Confused by legal jargon relating to your home purchase, sale or re-mortgage? Hopefully, the below easy glossary of terms will assist you.
Caveat Emptor:
Means “let the buyer beware”. It describes the fact that there is no positive obligation of disclosure by a seller to the buyer during the sale and purchase process about the property and it is for the buyer to ask the questions.
Chain:
is the word to describe the buyers and sellers who are dependent upon one another in order for their sale and purchase to go through.
Charge:
Is a debt secured against your property. In most cases this will be a mortgage.
Chattels:
Is another name for the property furniture and contents.
Completion date
Is the date when payment is made and the legal transfer of the property takes place. This is also the day you would usually collect your keys and you can move in.
Conveyancing:
Is the legal process of buying your home.
Covenants:
Are obligations and restrictions that are attached to the property that may limit your use and enjoyment of the property.
Deeds or Title Deeds:
Most land in England and Wales is registered at HM Land Registry and therefore legal ownership is evidenced by the electronic register.
Deposit:
Is the money paid by the seller’s solicitor to the buyer’s solicitor at exchange of contracts. It is typically 10% of the purchase price but can be a lesser amount if pre-agreed. It is also the amount that would be forfeited by the buyer to the seller should the buyer fail to complete.
Disbursements:
Are costs incurred by us during the sale or purchase process such as Land Registry fees which we pay to third parties as part of our legal work.
Contract Pack:
This is the pack produced at the outset by the seller’s solicitors which includes a contract, a copy of the title to the property and the property information forms or site documents such as planning documentation.
Drainage search:
Is a check your solicitor will carry out to ensure your property is connected to mains water and sewers.
Environmental Search:
It seeks to identify whether the land could be contaminated land and therefore liable for costs to clean up based on previous land use.
Exchange of contracts:
Is when your solicitors make the transaction legally binding and fix the completion date.
Fixtures and Fittings:
Refers to items that belong to the seller and are at the property. Fixtures typically are not easily removable items whereas fittings are moveable.
Freehold:
Means all the property within that area from the centre of the earth to the skies. Ownership is not limited in time unlike the other form of property “leasehold”.
Ground rent:
Is a yearly fee relating to leasehold properties. This is payable by the leaseholder to the freeholder.
Indemnity insurance policy:
Protects the buyer against any problems that may be experienced due to a defect in the legal title. It is available where the risk is low. Your solicitors can advise you whether this can/should be used in a particular circumstance.
HM Land Registry:
Is a Government organisation that deals with ownership of property and land in England and Wales and holds an electronic register of all land ownership.
Lease:
The legal document for a leasehold property that sets out how long you will own the property and what conditions and rents your ownership will be subject to. These are complex documents and you will require specialist advice on this.
Leasehold:
Is the other form of property tenure and relates to the right to occupy an area of freehold land for a specified term which is then reducing and paying a nominal annual rent. For this reason the length of the lease is important for your solicitor to ascertain as it can have a significant effect upon the value of your property as it gets shorter.
Local authority searches:
These searches will reveal any council plans that may affect the property you wish to purchase.
Property Information Form:
Is a form a seller will complete. It lists questions regarding boundaries, services, guarantees and restrictions. If you are buying a newly built property this will usually be replaced with a property specification which will be provided on site.
Reservation fee:
Is typically found in the new homes market and is a sum paid before exchange of contracts to reserve the property for a period of time to give you exclusivity to buy. You should expect this to come off the purchase price.
Service charges:
Are payable to your landlord in respect of a leasehold property. The charge covers any repairs, maintenance or improvements made to the building or shared facilities or common spaces.
Stamp Duty Land Tax:
Also known as SDLT, is a tax payable to HMRC and is based on the purchase price of the property. Your solicitor will be able to advise the rates applicable to you.
Transfer deed:
Is legal document that transfers the ownership of the property from the seller to the buyer. If you buy with a partner this document also defines your shares in the property.
Transferor:
Means the seller.
Transferee:
Means the buyer
The above article is for guidance only and does not constitute legal advice. Relevant law applicable as at date of publication only.