anyone reading this article has any HIP related questions please e-mail them to me at rob@hipag.co.uk. This article is as extensive and as accurate as space will allow but does not cover every aspect of The Housing Act 2004 or the Regulations.

Rob Hailstone, CEO, HIPAG, The Independent HIP Group, www.hipag.co.uk.

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