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Legal Jargon Buster
Glossary of terms that you may find useful regarding property
A
Abstract of Title
A summary or list of relevant title deeds proving the history of ownership of a property.
Adopted Highway
A road (and ancillary paths and sometimes verges) maintained by the local authority at public expense.
Advance
The original amount of the loan from a Bank or Building Society.
B
Bankruptcy Search
If you are taking out a mortgage against the property you are purchasing then the lender will request that your solicitor carries out a search to ensure you are not bankrupt.
Building Insurance
Buildings insurance provides cover for you in case something happens to the property you are purchasing (a fire for example). In conveyancing transactions you are often responsible for building's insurance from exchange of contracts (not completion). It is important to have an appropriate level of cover in place from this date. The policy value should be able to meet any costs involved in rebuilding the property, rather than the current property value.
Building Regulation Consent
Approval by the local authority to the method of construction and materials used in building work.
C
Chain
A position in which Seller 1 sells to Buyer 1 and Buyer 1 sells to Buyer 2 etc. thus creating a chain of connected transactions.
Completion Date
This is the date upon which the buyer (or the buyer's solicitor) will transfer payment for the property to the seller, and also receive the keys to their new property. The seller hands over the keys to the property (usually through their estate agent) and the sellers solicitor transfers payment for the property (minus deductions for fees or disbursements due) to the seller.
Completion Statement
This is a full breakdown of the financial costs incurred in purchasing a property and will be provided by your solicitor. It states the total amount of money your solicitor needs from you in order to complete the purchase of your chosen property on your behalf.
Contract
The contract is a legal document that sets out the terms of the conveyancing transaction and the parties involved, and is drafted by the seller's solicitor.
Contract Pack
The contract pack is a collection of documents and information relating to the property being sold. It is compiled by the seller's solicitor and contains key details including: draft contract, copy title deeds, a completed property information form (completed by the seller) and a fixtures and fittings form (completed by the seller). The contract pack is forwarded to the buyer's conveyancing solicitor so he may investigate the seller's legal title over the property.
Conveyancing
The legal process used to buy and sell land and property.
Covenants
Rules/regulations governing specifics that can /cannot be carried out in the properties title deeds or lease/leasehold agreement. They can be a 'positive covenant' requiring you to do something or a 'restrictive' covenant requiring you NOT to do something.
D
Deed of Covenant
A document or deed containing an agreement to pay or do something.
Deed of Gift
A document or deed used to transfer ownership of property from one person to another without any payment being made.
Deed of Guarantee
A document used where one person agrees to be responsible for someone else's debt or mortgage obligations should that person fail to carry out his/her own obligations.
Deed of Postponement or Priority
Where a Lender agrees that its mortgage will rank or take effect in priority after another lender's mortgage.
Deeds
Documents which establish ownership and confirm the Owner's title to the property.
Deposit
This is the amount of money the buyer will pay to the seller on exchange of contracts. The standard deposit is 10%, however if you are buying and selling your solicitor can usually use your buyers deposit for your purchase without the need to find a deposit in cash.
Disbursements
These are additional costs incurred during a property sale or purchase, and include things such as stamp duty and search fees.
E
Equity
Refers to the net value of a property after mortgages or other charges are paid off.
Estate (Wills)
Usually refers to the value of the assets of a deceased person including the house, Car, Investments or Bank Accounts and anything else you own in your sole name.
Exchange of Contracts
It is at exchange of contracts that a conveyancing transaction becomes legally binding. Until this point either party can pull out of the conveyancing transaction. Identical copies of the contract are signed by both parties and exchanged, usually by the solicitors for both parties. The deposit is also passed from the buyer's solicitor to the seller's solicitor for them to hold until completion - the deposit is non-refundable.
F
Fees
This is the charge levied by your solicitor to complete your conveyancing transaction. VAT will be payable on any fees, and it is worth noting that disbursements may also be payable in addition to any solicitors fees. Always ensure you obtain a full conveyancing quote including all fees and disbursements before instructing a solicitor.
Fixtures, Fittings and Contents Form
A standard form in which the Seller specifies items in or affixed to the property which are included in the sale at the agreed price. If an item is not mentioned in the property sales particulars (e.g. a cooker) you should not assume that it is included in the sale.
Freehold
Ownership of the land upon which the property is situated on.
Freeholder
The person who owns the freehold.
Full Title Guarantee
The standard guarantee given by an absolute owner to the Buyer.
Further Advance
An additional amount loaned to an Owner after completion on broadly the terms of the original mortgage.
G
Ground Rent
This is the rent paid by a lessee to a lessor where a property is leasehold. It is often paid yearly or half yearly.
H
Home Buyers Report
One of a variety of valuations and surveys which may be undertaken on behalf of a lender.
I
Index Map Search
A search at the Land Registry to see if a property is registered or unregistered.
J
Joint Tenancy
A form of joint ownership of land when two or more parties share the ownership of the whole title to the property. If one party dies, then the survivor/s will own the whole property.
L
Land Registry Search
This search determines the current ownership of the property and checks that there are no mortgages registered against the property that have not previously been disclosed. If a mortgage is in place the buyer's solicitor will obtain confirmation that the mortgage will be repaid.
