How do you Compare Legal Fees?

publication date: Mar 2, 2009
 | 
author/source: Kate Faulkner
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Legal fees are notoriously misunderstood and often quoted so that you can't compare them, not much help for consumers wanting to get a quality service at the best price!

So to help you compare legal fees you are given, here's a list of everything that should be included in a quote from legal companies:-

Legal Fee
This should be split into a buying fee and a selling fee.  You also need to check whether the fee includes VAT or not, this is 15% at the moment, so can make a big difference!

Searches
These are checks carried out by the legal company on a property you are buying to see what's happening locally from a planning perspective or whether there is anything that needs checking out further, such as effects of coal mining, flooding etc.

Bankruptcy Search Fee
This checks whether the buyer you are selling to/about to buy from has been or is about to be declared bankrupt.

Money Transfer
This is a fee charged by the legal company typically for money transactions such as paying off a mortgage, drawing mortgage monies down and sending them to the seller's solicitor etc.

Office Copy Entries
These are fees charged for copying records from/to the Land Registry that prove ownership.

Land Registry Fees
Via your legal company, this fee is paid to the Land Registry and registers your purchase or sale with them.
You can check out how much this fee actually is (as opposed to what your legal company charges) by visiting the Land Registry.

Leasehold Fees
If you are buying or selling a property which is leasehold (typically for flats), you are normally charged an additional £100+ fee to carry out the transaction.

Stamp Duty
This is effectively a 'tax' that you have to pay to the Government when you purchase a property. Currently up until September 2009, you pay no stamp duty up to £175,000, then it's between 1% and 4% depending on how much you purchase for.

Other fees that are likely to be incurred and paid via your legal company include:-

Mortgage Valuation
This is charged to buyers and used to be around £80-£100 but over the last few years, these have risen to around £300+.

Mortgage Fees
This is charged to buyers and they have gone up dramatically due to the credit crunch, sometimes they are nothing, or 1-2% of the mortgage, but in some cases are fixed fees of £5,000 or more!

Mortgage Redemption
This is a seller's charge and may be anything from nothing to thousands of pounds depending on your agreement with the mortgage company.

Estate Agent's Fee
This is usually paid for by the legal company to the estate agent on your behalf.

Legal fees can add up quickly if there are any problems during your sale/purchase. To help with this, you should ideally work with a legal company that:-

1. Will give a fixed fee upfront.
2. Will offer a 'no sale, no fee' ie if your sale/purchase falls through, you don't have to pay the legal fee, which can be hundreds of pounds.

Always ask if a legal company will offer these terms, and if not, how much extra you will be paying if there is a legal problem, for example how much is a letter? How much for a meeting? What is their hourly rate?

Top Tip
It's worth discussing with the legal company whether they will charge less money if you ask them to organise your HIP which includes some of the items that you will be charged for as a buyer. Some legal companies will discount for you, some won't but it's worth asking!

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