Glossary of Terms - Property

Agreement – Another word for a Contract (see below)

Auction – Where a property is bought/sold at an auction house. Once the hammer goes down contracts are exchanged (see Exchange of Contracts below).

Bankruptcy Search – A search made to check whether a Buyer or Borrower has been, is, or is about to be, declared bankrupt.

Borrower – The person taking out a loan or mortgage on a property, sometimes also known as the Mortgagor.

Boundaries – Indicate the extent of the property and are usually marked on the ground by fencing or hedging. Boundaries are also often although not always shown on deeds plans.

Bridging Loan – A loan taken out to “bridge” the gap whilst waiting for the sale of a property or the receipt of a Mortgage offer.

Building Insurance – Insurance taken out by the owner of the property to insure the property against risks such as fire, landslip etc. The responsibility to insure the property passes to the Buyer on Exchange of Contracts.

Buy To Let – Where a property is bought with the intention of letting it out on a commercial basis. There are mortgages specific to this type of purchase known as Buy to Let Mortgages.

Buyer – The person that is buying the Property, sometimes also known as the Purchaser.

Caveat Emptor – Literally means; ‘buyer beware’. The Buyer is responsible for finding out the condition of the property by survey and other enquiries, and any matters affecting the legal title to the property by having their legal representatives check the title and carry out searches.

Chain – The property sales and purchases which, linked together, form a Chain of transactions, which includes your particular sale or purchase. The Chain may consist of only two parties i.e. you as buyer and your seller, or it may consist of several buyers and sellers. A Chain usually starts with a first time buyer or a buyer with nothing to sell and the end of a Chain usually ends with a seller who is buying a new home or who is not buying another property. Your sale or purchase can only proceed at the same pace as every other transaction in the chain.

Client – The person who has asked us to act for them in legal matters.

Client Care Letter – This sets out our terms of business and will be sent out at the beginning of the transaction. The letter must give clear details of the work will be carried out, who will be doing it, at what cost and the complaints procedure of the firm. The Client is usually asked to sign and return one copy. We are not allowed to start work for a Client until the Client confirms in writing that they wish us to do so.

Coal Mining Search – If the property is in an area designated as a Coal Mining Area we will search to see whether there are any issues which currently affect the property.

Commonhold – A rare way of owning Freehold land intended to overcome difficulties associated with Leasehold ownership e.g. relating to shared facilities and obligations. Creating a Commonhold initially involves registration of the Freehold title as Commonhold together with the formation of a Commonhold Association and a Commonhold community statement setting out the rights and obligations of the unit holders.

Completion Date – When the purchase becomes final and the Purchase Price is paid by the buyer’s solicitor and received by the seller’s solicitor. The seller must move out of the property on this date. The keys are released to the buyer and they may move in to the property. Completion Statement – This sets out all the financial details of the transaction and is usually given or sent to you before you sign the Agreement.

Conditions of Sale – These are detailed in the Contract that the seller’s solicitor prepares and sends to the buyer’s solicitor. There are standard Law Society conditions to which we add any Special Conditions to protect you.

Conservation Area – An area protected by the Local Authority. Properties in a Conservation Area may be subject to planning restrictions particularly relating to the exterior of the property.

Contract – The legal document that sets out the terms of the sale/purchase of the property. This is prepared in a draft form by the seller’s solicitor and sent to the buyer’s solicitor. Once all queries are answered it is then approved and the seller and the buyer each sign their own copy.

Conveyance – The old fashioned name for the document that transfers ownership of a property from one person to another. Conveyances are not used nowadays and property is transferred by a Transfer Deed.

Conveyancing – The legal description for the work that is done to transfer ownership of a property from one person to another.

Covenants/Restrictive Covenants – These are obligations/restrictions which affect the property. For instance there may be an obligation to maintain a Boundary which is a positive covenant, or there may be a restriction on the type of building allowed on the land, which is a restrictive covenant.

Deeds/Title Deeds – Legal documents that contain information about the Property.

Defective Title Insurance – A defective title means there is a problem with the Deeds relating to the property – which may be missing, destroyed, lost or simply inadequate. A Buyer will not usually buy a property with a defective title unless the seller provides him with an insurance policy to protect him and his Lender against any financial loss which could result from the defective title.

Deposit – There are two types of deposit that a purchaser may be asked to produce. Sometimes the estate agent will ask for a goodwill deposit to secure the property. You should not pay this deposit without first consulting with us. The second type of deposit is the one a Buyer will pay to their legal representative to hand over on Exchange of Contracts. Traditionally this is 10% of the purchase price.