Local Authority Search
This looks at the planning history of the property and whether the Council are aware of any breaches of planning permission. The search also checks for proposals for any new traffic schemes and roads that could affect the value of your property, as well as for anything else of interest such as conservation areas and smoke control orders within the Council's control that affect the property.
Land Registry
An organisation controlled by central government which maintains a register of properties and their ownership.
Land Registry Fee
The fee payable to the Land Registry to register any change in the property details including a change of ownership.
Landlord / Lessor
Usually (but not necessarily) the Freeholder but certainly the person entitled to receive the ground rent from the Lessee or Tenant.
Lease
A document setting out the rights and obligations of the Landlord and Tenant (Lessor and Lessee) in the leasehold arrangements.
Leasehold
Where the ownership of property is for a limited period only. For example 999 years. It will normally involve payment of an annual ground rent.
Lender
A Bank, Building Society or other person or company who lends money to an Owner.
Lessee
The present owner of the leasehold property. This contrasts with the freeholder or landlord whose interest is subject to the lessee's rights under the lease until the lease term has come to an end.
Limited Title Guarantee
A title guarantee given by a Seller who has limited knowledge of the property and cannot give a full title guarantee such as someone selling on behalf of a deceased owner.
Local Search
A search submitted to the local authority to ask a considerable number of questions about the property including information on planning permission(s) and whether the adjoining roadway is maintainable at public expense.
M
Marital Home
A property where the married couple lives or have lived - usually referred to in Divorce Cases.
Mortgage Deed
A document used when a Lender lends money to a Buyer or existing Owner. The document is registered against the property at the Land Registry and secures repayment to the Lender.
Mortgage Offer
This specifies the terms upon which the Lender is prepared to make the loan including the specific financial details and period of repayment.
Mortgage Term
The length of time agreed for the repayment of the loan.
Mortgagee
The Lender person or Company who benefits from the Mortgage security (e.g. Bank or Building Society).
Mortgagor
The Property Owner (i.e. the Borrower) who enters into a mortgage deed in favour of a Lender.
N
Negative Equity
This refers to the situation where the value of the property is less than the amount required to pay off any mortgage or charges etc.
O
Occupier's Consent
Any person who lives at the property who is not an owner (and so will not be signing the mortgage deed) will be asked to consent to the mortgage being taken out and agree to move out if the mortgagee lender takes possession by reason of default of the owner.
P
Party Wall
A wall owned jointly with a neighbour and repairable at joint (and normally equal) expense.
Planning Permission
Approval by the planning authority to the construction (and extension/alteration) of a property or a change of its use.
Power of Attorney
A document by which someone appoints another person, to act as their attorney.
Private Road
A road which is not an adopted highway and accordingly not maintained at public expense. Property owners need to have particular (and preferably documented) rights over it as it is not necessarily a road which offers public access.
Probate
The process of 'Proving' a persons will to enable a deceased person's estate to be dealt with.
Property Information Form
This is a questionnaire about the property that the seller is requested to complete by their solicitor. It asks for details about the property such as details of current utility providers, boundaries, fixtures (such as double glazing) and planning permissions.
R
Radon Gas Search
A search to see if the property is affected by naturally occurring gas which may if above certain safety levels, require preventative action to be taken (e.g. more ventilation in a property).
Redemption
The repayment of an existing mortgage or loan.
Redemption Penalty
A penalty payment charged by a Lender if a loan is repaid within a period specified in the mortgage offer (some loan products only).
Redemption Statement
This details the amount it will cost you to pay back your mortgage early, and is usually made up of the amount of money you owe the lender along with a penalty for the early redemption of your mortgage.
S
Service Charge
A payment required by a Landlord (or managing agent) to cover the costs of insuring and/or maintaining a development or block of which the property forms part.
Shared Equity
Similar to Joint Equity but often used in a situation where a 'Shared Equity Scheme' provides a loan which acts as part of a buyers deposit in a property purchase. There are government or Housing Association Schemes available to provide this type of purchase but not all Lenders will accept applicants.
Stamp Duty
'Stamp Duty Land Tax' a tax paid by purchasers, the amount payable depends on the value of the property.
Subsidence
Where a property moves due to poor construction or ground movement for geological reasons.
T
Tenancy in Common
Another type of property ownership, in which separate owners each have a share in a property which would form part of a person's estate and would not automatically pass to the other party/ies - unlike a 'Joint Tenancy'.
Title
An owner's actual right of ownership (whether or not the owner is in occupation).
Transaction
A dealing with property (e.g. sale or purchase or re-mortgage).
Transfer
A document which actually transfers ownership of a property from one person to another (as opposed to a Contract which may include an obligation to effect a transfer at a later date).
Transfer of Equity
A document transferring ownership of a part share or interest in a property from one person to another.
Tree Preservation Order
An order made by the planning authority specifying a tree or group of trees as protected and requiring that authority's permission to cut branches or fell them.
U
Undertaking
A promise which can be enforced by law. For example, a âSolicitors Undertaking' which would assure a buyer that a seller of a property would pass monies from a sale to a third party.
V
Vacant Possession
A Seller required to give vacant possession must (on completion) leave the property (including the garden and outhouses) empty of people, possessions and rubbish.
Vendor
An older word for Seller.
