Jargon Buster
Agreement – Another
word for Contract (see below)
Auction – This is
where a property is bought at an auction house. Once the gavel goes
down contracts are exchanged (see Exchange of Contracts below).
Bankruptcy Search – A
search made by the conveyancer to check whether a buyer or a borrower has
been, is or is about to be declared bankrupt.
Borrower – The
person taking out a loan or mortgage on a property that they own, sometimes
also known as the Mortgagor
Boundaries – The
boundaries define the extent of the property and are usually marked out on
the ground by fencing or hedging. Boundaries are also often although
not always shown on the deeds plans.
Bridging Loan – This is
a loan taken out to “bridge” the gap whilst waiting for the sale of a
property or the receipt of a mortgage.
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
often passes to the buyer on exchange of contracts. See our links page for
Buildings Insurance
Buyer – This is
the person that is buying the Property, sometimes also known as the Purchaser
Buy To Let – This is
where a buyer buys a property with the intention of letting it out on a
commercial basis. There are usually mortgages specific to this type of
purchase known as Buy to Let Mortgages
Caveat Emptor – Literally
means let the buyer beware. The buyer is responsible for finding out
the condition of the property by survey and any matters affecting the legal
title to the property by using a conveyancer to check the title and carry out
searches.
Chain – These
are the property buyers and sellers that link together to make the chain for
your particular sale or purchase. The chain may consist of only two
people i.e. you as buyer and the person you are buying from as seller or it
may consist of several buyers and sellers. The beginning of the chain
usually starts with a first time buyer or a buyer with nothing to sell and
the end of the chain usually ends with a seller who is buying a brand new
home or who is not buying another property. Your sale or purchase can
only proceed at the same pace as every one in the chain. It is a bit
like being in a traffic jam.
Client – The
person who has asked the conveyancer to act for them in legal matters.
Client Care Letter
– The
conveyancer must send the client this letter at the beginning of the
transaction. The letter must give clear details of what 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.
The conveyancer is not allowed to start work for a client until the client
confirms in writing that they wish the conveyancer to do so.
Coal Mining Search
– If
the property is in an area designated as a Coal Mining Area the conveyancer
will search to see whether there are any issues which currently affect the
property.
Completion Date
This is the date that ownership of the
property passes from the seller to the buyer.
The seller and buyer should discuss dates between themselves ad then notify
their respective solicitors who will try to fit in with the suggested date.
If there are unforeseen delays, for example, if the buyer does not receive a
search or mortgage offer in time, or the "cash buyer" turns out to
have a related sale then the completion date may have to be revised. For this
reason you should not make any firm commitments such as giving notice on a
job, arranging removals or making holiday bookings without first contacting
us so that we can advise you of the situation.
Only when contracts are exchanged and a completion date is fixed can you be
virtually guaranteed that the completion date will be met. It is not
essential for you to be present on the completion date but if you are going
to be away, then you should let us know so that we can arrange for one of
your relatives (or ourselves) to act for you through a Power of Attorney.
Completion Statement – This
is the final account that the conveyancer will send and it will detail his
fees plus the VAT and all searches etc. This is usually sent after
exchange and before completion.
Conditions of Sale
– The
conditions of the sale are detailed in the Contract that the seller’s
conveyancer prepares and sends to the buyer’s conveyancer. There are
standard Solicitors Regulatory Authority conditions to which the conveyancer adds any Special
Conditions.
Conservation Area – This
is an area protected by the Local Authority. Properties in a conservation
area are usually subject to planning restrictions particularly relating to the
exterior of the property.
Contract
This is the agreement between the buyer and
the seller. It sets out the main terms of what has been agreed such as the
property, the price and the names of the parties. It also deals with the
process if something goes wrong. Rather than making the buyer and the seller
meet to sign the same contract, the seller's solicitor draws up two copies of
the same contract, and each party signs their own copy. When both parties are
ready to legally commit, the two contracts are exchanged.
Conveyancer/ Conveyancing –
Conveyancing is the legal description for the work that is done to transfer
ownership of a property from one person to another. Conveyancer is the
job description of the person doing the legal work.
Conveyance – This is
the old fashioned name for the document that transfers a property from one
person to another. Conveyances are rarely used nowadays and property is
usually transferred by a Transfer document.
Council for
Licensed Conveyancers (CLC) – the organisation that governs
Licensed Conveyancers in the same way that the Solicitors Regulatory Authority governs
solicitors.
