Property Jargon
Chancel Search:
This search is not included in the Home Information Pack, but it is recommended that it is implemented.
This search will reveal any liability in the area to maintain a local parish and if there is any potential liability, then a chancel indemnity policy can be affected.
Completion Date:
This is the date that ownership of the property passes from the seller to the buyer.
The seller and buyer should discuss and agree the date between themselves or through their respective solicitors who will try and work towards the proposed date. The date must be realistically agreed on the understanding that the transaction is ready to complete and that there are no outstanding matters or documents, e.g. a mortgage offer.
The completion date is only legally agreed once contracts are exchanged and cannot be changed at any time thereafter otherwise you will be in breach of contract.
Contract:
This is the agreement between the buyer and seller setting out the terms and conditions of the property transaction. It is against this agreement that contracts are exchanged.
Deposit:
The deposit is the monies that the buyer is putting down from their own funds and is usually 10% of the purchase price. Before contracts can be exchanged, you must provide your solicitor with the 10% deposit and sign the contract. Thereafter, your solicitor will exchange contracts and forward the deposit to the seller’s(s’) solicitors.
You should be aware that if as the buyer you have negotiated a reduced deposit and you fail to complete the purchase through no fault of the seller, you will still have to under the terms of the contract pay the seller the full 10% deposit. You may also have to pay compensation to the seller, if the seller loses out through your failure to complete.
Disbursement:
A disbursement is a fee that we have to pay to a third party on your behalf, for example a search fee or Land Registry fee.
Environmental Search:
This search is not included in the Home Information Pack, but is a recommended search that all buyers should instruct their solicitors carry out and the search will be at the buyers’ (s’) own expense.
This search will reveal any environmental issues or risks affecting the property, such as landfill or waste disposal sites in the area, contaminated land, toxic emissions, flooding and subsidence etc.
Exchange of Contracts:
This is extremely important for all parties and should be considered carefully. As from the second contracts are exchanged the transaction becomes legally binding. This means that the seller must sell and the buyer must buy as per the price stated in the contracts. Until contracts are exchanged the transaction is not binding and either party can walk away with no penalty or compensation.
Fixtures, Fittings and Contents Form:
This form states a list of items at the property and that the seller is leaving at the property either included or excluded from the purchase price. The seller must accurately complete the form and the buyer must check to ensure what items were agreed to be bought or included in the purchase price.
Freehold:
Ownership of both the property and the land it stands on.
HIP (Home Information Pack):
The Government requires all sellers of residential property to prepare this pack before they market their property.
Land Registry:
The central body that retains records of who owns the land and under what conditions.
Leasehold:
Is temporary ownership of the property but not the land on which it stands. When the lease expires ownership of the property reverts back to the freeholder.
Local Authority Search:
This is a search against the property and provides information recorded with the local authority. It covers such items as, whether the road serving the property should be maintained by the council, whether there have been any planning applications on the property, and a number of other things.
The search is against the property only and does not cover the surrounding area. A word of warning – the search will not show any Planning Permissions or matters affecting land or buildings outside the boundaries of the property. It is important that you let us know at the start of the transaction if you require information on any particular point or if you wish us to ask any particular questions of the local authority. We would not normally advise a buyer to exchange contracts without a satisfactory local authority search.
Mortgage:
This is a loan to help you buy the house. The lender will register a charge against your property on completion of the purchase, which means that you cannot sell the property without paying it off at the same time.
Contracts should not be exchanged until an acceptable written mortgage offer has been received. It is not enough that you have had verbal confirmation from you bank of building society that they will grant you a mortgage.
If you are selling, we will contact your mortgage lender at an early stage to ask how much it will cost to pay off the mortgage – we will send you a copy of this figure. You may find that you will be charged a financial penalty if you pay the mortgage off early. This is a consideration to be taken into account when agreeing a completion date, and often applies when your existing mortgage was set up on a fixed rate, or you obtained a “cashback” figure.
Mortgage Deed:
The legal charge of the property to the mortgage lender until such time as the loan is repaid.
Property Information Form:
This is a questionnaire about the property completed by the sellers. It covers such items as guarantees, neighbour disputes and boundaries.
If your are buying, then time can be saved if you tell us at an early stage if there are any particular points about the property that concern you. We can then ask the seller’s solicitors the relevant questions.
If you are selling and the buyer’s solicitor asks a question to which you do not wish to give an answer to, for whatever reason, it is essential that you discuss it with us. Failure to disclose information could give the buyer grounds for taking action against you.
Redemption:
The final payment of a mortgage loan.
Redemption Fee:
Penalty sometimes incurred if paying off a mortgage early.
Stamp Duty:
This is simply a tax charged by the government, and only affects you if you are buy property for more than £175,000.
Stamp duty is paid by the buyer.
If you buy for exactly £175,000 you pay nothing in stamp duty; if you pay from £175,001 to £250,000 stamp duty is charged at 1% on the whole of the purchase price. From £250,001 to £500,000 it is charged at 3%, and above £500,000 it is charged at 4%.
Survey:
This is a report carried out by a surveyor on the physical state of the property you are buying.
If you are buying a property you should be aware that the property is “sold as seen”. It is for you, as the buyer, to discover any physical defects by means of inspections and surveys and provide your solicitor with a copy of the survey report and also inform them of your findings or any verbal representations/information given to you.
If you are relying on a mortgage, then your lender will carry out their survey to ensure that the property is satisfactory to lend against. Please note that this survey is very basic and will not give you an in depth survey report on the property. It is recommended that you should obtain at least an RICS Homebuyer’s Report prepared by a qualified surveyor. This will cost more than a mortgage valuation but it is advisable. It is possible to go one step further and have a full structural survey, however you should not choose this option unless the surveyor who carries out the Homebuyer’s Report thinks any matter should be investigated further.
Title Deeds:
These documents firstly act as evidence that the person selling the property actually owns it, and secondly set out any rights or obligations that affect the property. The title deeds are now electronically held with the Land Registry.
Transfer Deed:
This is the legal document that passes the ownership of the property from the seller to the buyer.
It is dated with the completion date, and will be sent to the Land Registry after completion. The Land Registry needs this deed to change their records, and show the buyer as the new owner of the property.
Water Drainage Search:
This provides Confirmation of whether the property is connected to a public or private water supply. Confirmation of how the property is billed for the water and wastewater charges (either rateable value or water meter). Confirmation of whether the property is connected to a public sewer or septic tank or other private disposal facilities. Confirmation whether the property is close to or is affected by water mains or public sewers.