Explanation Of Conveyancing Legal Terms
Buying and selling houses involves a lot of complicated legal processes; referred to in a number of technical ways. We’ve put together a glossary of common terms to help you understand your conveyancing journey.
Abstract of Title
This is a schedule listing the documents that set out the history of ownership of a property.
A road maintained by a local authority.
A notice between 2+ parties for a 35-day period that protects a deed intended to be registered in the Land Register in Scotland.
This is the amount of money that a buyer will pay or a seller will receive. This usually relates to Leasehold property where ground rent is payable for a certain period of time. It will need to be apportioned because they are outstanding or have been prepaid to a date after completion.
The amount of money your house value has increased by. This could be down to an upturn in the property market or home improvements / developments in the area.
The formal document required to transfer ownership of a property to a person entitled following the death of the owner.
Fees which may apply to taking on a mortgage. These are usually payable up front or simply added to the final amount. However adding them to the loan increases your mortgage debt, and so it’s usually cheaper to pay these as a lump sum at the time of purchase.
If a mortgage is being obtained, the buyer’s solicitor will carry out a bankruptcy search as it is an offence for a bankrupt person to obtain credit.
The transfer of funds electronically via a bank. This will usually be by way of Bacs transfer (up to 3 day) or a Chaps (same day) transfer. Chaps transfer often happens on completion in order to ensure quick movement and to avoid any delays. An administration fee will be payable in respect of each transfer.
The fee charged by the solicitor for their time and work. This is often calculated as a percentage of the property’s sale price. It can also be calculated as a fixed-fee or on an hourly basis.
The interest rate set by the Bank of England.
Insurance to cover the cost of rebuilding a property following a fire, flood or structural damage. This does not cover the contents of your house (See Contents insurance).
Building Regulations set guidelines and rules for design and construction which apply to most new buildings and many alterations to existing buildings.
This is where a series of connected sales and purchases are taking place and all depend on one another to go ahead. A long chain can cause delay for the parties towards the end of it, when it comes to completion.
A debt owed on the land or property (for example, a mortgage).
The date when ownership of the property is to transfer from the buyer to the seller which will be agreed when contracts are exchanged. On the completion date the seller should receive payment and the keys will be handed over to the buyer. If completion does not happen on the agreed completion date the party in default will be liable to compensate the other party.
A written calculation of all the receipts and payments due in respect of the transaction.
This document contains the details of the property, the parties involved in the sale and purchase and the terms of the conveyancing transaction including the price. It will also contain detailed terms and conditions.
The legal process of transferring property from one owner to another. Online conveyancing is a popular method to do this. Once an offer is accepted, your conveyancing solicitor will ensure all relevant contracts are signed and money transfers are completed.
Conveyancing should be undertaken by specialist conveyancing solicitors or licensed conveyancers. They act on behalf of a buyer or seller.
A promise contained in a deed (e.g. a clause in a lease).
Deed of Guarantee
A legal document used to confirm the position when one person guarantees the duties of another, usually in connection with a mortgage.
Deed of Grant
This is a legal document which gives specific benefits,for example: rights of way, to a property owner.
Deeds / Title Deeds
These documents tell you who officially owns the property. In general, properties in England and Wales are registered at the Land Registry and the Land Register is the ‘evidence’ of who owns what.
For leasehold properties, the most important deed is the lease.
This is a lump sum of money that a buyer pays as their stake in the property. It will usually be between 5% – 20% of the sale price.
The decrease in value of a property.
Extra fees on top of the conveyancing fees, such as Stamp Duty, Land Registry and search fees which you normally pay via your solicitor.
Exchange (of Contracts)
Exchange of contracts and completion are the final stages of the process with buyers and sellers both aiming to get to this as soon as possible. This stage brings security that a sale will no longer fall through When exchange of contracts occurs, conveyancers generally exchange or ‘swap’ contracts by telephone. This is when the deposit is generally paid and the completion date is set. Once contracts have been exchanged neither party is able withdraw from the sale without incurring a substantial penalty.
The difference between the value of a property and the amount owed on the mortgage.
This is ownership of the land and any property on it. It means the owner of the freehold is entitled to occupy the property for as long as they wish.
This is where a seller accepts a higher offer than that previously agreed with someone else.
This is the rent payable on leasehold houses and flats where the ‘tenant’ has paid a premium on the grant of the lease to cover the cost of the house. The tenant effectively rents the ground upon which it stands.
A person that agrees to pay the mortgage repayments if the borrower is unable to. A guarantor is most often a parent or guardian. Having a guarantor can significantly increase the amount a first time buyer can borrow.
This is a type of survey. It assesses the condition of all permanent structures such as walls, garages etc, and highlights problems that could affect the property’s value. It includes a valuation.
This is an insurance to cover a defect in title or missing/lack of building/planning documents.
Land Charges Search
This is a search to see if a person has any bankruptcy proceedings pending or if the property is unregistered. It will find out if there are any mortgages or interests registered against the property already.
This is the government department that records ownership of registered land. It shows details of individual properties, who owns them and what rights or interests exist in or over them.
Land Registry Fee
The fee payable to the Land Registry to register any changes regarding the ownership of the property.
Land Registry Search
This checks that no undisclosed charges or interests are registered against the property.
This is the owner of land for a temporary period. At the end of the term the property passes back to the owner of the freehold (or the superior leaseholder).
This is the loan you take out to purchase a house. In return, a legal charge is registered against the property to ensure that the loan must be repaid before the property can be sold.
This is a document signed by the mortgage lender to create a legal charge which the mortgagee can register at the Land Registry.
When a property is worth less that what is owed on the mortgage.
Registration of Title
This is the title to a property must be registered at the Land Register. Ownership and all important details of rights and liabilities are recorded on the register. There is a registration fee which varies according to the purchase price.
If the mortgage is not repaid for a certain amount of time, the lender can repossess the property and sell it to pay the debt.
Searches are carried out to make sure there are no recorded problems with the property being sold. They will include Local Authority Search, Environmental Search, Water & Drainage Search and Chancel Liability Search. Subject to the location of the property additional searches might be necessary such as mining and several more.
Most commonly seen in flats or shared land purchases, this is a payment required to cover the costs and maintenance of running a development (e.g. gardening and decorating)
This is a scheme enabling people to buy an equity share in a property with the a mortgage, while the housing association owns the remaining share. The housing association would be entitled to their share of the equity of the property in the event it is sold at a later date.
Solicitors Regulation Authority (SRA)
The independent regulating body of the Law Society of England and Wales, the SRA can be called upon to deal with disputes if you have received an unsatisfactory service from your solicitor.
This is where first time buyers with shared equity mortgages can ‘top up’ the number of shares they own until they own all shares to the property outright.
If you’re buying a property in Scotland you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.
This is a report made about the physical condition of the Property. We have a whole section about surveys which you can read about here. A survey may flag up problems with the property’s construction or condition.
This is a document that shows the formal transfer of ownership from the seller to the buyer. Most transfer deeds follow a standard format and are often on forms called TR1.
This is when there is no tenant or occupier of a property. If a property is sold with vacant possession you should be able to move in straight away. If you are selling a property with vacant possession the property should be substantially clear of all chattels on completion.
The most simple form of survey designed to establish the market value of the property.
The Seller of the property.