Legal Jargon

Building Regulations Approval

Any work of a structural nature must have approval from the Local Authority; i.e. erection of an extension or a loft conversion. If building regulations approval has not been given then your Conveyancer will recommend that a Lack of Building Regulation Approval Indemnity Insurance Policy is obtained to protect you when you come to sell the property.

Chain

The majority of people moving house will be selling one property and buying another and will want the two transactions to coincide.There may be several people in this situation and hence a chain is formed. A long chain can take longer to reach an exchange of contracts as everyone has to wait for the last person to be ready.

Chancel Search

This is carried out to establish whether there is a chancel repair liability on the owner of the property to fund repairs to the chancel of their local church. If the search reveals that there is a liability we will obtain indemnity insurance on your behalf.

Completion Certificate

This document confirms that building work to a property has been carried out in accordance with building regulations. It is issued by the Local Authority.

Completion Date

This is the date that the balance of the purchase price is paid to the seller and legal title to the property passes from the seller to the buyer. It is also the day on which you move. Don’t make any firm commitments, such as giving notice or booking removals before exchange of contracts takes place and the completion date is set. The completion date is not set without discussing and agreeing this with you first. If you are part of a chain of sales and purchases the completion date has to be agreed between all parties involved in the chain, so a date has to be found that is convenient for everyone.

Covenants

Deeds may contain covenants which are a promise to do or not to do certain things on the land. Your conveyancer will make you aware of any such covenants that affect the property you are buying.

Deeds

The documents which prove who legally owns the property. If you have a mortgage the deeds are normally held by the lender (sometimes known as ‘the Mortgagee’); if you own your house outright you probably have them yourselves or they are kept at your bank. In addition to the actual proof of ownership the deeds also contain a lot of information about the property and any restrictions on the way you can use it (these are called ‘restrictive covenants’). Sometimes the bundle of deeds also has copies of planning permissions and building regulation approvals relating to the house. Needless to say these are very important documents.

Deposit

On exchange of contracts part of the purchase price is paid by the buyer to the seller, which is held by the seller’s conveyancer until completion. The deposit is usually 10% of the purchase price although it may be the difference between the purchase price and the amount of your mortgage advance. If you are simply buying a property without a related sale we will ask you for this money before exchange of contracts. If you are both buying and selling we will probably be able to use the deposit that we receive from your buyers’ conveyancer as the deposit on your own purchase.

As the buyer, if you then fail to complete (and it is not the sellers’ fault) you will forfeit the deposit. If the deposit amount is less than a full 10% you will have to provide the difference. You may also have to pay compensation to the sellers if they lose out through your failure to complete.

Disbursements

Disbursements are fees that your conveyancer has to pay to others i.e. Local Authorities, the Land Registry etc during the course of the transaction. These will be in respect of Local Authority searches, Land Registry fees, environmental searches and any other relevant searches.

Draft Contract

This document is drawn up by the seller’s conveyancer and is based on the information contained in the Deeds. It sets out exactly what is being sold and for how much. It also lists any special terms that have been negotiated; and it deals with what will happen if something goes wrong. The contract is drawn up in two identical parts, each of which is signed by both parties. When both sides are ready to commit themselves the signed contracts are exchanged.

Drainage Search

This is a search of the water authority’s records to check whether the property is connected to mains drainage and to the mains water supply. The search will also reveal whether there is a sewer or main within the boundary of the property, how close the nearest sewer or main is, whether there is a build over agreement in place etc.

Easement

This is a right over another person’s property or a right that they have over your property. This can be a right of way, a right of support, right of light etc. Your conveyancer will make you aware of any such easements that affect the property you are buying.

Environmental Search

In additional to the Local Authority Search we also carry out an environmental search. This contains information about contaminating and polluting processes, past and present; landfill and waste treatment sites in the immediate area; nearby sources of toxic or explosive substances; areas of ground that may have been filled in the past; the probability of radon gas seepage’ and the risk of subsidence and flooding.

Exchange of Contracts

When contracts are exchanged the sale and purchase become legally binding. This means from that moment on the seller must sell and the buyer must buy at the price set out in the contract, and this must happen on the completion date fixed in the contract. Until contracts are exchanged there is no binding agreement and each party can walk away from the deal without any legal consequences. Just prior to an exchange of contracts taking place the buyer and the seller will need to agree a completion date as this is inserted into the contracts at the time of exchange.

If you are both buying and selling we shall exchange contracts using a formula agreed between lawyers that means that at no lime will you be committed to one side of the deal without a similar binding commitment on the other side.

On exchange of contracts a deposit is paid with the balance of the purchase price being paid on completion.

Fixtures, Fittings & Contents Form

This is a pre-printed form for you to fill in if you are selling a house.It details the items being left at the property or being taken by you. If you are buying a house you will be provided with a copy of this form that has been completed by the seller.

