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Conveyancing terms explained

Apportionments

When buying a leasehold flat, you will become responsible for ground rent and service charges. Apportionments cover the situation where the vendor has paid for some of these charges upfront and in advance. There will therefore will be a need for the buyer to reimburse the seller on completion for those costs that would be due for the post completion period

Balance of Funds

The remaining funds needed in order to complete the transaction Bridging Loan: a loan taken over a short period to bridge a gap between the purchase of one property and the sale of another.

Building regulations

Quite different from planning permission. These rules set standards for the design and construction of buildings to safeguard the health and safety of occupiers or visitors to those buildings, and can cover other issues such as access for the disabled.

Buy to let

Property usually bought by a person with the aim of renting it out rather than living in it.

Certificate of title

The document the conveyancing solicitor gives to the lender to confirm certain statements about the property. It confirms to the lender:

  • that the property has a "good and marketable title" i.e. that there are no legal problems with the property, so the lender can lend the mortgage monies safely
  • who own the property after completion
  • the completion date

Chain

A situation where one buyer can only make a purchase when his own sale goes through and so on down the chain. It is often the case that just a couple of links in the chain can make the process much more complicated.

Chancel repair liability

A financial obligation imposed on some property owners to pay for certain repairs to a church, often the local parish church.

Charge

A sum of money for which the property is being used as security. Banks or Building Societies will register a charge against a property if you are buying it using mortgage funds.

Completion date

The finishing post of the conveyancing process. At this point, full payment for a property has been made, and the title deeds have been transferred. Many people use this term to mean the day on which you get the keys and move into a new home.

Completion statement

A financial document detailing all the costs associated with the purchase of the property. This is usually sent out after contracts are exchanged, but before the sale completes. This document is particularly important as it sets out the costs due to the conveyancer, including VAT and disbursements.

Contract

A legally binding document when exchanging Contracts occurs - means seller has a legal obligation to sell, and buyer has a legal obligation to buy, otherwise there may be financial penalties.

Covenant

Any restrictions and obligations which are associated with the purchase of a property. An obligation means you are legally obliged to take responsibility for the upkeep of something on the property. A restriction means you are forbidden from erecting certain buildings or undertaking certain renovations.

Deed of Guarantee

A type of binding legal contract under which one person agrees to be responsible for another's debt or mortgage obligations if that other person fails meet their own obligations. These type of agreements are common with loans and commercial finance, as they provide the lender with protection from a borrower failing to pay as agreed.

Deed of Postponement

An agreement, normally between two lenders, where they agree that one loan should be "postponed" behind the other lender's loan. Often this means that one mortgage will become a 2nd charge ranking behind the 1st charge registered at the Land Registry.

Deeds

The legal paperwork setting out who owns a property. This is kept by the owner, or by the mortgage company if the property has been bought with a mortgage. The old system of relying on paper Title Deeds have now largely been replaced by land registration at HM Land Registry.

Deposit

The amount which is paid at the time contracts are exchanged, normally 10%. This confirms the buyers' commitment to the purchase.

Disbursements

Expenses incurred by the conveyancer or solicitor when working for the buyer. The conveyancer will pass these costs along to the buyer, but might add an additional service charge.

Energy Performance Certificate (EPC)

A document containing information on a property's energy use and typical energy costs, along with recommendations on how to reduce energy use and thus save money. In England and Wales, from 2020, all privately rented, domestic properties must have an EPC rating of E or better. Failure to provide an EPC for a property can result in a landlord being unable to evict a tenant.

Exchange of Contracts

This is stage when solicitors acting for both the buyer and seller swap signed contracts and the deposit is paid over. At this point in the conveyancing process, the agreement between seller and buyer becomes legally binding.

Freehold

A type of property ownership in which not only the property is owned, but also the land on which it stands. The freehold title owner will be registered at the Land Registry, and the freehold can be bought and sold.

Gifted Deposit

A gifted deposit is money given by an individual - usually a family member - to a homebuyer to use as a down payment on a property. It could be used for the whole deposit, or just a part of it. The money isn't a loan and gifted deposits are given with the understanding that the money doesn't need to be repaid. The person who is gifting the deposit will not be given any stake in the property in return. Their name will not appear on the deeds or the mortgage, for example.

Ground rent

A sum of money which has to be paid by a leaseholder to their landlord each year. The amount of ground rent will be stated in the lease. It could however be subject to change at certain intervals. Ground rent only applies if you have a leasehold property.