Disbursements – Monies we must pay to others on your behalf. Typically these are VAT, Stamp Duty Land Tax, Land Registry Fees and Searches.

Domestic Energy Assessor (DEA) – A person responsible for the preparation of the Energy Performance Certificate.

Drainage/Water Search – A search carried out by the buyer’s solicitors to check whether the property is connected to mains water and drainage and whether there are any other issues relating to drainage/water affecting the property.

Easement – A right granted over land. Typically this could be a right of way or access, a right of drainage or a right to a water supply. By law the Seller must disclose all Latent Easements but not Patent Easements. Latent Easements are easements that could not be discovered by search or survey – in other words they are not easily discovered. Patent Easements are easements that can be discovered by search or survey.

Energy Performance Certificate (EPC) – Prepared by a Domestic Energy Assessor (DEA), reporting on the energy efficiency of the home, provided by the sellers.

Environmental Search – A search carried out to check whether there are any environmental issues affecting a property. These may include matters such as flooding, landfill and previous uses of the land.

Equity – The market value of a property less any outstanding mortgages. Negative Equity occurs where the value of the outstanding mortgages exceeds the market value of the property.

Estate Agent – The Estate Agent acts on behalf of the Seller to market the property. They will prepare a set of details which are legally required to be accurate. They will negotiate the sale between the Buyer and Seller and will prepare a Memorandum of Sale giving details of the Buyer, the Seller, their legal representatives, the price and any additional terms agreed between the parties. This memorandum is sent to all parties to the transaction.

Exchange of Contracts – The parties’ legal representatives usually “Exchange Contracts” over the telephone. If there is a Chain everybody in the whole Chain “exchanges contracts” at the same time using a Law Society Formula. Once contracts are exchanged the sale/purchase is legally binding.

Financial Advisor – Usually the person responsible for arranging the mortgage or finance to purchase the property and who will often arrange any life insurance, mortgage protection insurance etc.

Fixtures and Fittings List – A list of items, such as carpets and curtains, that will remain in/be taken from the Property on Completion. This is completed by the Seller and a copy is attached to each part of the Contract and is legally binding.

Freehold – The legal term for one type of ownership of property. With Freehold land the owner owns the property/land outright subject only to any mortgages, easements etc. revealed by the deeds. The other types of ownership are Leasehold and Commonhold (see below and above).

Gazumping – Where a Seller has agreed a sale price but then sells to another buyer for a higher price. This can only happen before Exchange of Contracts.

Gazundering – Where a Buyer reduces his offer for a property after agreeing a price with the Seller. This can only happen before Exchange of Contracts.

Ground Rent – The rent paid to a Landlord on a Leasehold property.

Joint Tenants – Where two or more persons buy a property they are called joint tenants or tenants in common whether the property is Freehold, Leasehold or Commonhold. Where property is held as a joint tenancy if one owner dies the property passes to the other owner automatically without a Will. If the property is held as Tenants in Common each Buyer owns their own share of the property which can only be passed on by sale, under their Will, or the intestacy rules if they have not made a Will.

Land Registry – The Land Registry is a government agency that holds the records of all registered property in the United Kingdom. Most property is now registered at the Land Registry.

Land Registry Search/Fees – The seller’s solicitors will obtain from the Land Registry up to date copies of the Land Registry entries that relate to the property. A buyer’s solicitor will make a search with the Land Registry to ensure no new entries have been made since the date of the information provided by the seller’s solicitors. This search will also provide a period of protection during which no new entries can be made in relation to the property. On Completion, and within the protection period provided by the search, the buyer’s solicitors will send the relevant documentation to the Land Registry who will register the new owner and any new lender. The Land Registry charges a fee for searches and for registration of property and mortgages. Visit the Land Registry website where a full list of fees is available.

Landlord – The owner of the freehold interest of a leasehold property. Rent on a leasehold property is paid to the Landlord who has the right to enforce the terms in the Lease.

Lease – A Lease is a complicated document which details the matters affecting a Leasehold property. Typically these will include the length of the lease, rent, service charges, rights of way, water, drainage and access and it will usually incorporate a plan.

Leasehold – A Leasehold property is one which the owner will not own forever. There is a Lease which for a certain number of years grants the Leasehold owner the right to occupy the property/land. There may be a rent and a ground rent payable to the Landlord.