Freehold Title

Most houses have freehold title giving the owner outright ownership of the land and the building, subject to any covenants affecting the property.

H M Land Registry

The Land Registry keeps a record of who owns what land and updates it whenever there is a transaction dealing with it. It is compulsory to notify the Land Registry of all dealings affecting land, which is usually dealt with by your conveyancer.

Land Registry Fees

These fees are payable to the Land Registry when your Conveyancer applies to them following completion to register your title to your new property. The amount of this will be included in your quotation at the beginning of the transaction and is determined by the purchase price of your property.

Leasehold Title

Flats and maisonettes are the subject of a lease which sets out the responsibilities for maintenance etc affecting the property. All leasehold properties have a set term which determines when the lease will end at which time it reverts back to the freeholder or a lease extension can be negotiated with the freeholder.

Local Authority Search

This is a list of enquiries to the Local Authority of the area in which the property you are buying falls. It will detail the planning history of the property you are buying; it should also confirm that there are no existing breaches of planning control that could lead to problems if you buy the property (for example, an extension without planning permission or building regulation approval). It also shows whether the roads giving access to the property are adopted and maintained by the Local Authority. The search is against the property only and does not cover the surrounding area. If there is a possibility of developments nearby which may affect the property we are able to carry out an additional search.

Mortgage Advance

This is the amount of money that your lender is providing to help purchase your property. Your conveyancer will arrange for these funds to be paid to them in time for the completion date.

Mortgage Deed

This document is supplied by your lender and records your loan with them and ‘charges’ your new property as security. This document must be signed by all parties to the mortgage before completion.

Mortgage Offer

If you need financial assistance to buy your property you will have probably applied to a bank of building society for a loan. This loan is ‘secured’ on the property so that you cannot sell it without first repaying the loan. Your conveyancer will not exchange contracts until you have received a written mortgage offer confirming that the lender is prepared to lend you part of the purchase price.

Office Copy Entries

Office Copy Entries are an up-to-date copy of the title of the property detailing the owner and shows any mortgages, covenants etc. These are provided to the buyer’s conveyancer at the beginning of the transaction.

Planning Permission

This must be granted for building works carried out to a property i.e. conversion of a building to flats, erection of an extension of a size larger than that allowed as permitted development etc.

Pre-Completion Searches

Before completion your conveyancer will check various public registers to make sure that there have been no dealings with the property you are buying since contracts were exchanged that may adversely affect the transaction. If you are getting a mortgage your lender will require your conveyancer to carry out a search to make sure that you are not bankrupt.

Redemption

If you have a mortgage on the property you are selling your conveyancer will be required to pay off the amount that is outstanding on this mortgage from the proceeds of sale.

Report on Title

This is the confirmation that your conveyancer will give to your lender that the property you are buying is good security (in legal terms) for their loan. This is also the document that requests the drawdown of your loan in time for the completion date.

Retention

A retention is when a sum of money is held back by the buyers conveyancer usually in respect of something that the seller has to provide prior to completion or perhaps some work to the property that it was agreed on exchange has to be carried out prior to completion. The retention monies are released once the conditions to which it relates have been satisfied. Sometimes a lender will insist on making a retention from the mortgage advance to cover the cost of certain works that they consider must be carried out to the property before they will release the whole of the mortgage advance.

Sellers Property Information Form

This is a pre-printed form that we will send to you at the beginning of the transaction if you are selling a property. It is designed to provide a lot of information about the property that is not necessarily clear from the deeds. If you are buying a house you will be provided with a copy of this form that has been completed by the seller.

Stamp Duty Land Tax

The Government charges a tax on all property sales of more than £125,000.00. Stamp Duty Land Tax (SDLT) is paid by the buyer and not the seller. The amount you pay increases with the value of the property as follows:

Purchase Price

Stamp Duty Payable

Up to £125,000

Zero

Over £125,000 to £250,000

1%

Over £250,000 to £500,000

3%

Over £500,000 to £1 million

4%

Over £1 million to £2 million

5%

Over £2 million

7%

Over £2million

15% (purchased by certain persons including corporate bodies)

Survey

This is a formal summary of the physical state of a property which is prepared by a qualified surveyor. Different levels of survey are available depending on the age and state of the property, the most comprehensive being a full structural survey, but this can prove expensive. At the very least you should commission a ‘House Buyers’ Report. If you are having a mortgage your lender will probably carry out their own survey and valuation. It is always encouraging if this does not show up any problems but do remember that you cannot rely on it if a problem appears later – it was carried out for the lender’s benefit and not for yours (even though you might have paid for it!).

Title Information Document

This is the document issued by the Land Registry to show (a) you own your house and (b) if you have a mortgage that your lender has a charge against it. This information is also stored electronically at the Land Registry.

Transfer Deed (TR1)

This is the Land Registry document that formally transfers ownership from the seller to the buyer. It always has to be signed by the seller and sometimes by the buyer. The Transfer Deed must be signed prior to completion.