Indemnity Insurance

A policy taken out to give the owner insurance cover if problems should be discovered with the legal title e.g. a breach of covenant or there's not enough evidence to confirm the building regulations approval.

Joint tenants

If a property is owned by two people who are "joint tenants", this means that if one of them dies, their share in the property will pass to the surviving tenant. A joint tenancy trumps anything that is stated in a will.

Land Registry

The official body which keeps records of property ownership in England and Wales.

Land registry fee

This fee is the cost paid to the Land Registry to change the details on the title deeds of the property your conveyancer is transacting on for you.

Learn more and calculate your land registry fee.

Lease

an agreement between a tenant and freeholder, setting out the deal for the occupation of a property, often for a specific duration or term.

Lease extension

The process by which owners of residential long leasehold flats can individually compel or negotiate an extension of their lease term with the freeholder.

Leasehold

The owner has the right to live in a property for the term given on the lease, but never becomes the owner of the land where their property stands.

Leaseholder

Person or persons owning a leasehold property. It usually refers to ownership of what is called a long lease - originally granted for at least 20 years but typically for 99, 125 or 999 years.

Memorandum of Sale

The memorandum of sale is a legal document that records specific information about the sale of a property. It is not legally binding, but it is a legal document that sets out the terms of agreement at the start of the conveyancing process once an offer is made and accepted. Conveyancing work cannot start until the memorandum of sale is in place, so this is a vital document in the conveyancing process.

Learn more about memorandum of sale.

New Build

A property that is being built by a developer, e.g. companies such as Taylor Whimpey or Persimmons. These properties will usually not have a complete or registered postal address that a property would normally have. Instead, they will usually have the Plot Number and the development name in the address at first, with information later being provided (either in the Reservation Form or the Contract Pack or both) as what the full postal address of the property will be. E.g. Plot 2, The Shardays, later to be known 2a, Riddle Street, RW2 LQ9.

Redemption

Paying off your mortgage.

Register of Title

The Land Registry Title Register and Title Plan are the officially registered documents that together provide proof of ownership and details of the terms upon which a property is owned. The Title Register provides the owners, names and addresses, the price paid and date purchased, the tenure of the Title owned (freehold or leasehold), the Class of Title, length of lease (if leasehold), restrictive covenants, personal covenants, easements such as rights is way, mortgages, charges, restrictions and notices.

Right to Buy

Where a council tenant, who has lived in the property for a period, is now able to buy the property from The Council.

Searches

Standard questions carried out at the beginning of the conveyancing process for buyers by your solicitor to find out important information about the property. They include a local authority search, environmental search and drainage search. In some parts of the country there will also include more specialist searches - such as mining or radon gas searches.

Service Charge

Money payable to a freeholder to cover maintenance and repairs to a property.

Shared driveway

Either a drive owned equally by all those who use it or, alternatively, a private access road owned by one person with permission for others who need access to use it.

Shared ownership

A unique type of home ownership where you own part of the property and rent the rest. The other party is normally a Housing Association, and there is usually the option to increase your ownership share or by your property outright. It sometimes known as "Shared equity" or "Part rent, part buy"

Stamp Duty Land Tax

Unless you are a First Time Buyer or buying under the threshold you will have to pay stamp duty land tax on you transaction. It is calculated on your position as a buyer and on the price of the property you are buying, and it is paid to HM Revenue and Customs .

Learn more and calculate your stamp duty.

Telegraphic Transfer Fee

The cost that the bank charges for the money that needs to be transferred from your lender to your solicitor to buy your new property.

Tenant

Someone living in a property owned by a landlord.

Tenants in common

An arrangement made by two or more people who own a property. If one of them dies, their share of the property is passed on according to what their will says. If they haven't made a will, the normal laws of intestacy apply.

Tenure

This refers to how property is held - freehold or leasehold.

Title Plan

The Title Plan shows the property and adjoining properties sufficient to identify it. The property owned is outlined in red ink. Coloured tints and hatches describe those parcels of land that are within the ownership and are affected by easements, covenants and other burdens and rights.

Transfer

The legal document for the exchange of ownership of the property.

Transfer of equity

Where one or more of the existing legal owners agrees to transfer ownership of a part share in the property to another person. Commonly used for a transfer of the former matrimonial home following divorce.

Tree Preservation Order

Often referred to as a TPO, these are usually made by the local council to protect a specific tree or trees from any deliberate damage and destruction. This makes it a criminal offence to cut down, top, lop, uproot, or wilfully damage any specified trees without prior written consent from local council.

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