A
ABSTRACT OF TITLE
A list of the documents which state a property or plot of land's history of ownership.
ADOPTED HIGHWAY
A road, footpath or bridleway that is maintained at public expense by the Local Authority or Highway Authority. An un-adopted, or ‘private' road is maintained at the expense of property owners, often the residents of property on that road, or developers.
AGREEMENT
May be used to refer to the contract, the legal document setting out the details of the sale, including those of the buyer, the seller and the property being transacted.
ASSENT
A formal document needed in order to transfer ownership of property to another person in the event of the owner's death.
B
BANKRUPTCY SEARCH
A search carried out to establish whether the buyer of a property is, or is soon to become, bankrupt. This search is performed for the benefit of the mortgage lender, and may not be required in the case of a cash buyer.
BOUNDARIES
The extent of the property, usually shown on the title plan. Buyers should check that the boundaries defined on a plan match the physical boundaries, including fences, hedges etc, of a property.
BREACH OF CONTRACT
This occurs following exchange of contracts if either party pulls out and fails to complete the transaction. The other party may seek a legal remedy, including monetary damages or a court order requiring completion of the sale.
BUILDING INSURANCE
Cover for the property itself, commonly including fittings, but not contents. It may provide cover in the event of flooding, fire damage or other concerns such as subsidence. In leasehold flats, a joint policy may protect the whole building.
BUILDING REGULATION APPROVAL
This must be sought prior to commencing any building work on a property. It is separate from planning permission, and should be sought from either the local authority or an approved building inspector.
C
CAVEAT EMPTOR
Latin for “let the buyer beware”, caveat emptor is a principle of property law restricting a buyer from recovering damages from a seller for defects that rendered property unfit for purpose, unless misrepresentations were made amounting to fraud.
CHAIN
A chain is created when one party in a transaction is also a party in another ongoing property sale or purchase. Chains are a common source of delays, as parties may be unwilling to proceed on their individual transaction until all parties, throughout the chain, are ready to proceed.
CHAPS TRANSFER
CHAPS (Clearing Houses Automated Payment System) transfers are used by solicitors to transfer funds, usually on the day a property sale completes.
CHATTELS
Items, usually furniture, sold with a property and included in the purchase price. The Fixtures, Fittings and Contents form (TA10) completed by the seller gives details.
CHESHIRE BRINE SEARCH
A search used to ascertain whether a property may be adversely affected by brine mining. It is similar to a Coal Mining search, in that it identifies property at risk of mining subsidence.
COMPLETION DATE
On the date of completion, the balance of the property price is transferred to the seller, and the deeds and ownership of the property passes from the seller to the buyer. If a mortgage is in place, the conditions will come into effect. Unless specified otherwise, it is common for the seller to have moved out on or before this date.
COMPLETION STATEMENT
Shortly before completion, the buyer's solicitor will prepare a completion statement stating the purchase price, less any deposit and mortgage advance. The outstanding sum will need to be paid to the buyer's solicitor several days before the completion date, to allow for funds to clear.
CONTAMINATED LAND
Land can become contaminated by previous use, such as industrial use, or by storage of contaminants on the property. The legal definition states that contaminated land could cause ‘significant harm to people or protected species' or pollution of ground and surface water. An Environmental Search will establish whether a property is located on or near contaminated land.
CO-OWNERS
There are a number of forms of joint or co-ownership, notably ‘joint tenants' and ‘tenants in common'. When purchasing a property, buyers must be clear of their individual legal rights over a property.
COVENANTS
A covenant is a binding promise between a seller and a buyer, and potentially all subsequent owners. A restrictive covenant will usually prevent certain uses of the land, such as keeping livestock on the property, or posting advertisements other than those relating to marketing the property.
D
DEED OF CONVEYANCE
A legal document to effect the transfer of unregistered property and to demonstrate a legal right to possess it. This term is rarely used in modern conveyancing practice.
DEED OF COVENANT
This is a legal obligation which requires a party either to do something, such as repair a garden wall, or refrain from doing something, for example running a business from the property.
DEED OF POSTPONEMENT
An agreement between two mortgage lenders to define which of the two parties will be paid first, in the event that the borrower (debtor) is in default and enforcement of the security occurs. The borrower is often be expected to be a party to a deed of postponement, to ensure all parties involved in the lending understand the terms of this agreement.
DEFECT IN TITLE
A defective title indicates that is a problem with the legal ownership of the property, a significant detail is missing from the title deeds (such as a missing right of way), or something unexpected with the title. A defect can occur if it is unclear who the legal owner of a property is, and therefore has the right to sell it.
DEPOSIT
This can refer to either the deposit which the purchaser puts down to cover the difference between their mortgage and the purchaser price of the property, or the money handed over to the seller's solicitor on exchange of contracts.