Covenants/Restrictive
Covenants – These are obligations/restrictions that are attached to
the property. For instance there may be an obligation to maintain a
fence or boundary which is a positive covenant or there may be a restriction
on the type of building on the land which is a restrictive covenant.
Deeds/Title Deeds – These
are the legal documents that contain information about the Property.
Defective Title
Insurance – A defective title means that there is a problem with the
deeds relating to the property. They 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
This causes a lot of confusion. When most
people talk about the deposit they mean the part of the purchase price that
the buyer is contributing him/herself (i.e. usually the difference between
the amount of the mortgage and the purchase price). When conveyancers talk
about the deposit they are talking about the money that is handed over to the
seller's conveyancer upon exchange of contracts. This might be the same
amount, but it might not. On exchange of contracts the seller can insist on
receiving from the buyer a 10% deposit of the purchase price. However as many
people are not contributing as much as 10% to the purchase, reduced deposits
are often agreed. You should be aware, however, that if you are a buyer and
you pay a reduced deposit then fail to complete the purchase through no fault
of the seller, you will, under the terms of the contract, be required to make
the deposit up to the full 10%. You may also have to pay compensation to the
seller if the seller loses out through your failure to complete.
Disbursements – Simply
put this means items that the conveyancer must pay to other persons on your
behalf. Typically these are VAT, Stamp Duty, Land Registry Fees and
searches.
Drainage/Water
Search – This is a search carried out by the conveyancer for the
purchaser 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 – This
term means a right given to the Property Owner over adjoining property or
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 found out. Patent Easements are easements that can be discovered by search or survey.
Environmental Search
This is carried out check if there are any
known environmental issues affecting the property, these include matters such
as landfill or waste disposal sites in the area, if the property has been
built on an old industrial site and whether there are any risks from
contaminated land, toxic emissions, flooding, subsidence etc.
Equity – The
equity in a property is the value that is left after you take the current
worth of the property and deduct from that any mortgages outstanding on the
property.
Estate Agent –The
Estate Agent acts on behalf of the seller to sell the property. They
will prepare a set of details which must be accurate by law. They will
negotiate the sale between the buyer and seller and any specific terms.
The Estate Agent will prepare a Memorandum of Sale giving details of the
buyer, the seller, their conveyancers, the price and any specific terms which
is sent to all parties to the transaction.
Exchange Contracts
This is a very important moment. From the
minute contracts are exchanged, the matter becomes binding. From that moment
on, the seller must sell, the buyer must buy, it must be done at the price
stated in the contract. Until contracts are exchanged nothing is binding -
either party can walk away from the transaction with no penalty.
Financial Advisor – The
Financial Advisor is usually responsible for arranging the mortgage or
finance to purchase the property and will often arrange any life insurance,
mortgage protection insurance etc.
Fixtures, Fittings and Contents Form
This is a list of the items at the property
which are either included or excluded from the agreed price. This form is
completed at an early stage by the seller and sent to the buyer, so that both
parties understand what is included in the selling price. If you are the seller,
when you let us have the form we will send you a copy back so that you know
what you have agreed on it. If you are the buyer we send you a copy of the
form as soon as it is received by ourselves from the seller's solicitors so
that any difficulties can be resolved at an early stage.
Freehold
Ownership of both the property and the land
it stands on.
Gazumping – This
is where the Seller sells to another buyer for a higher price. This can
only happen before exchange of contracts.
Gazundering – This is
where the Buyer lowers his offer on the property after agreeing a
price. This can only happen before exchange of contracts.
Ground Rent – This is
the rent paid to the Landlord usually on a Leasehold property where there is
a long lease. Ground Rents are payable on some freeholds.
H M Revenue and Customs – A government department, formerly know
as the Inland Revenue, that collects tax on behalf of the government. H M Revenue
and Customs now insists by law that every purchaser of property must
complete a Stamp Duty Land Transaction Form. This form must be sent to H M Revenue and Customs
along with any Stamp Duty within 30 days of completion. H M Revenue and Customs
impose hefty fines if this is not done. For sample
forms and Stamp Duty Tariffs see our links page for details of the H M Revenue and Customs web site.
Indemnity Contribution - Indemnity insurance is taken out by all
Solicitors to cover losses to clients arising from errors or fraud in dealing
with their matters.
Indemnity Insurance – The
Solicitors Regulatory Authority insist that all Solicitors and all
Licensed Conveyancer firms must take out insurance to the value of £1,000,000
or more to cover defective work or fraud by that firm or its client (s).