Lender – Sometimes also known as the Mortgagee, usually a Bank or Building Society who lend money to property owners.

Listed Buildings – Listed Buildings are protected by law. Properties that are listed are subject to rigorous planning restrictions.

Local Search – This search reveals information relating to the property which is held by the relevant Local Authority. The search will either be sent to the Local Authority to answer and return or we may use a personal search agency or an online search provider to collect the information from the Local Authority.

Local Search Indemnity Insurance – This insurance is often used on re-mortgages where there is no need to carry out a full local authority search and protects the Lender from financial loss. It is sometimes used on a purchase where there is insufficient time to make a full Local Search if the Lender permits.

Management Company – If a property is Leasehold there will often be a Management Company set up to deal with the day to day running of the property and repairs and renewals. The management company collect a service charge from the property owners to pay for their services and for the upkeep and maintenance of the building.

Mortgage – A loan that is secured over a property.

Mortgage Deed – This is the document the Borrower signs to agree to the terms set out in the Mortgage Offer. This document is sent to the Land Registry who register the Mortgage as a financial charge on the property which is shown in the charges register.

Mortgage Offer – A written offer to lend money on a property. The Mortgage Offer will contain all the terms of the Loan and the conditions upon which the money is loaned.

Mortgage Valuation – The Borrower generally pays a fee to the Lender to have the property valued for Mortgage purposes. This enables the Lender to take a commercial view on whether the property is worth what the Borrower says it is and whether it is suitable security for the Mortgage. The mortgage valuer will not necessarily inspect the physical condition of the property.

New Build – Where a property is being purchased for the first time from a Builder or Developer.

Overriding Interests – Not all matters affecting property are registered or capable of being registered at the Land Registry. Nonetheless the property is still subject to such matters.

Preliminary or Pre Contract Enquiries – This is a set of questions that is sent to the seller’s solicitor relating to the property. Typically these questions will consist of enquiries relating to boundaries, easements, persons living at the property etc.

Redeeming Your Mortgage – When a property owner pays back the Mortgage on the property it is called redeeming the mortgage. You will first need to get a statement of what is owed which is called a redemption statement. If you are paying the loan back early you may be charged a redemption fee.

Registered Land – Registration of land is now compulsory when it is sold, mortgaged etc. although this was not always the case (see Unregistered Land below). Land registered at the Land Registry provides a guarantee of ownership and does not depend on the safekeeping of a collection of old deeds and documents.

Searches – There are many different types of Conveyancing searches. Which searches are needed for your property will be assessed at the outset of your transaction.

A brief list follows:-

Bankruptcy search
Chancel search
Coal Mining search
Commons Registration search
Company search
Environmental search
Flood Risk Report
HM Land Registry search
HM Land Charges search
Index Map search
Local search Water Authority/Drainage search

Seller – This is the person selling the property sometimes also known as the Vendor.

Sellers Property Information Form – A standard form completed by the Seller giving details about the property. The contents of the form are legally binding on the Seller.

Shared Ownership Property – Where a property is bought jointly with the Local Authority or a Housing Association.

Stamp Duty Exempt – Some types of purchase or transfer of land are exempt from Stamp Duty Land Tax.

Stamp Duty Land Tax – This is the tax payable on the purchase of a property. For current rates visit the H M Customs & Revenue website.

Stamp Duty Land Tax Form – A form which must be completed for every transaction whether or not tax is payable.

Subject to Contract – Before Exchange of Contracts (see above) all negotiations relating to the property are subject to contract, which means they are not legally binding.

Survey – An inspection to check the physical condition of the property and to advise the Buyer upon the value of the property. Do not confuse a survey with a Mortgage Valuation.

Surveyor – The person who is responsible for surveying a property. Usually a member of the Royal Institute of Chartered Surveyors RICS.

Telegraphic Transfer/CHAPS – The method of sending money from bank to bank upon the same day. Fees are payable for this service.

Tenants in Common – See Joint Tenants above.

Transfer Deed – The legal document that transfers the ownership of the property.

Unregistered Land – When ownership of land is not registered at the Land Registry, proof of ownership depends on production of a collection of old deeds and documents. There are rules concerning exactly what documents have to be produced to prove ownership of land and if this can not be done, the title is said to be defective (see Defective Title Insurance above).

Valuation – See Mortgage Valuation above.

VAT – Value Added Tax is a government tax charged on certain transactions.

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