DISBURSEMENTS
These are payments made by your solicitor to various bodies, including the local authority, and will include the cost of searches. These should be charged to you at cost.
E
EASEMENT
An easement is a right to use property owned by another party, such as a public right of way or a shared driveway.
ENVIRONMENTAL SEARCH
This search provides information on a property, notably whether it is located on or near contaminated land.
EXCHANGE OF CONTRACTS
Exchange of contracts occurs once a solicitor has performed all necessary enquiries and contract terms are agreed. Once signed and exchanged, the contracts are binding on both the buyer and seller, and the sale must proceed. A deposit is commonly paid to the seller's solicitor by the buyer on exchange of contracts.
F
FIXTURES, FITTINGS AND CONTENTS FORM (TA10)
The fixtures and fittings form lists the items which the seller intends to leave at the property on completion. This will be agreed by both parties, and forms part of the contract.
FLYING FREEHOLD
A flying freehold describes where part of a freehold property lies above another property, such as a room above a shared passageway, or a balcony. This may or may not be clearly marked on property deeds.
FREEHOLD
In legal terms, the freeholder possesses ‘absolute title on a property', meaning that they own both the property and the land it stands on. Subject to planning regulations, the owner of a freehold property may make what changes they wish to and within the property.
FREEHOLDER
The freeholder owns the freehold of a property, and is generally responsible for maintenance and repair of the property.
FULL TITLE GUARANTEE
This is an assurance made by a seller that they have the right to sell a property, and that the property's title is free from undeclared charges or adverse rights.
G
GROUND RENT
This is paid by a leaseholder to a freeholder and is usually expressed as a yearly sum. Some leaseholders opt to exercise their right to purchase the freehold, to avoid paying this sum in future.
H
HM LAND REGISTRY
This government body registers the ownership of land and property, and maintains a registry of property titles providing evidence of ownership.
I
IDENTIFICATION FORM
In compliance with Money Laundering Regulations, conveyancing solicitors are required to take steps to identify their clients. Identification documents such as utility bills or a valid passport must be supplied to a certified professional, with a completed ID1 form, to achieve this.
INDEMNITY CONTRIBUTION
Solicitors are required to take out indemnity insurance, to protect clients from losses resulting from fraud or errors. Conveyancing solicitors should not expect their clients to make a contribution towards this.
INDEMNITY INSURANCE
This insurance is taken out by solicitors to cover clients in the event of fraud or errors, such as the solicitor failing to identify a defective title, or missing planning documents.
J
JOINT TENANTS
A form of co-ownership. In the event of one owners death, the remainder of the property is passed to the surviving joint tenants.
L
LAND REGISTRY FEE
This is paid to HM Land Registry to register a change to a registered title, notably a change of ownership.
LAND REGISTRY SEARCH
This search is carried out identify charges or interests are registered at HM Land Registry against the property, such as an undisclosed second mortgage.
LEASE
The lease is the document giving the owner of a leasehold property the right to possess the property for the length of the lease. Once the lease term expires, ownership reverts to the freeholder, emphasising the risks associated with a short lease, and why lenders are reluctant to offer a mortgage on a property with a short lease.
LEASEHOLD
The owner of a leasehold property has the right to possess the property for only a limited period, often 99 years following a lease extension. Ground rent is paid (often annually) by the owner of a leasehold property to the freeholder, or landlord.
LEGAL TRANSFER
Transfer of the legal title to a property from one party to another is effected by a legal transfer document. This is signed shortly prior to the completion date.
LENDER
The mortgage lender provides funds for a mortgage. Lenders' generally require legal work to be carried out on their behalf, and a valuation of the property, to confirm that the property is sufficient security for the value of the mortgage.
LIMITED TITLE GUARANTEE
Limited knowledge of a property, resulting from missing documents or unclear ownership, will result in a seller giving only a limited title guarantee. The reasons for, and likely consequences of, a limited title guarantee vary, and a solicitor will advise accordingly.
LOCAL AUTHORITY SEARCH
This search consists of a list of enquiries made to the local authority. Factors considered include whether the road on which the property is located is adopted (maintained by the local authority) and whether any planning applications have been made.
M
MINING SEARCH
Mining works nearby a property can cause subsidence long after mining activity has ceased. This search identifies any risks to a property posed by the proximity of such works.
MORTGAGE
A loan to buy a house or flat. A legal charge is registered against the property to ensure that the loan is repaid to the lender before the property can be sold.
MORTGAGE OFFER LETTER
This formal document sets out the terms of the mortgage offered to a buyer. A lender may rescind this offer if certain conditions are not met. Mortgage offers will usually have a time limit.
MORTGAGE TERM
The length of time allowed for the mortgage to be repaid. A shorter term will mean less interest, but higher monthly repayments.