Instructions – This
means authorisation by the client to the conveyancer. The client must give
the conveyancer written instructions to act on his behalf in the property
sale, purchase, re mortgage or transfer. After that the conveyancer
will from time to time ask the client for instructions as to how the client
wishes to proceed. eg what date the client wants to move.
Joint Tenants – Where
two or more persons buy a property they are called joint tenants or tenants
in common whether the property is freehold, commonhold or leasehold. 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 or by a Will.
Land Registry
A Central body that retains records of who
owns the land, and under what conditions.
This was set up in 1925, to simplify the conveyancing process. Not all land
in England and Wales is registered today. This is partly due to the fact that
land can only be registered following certain 'triggering events'. The Land Registry has its'
own website which provides useful information.
Landlord – A
Landlord is the owner of the freehold 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
Temporary ownership of the property but not
the land on which it stands. When the lease expires ownership of the property
reverts back to the Landlord (see above).
Legal Executive – A
qualified legal professional who is governed by the Solicitors Regulatory Authority
Lender – The Bank
or Building Society who lend money to property owners, sometimes also known
as the Mortgagee
Licensed
Conveyancer – a qualified property lawyer who holds a license granted
by the CLC (see above).
Listed Buildings – Listed
Buildings are protected by the Local Authority. Properties that are listed
are subject to planning restrictions.
Legal Fee
This is a fixed cost that covers the cost
of the time our property lawyers spend on your conveyancing.
If the sale or purchase does not complete then we will not charge you any
legal fees, only the disbursements we have incurred (searches, post, copying
etc).
Local Authority Search
This is a list of questions about the
property, which are sent to the local authority. It covers such items as,
whether the road serving the property should be maintained by the council,
whether there have been any planning applications on the property, and a
number of other things.
The search is against the property only and does not cover the surrounding
area. A word of warning - the search will not show any Planning Permissions
or matters affecting land or buildings outside the boundaries of the
property. It is important that you let us know at the start of the
transaction if you require information on any particular point or if you wish
us to ask any particular questions of the local authority. We would not
normally advise a buyer to exchange contracts without a satisfactory local authority
search.
Local Search Indemnity Insurance – This
insurance is 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
the 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
This is a loan to help you buy the house.
The mortgage is 'attached' to your title deeds, and means that you cannot
sell the property without paying it off at the same time.
Contracts should not be exchanged until an acceptable written mortgage offer
has been received. It is not enough that you have had verbal confirmation
from you bank or building society that they will grant you a mortgage.
In many cases a mortgage may be supported by an endowment, pension or
mortgage protection policy and in these circumstances we must confirm to the
lender before exchange of contracts that whether there are existing policies
or arrangements have been made for new policies to be brought into effect
immediately contracts are exchanged.
If you are selling, we will contact your mortgage lender at an early stage to
ask how much it will cost to pay off the mortgage - we will send you a copy
of this figure. You may find that you will be charged a financial penalty if
you pay the mortgage off early. This is a consideration to be taken into
account when agreeing a completion date, and often applies when your existing
mortgage was set up on a fixed rate, or you obtained a 'cashback' figure.
Mortgage Deed
The legal charge of the property to the
mortgage lender until such time as the loan is repaid.
Mortgage Fees
These fees are normally charged for acting
on behalf of your bank or building society.
We do not charge an additional fee for acting on behalf of your bank or
building society.
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
Fee – 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 the Builder or Developer.
Off Plan – Where a
property is being bought at the planning stage and is yet to be built
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.
Power of Attorney – a document giving power to another person
to deal with their affairs on their behalf.
Preliminary or Pre
Contract Enquiries – This is a set of questions that is sent to
the seller’s conveyancer by the buyer’s conveyancer relating to the property.
Typically these questions will consist of enquiries relating to boundaries,
easements, persons living at the property etc.
Property Information Form
This is a questionnaire about the property
completed by the sellers. It covers such items as guarantees, neighbour
disputes and boundaries.
If you are buying then time can be saved if you tell us at an early stage if
there are any particular points about the property that concern you. We can
then ask the seller's solicitors the relevant questions.
If you are selling and the buyer's solicitor asks a question to which you do
not wish to give an answer to, for whatever reason, it is essential that you
discuss it with us. Failure to disclose information could give the buyer
grounds for taking action against you.
Redemption
The final payment of a mortgage loan.
Redemption Fee
Penalty sometimes incurred if paying off a
mortgage early.