N
NEGATIVE EQUITY
Negative equity occurs when the value of a mortgaged property is less than the outstanding balance of the mortgage. During a property downturn, this can be common, and provided that mortgage repayments are made, there may be no immediate consequences. The seller of a property in negative equity however will be expected to make up the shortfall, the difference between the current value of the property and the mortgage, in order to redeem the mortgage.
O
OFFICE COPIES
Office, or official copies, are entries on the registered title of a property, produced by HM Land Registry. They provide an up to date record of all registered matters affecting a propert
P
PARTY WALL
A party wall describes a shared wall or partition between two properties. It is common for the responsibility to maintain and repair a party wall to be shared between the owners of the two properties.
PLANNING PERMISSION
Alteration or extension of a property, or a change of use, may require planning permission from the local authority. A local authority can require the current owner of a property to reverse any works which do not have planning permission, even if they were carried out by a previous owner.
PRIVATE ROAD
A private road is not maintained by a local authority at public expense. Private, or ‘un-adopted', roads, must be maintained by private individuals or bodies, commonly the owners of property adjacent to the road.
PROPERTY INFORMATION FORM
Sellers are required to complete this form, which covers a range of questions relating to neighbour disputes, legal rights and restrictions, and property boundaries. It is an offence to provide false information, but there are a number of questions which the seller may not know how to answer. The seller's solicitor will be able to offer appropriate advice.
R
REDEMPTION CHARGE
Early repayment of a mortgage may incur a redemption charge, depending on the terms of the mortgage. This charge may be significant; buyers may wish to review the terms relating to this charge prior to borrowing.
REGISTERED LAND
The HM Land Registry maintains a register of charges, interests and other matters against registered land and property. Although it is increasingly rare for property to be unregistered, the sellers of unregistered land will require historical title deeds for proof of title, which can create delays if these are not readily available.
RENTCHARGE
A rent charge is a sum paid by a freeholder to another party who has no other legal interest in the property. Rent charges have existed for centuries, and were used historically to provide a regular income for landowners who released their land for development. These charges may be confused with ‘ground rent' paid by a leaseholder to a freeholder, but are legally distinct.
S
SERVICE CHARGE
Service charges are paid by a leaseholder, often the owner of a leasehold flat, to a freeholder or managing agent. These charges cover the cost of maintenance and upkeep of shared areas, gardens and other parts of the freehold property, such as the roof. A contribution may be paid annually, or in the event of specific expenses.
STAMP DUTY LAND TAX (SDLT)
The is payable to the government when purchasing a property over a certain value. For residential property, the rate depends on the purchase price of the property, and whether it is located in a disadvantaged area. A number of schemes have also affected SDLT rate, recently offering a lower rate for first time buyers below a certain property value threshold, but as of May 2013, no such schemes are in effect.
STANDARD CONDITIONS OF SALE
These general conditions form the basis on which conveyancing transactions are governed, created by the Law Society. Under certain conditions, such as a property auction, these may be varied by special conditions of sale particular to the property being sold.
T
TENANTS IN COMMON
A form of property co-ownership. Unlike joint tenants, if a tenant in common dies, their share of the property (often expressed as a percentage) of ownership of the property does not pass to the surviving co-owners, but instead passes to whomever the deceased wished, as set out in their will.
TITLE
Title is a term which collectively refers to the legal rights in a property in which a party may own an interest. Title commonly refers specifically to ownership of a property, as evidenced in title deeds.
TITLE DEEDS
Title deeds act as proof that the seller owns a property, and has the right to sell it. The deeds will also state specific rights and restrictions affecting the property.
TRANSFER DEED
This deed is the document which formally transfers ownership of a property from the seller to the buyer, or, in the case of a transfer of equity, the transfer of a share of the interest in a property from one party to another.
TRANSFER OF EQUITY
This can occur when a property is jointly owned, and one party wishes to transfer their interest in the property to the other. This may or may not occur without money changing hands.
TREE PRESERVATION ORDER
A Tree Preservation Order (TPO) protects one or more trees from damage or destruction, and is made and enforced by a local authority. Exemptions may be sought for reasons such as to permit the felling of dead trees, or those posing a danger. In such the opinion of a qualified party should be sought before removal of the tree.
U
UNREGISTERED TITLE
It is increasingly rare that a property will be unregistered, but where no register of the property exists at HM Land Registry, the seller must demonstrate ownership of the property by a succession of historical title deeds demonstrating a chain of ownership.
V
VACANT POSSESSION
On completion of a sale, the seller is usually required to deliver the property with vacant possession. This means that the property must be clear of occupants, rubbish and any furniture or other objects not included in the sale.
VALUATION
This basic valuation is used to assess the market value of the property. A property valuation is carried out for the benefit of the mortgage lender, and rarely provides any useful information about the structural condition or state of the property.
VENDOR
This is another term used to describe the seller of a property.