We do not charge an additional fee to redeem (pay off) your existing
mortgage.
Searches – There
are many different types of Conveyancing search. Which searches are
needed for your property will be assessed by your conveyancers. A brief
list follows:-
Bankruptcy Search
Brine Search
Coal Mining Search
Commons Registration Search
Company Search
Environmental Search
HM Land Registry Search
HM Land Charges Search
Index Map Search
Local Search
Tin Mining Search
Water Authority/Drainage Search
Searches Pack
This specially negotiated search pack
includes Local Authority, Water/Drainage and Environmental searches, all for
one fixed fee.
Seller – This is
the person selling the property sometimes also known as the Vendor
Shared Ownership
Property – This is where a property has been bought jointly with
the Council or a Housing Association.
Stamp Duty
This is simply a tax charged by the
government, and only affects you if you are buy property for more than £125,000. It is paid by the buyer.
If you buy for exactly £125,000 you pay nothing in Stamp Duty; if you pay from £125,001
to £250,000 Stamp Duty is charged at 1% on the whole of the purchase
price. From £250,001 to £500,000 it is charged at 3%, and above £500,000 it
is charged at 4%. For current Stamp Duty
tariffs check our links page and visit the HM Revenue and Customs web site.
Stamp Duty Exempt – Some
types of purchase or transfer of land are exempt from Stamp Duty.
The Government has designated certain areas as being exempt from Stamp Duty where the purchase price of the property is
£150,000 or less.
Visit the web site where you can check whether your property is exempt by
entering the post code. Some other transfers of land may be exempt from Stamp
Duty. Your conveyancer will be able to tell you whether your
transaction is exempt.
Stamp Duty Land Tax
Form – This
is a lengthy form which comes with an even lengthier set of guidance
notes. See HM Revenue and Customs above.
Subject to Contract
– Before
Exchange of Contracts (See above) all negotiations relating to the property
are subject to contract this means they are not binding unless contracts are
exchanged
Surveyor – The
person who is responsible for surveying the property. They will usually
be a member of the Royal Institute of Chartered Surveyors RICS
Survey
This is a report carried out by a surveyor
on the physical state of the property you are buying.
If you are buying a property you should be aware that the property is
"sold as seen". It is for you, as the buyer, to discover any
physical defects by means of inspections and surveys.
Most houses are bought with the assistance of a mortgage and the bank or
building society, will require a mortgage valuation. However, this is not a
survey - it merely ensures that they property is of sufficient value to
protect the lender's interest. Our advice is that you should at least have an
RICS Homebuyer's Report prepared by a qualified surveyor. This will cost more
than a mortgage valuation but it is advisable. It is possible to go one step
further and have a full structural survey (initially you should not chose
this option unless the surveyor who carries out the Homebuyer's Report thinks
any matter should be investigated further).
Telegraphic Transfer Fee – This
is a bank charge for sending money from bank to bank. Money is usually transferred by the buyer's
conveyancer to the seller’s conveyancer this way on completion. Most redemption
payments to mortgage lenders are also done by this method.
Tenants in Common – See
Joint Tenants above
Title Deeds
These documents firstly act as evidence
that the person selling the property actually owns it, and secondly set out
any rights or obligations that affect the property.
If you are selling, then valuable time can be saved if your title deeds can
be obtained by us at an early stage. If you have a mortgage then your bank or
building society may be holding your title deeds. We will need to know your
mortgage account number and the name and address of the lender. Some lenders
charge a fee to send out your deeds but this will normally be added to your
mortgage account. Alternatively, if
you have bought or remortgaged your home in the past few years, these may have been
sent to you by your conveyancer for safe-keeping, and if this is the case, these
should be sent to us as soon as possible, preferably by registered delivery
Transfer Deed
This is the document that passes the
ownership of the property from the seller to the buyer.
It is dated with the completion date, and will be sent to the Land Registry
after completion. The Land Registry need this deed to change their records,
and show the buyer as the new owner of the property.
Valuation – See
Mortgage valuation above.
VAT – Value
Added Tax is a government tax charged on certain transactions.
Water and Drainage Search
This provides confirmation of whether the property is connected to a public
or private water supply,
how the property is billed for the water and wastewater charges (either
rateable value or water meter), whether the property is
connected to a public sewer or septic tank or other private disposal facilities, whether the property is close to or is affected by water mains
or public sewers.
Will – This is
the legal document that sets out what you want to happen to your property
after completion.