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Conveyancing Jargon-Buster
The trouble with lawyers is we talk too much jargon! Unfortunately there are a lot of specific phrases that we use in conveyancing which are just plain confusing. That's why we've created this jargon-Buster to try explain all the terms used in plain english. The blue
text sets out the basics, so if you're getting bored just
read the blue stuff! The dark text goes into it all in a bit more detail.
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.
 If you are selling then valuable time can be saved if your
title deeds can be obtained by us at an early stage. If
you have a mortgage then your bank or building society
will be holding on to your title deeds. We will need to
know your mortgage account number and the name and address
of the lender. Some lenders charge a fee to send out your
deeds but this will normally be added to your mortgage
account.
Property
Information Form
This
is a questionnaire filled out about the property by the
sellers. It covers such things as guarantees, neighbour
disputes and boundaries
If you 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
solicitor 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, for whatever
reason, it is essential that you discuss it with us. Failure
to disclose certain information could give the buyer grounds
for taking action against you.
Fixtures
Fittings and Contents Form
This is a list of the items
at the property which are being taken or left behind.
It is completed at an early stage by the seller and sent
out to the buyer, so that both parties understand what
is included in the selling price.
If you are the seller, when you let us have the form we
will send you a copy back straight away so you know what
you put on it. If you are the buyer we send you a copy
of the form as soon as it is received by ourselves from
the sellers solicitors so that any difficulties can be
resolved at an early stage.
Local
Authority Search
This is a list of questions about
the property which are sent to the local authority. It
covers such things as whether the road serving the property
should be maintained by the council, whether there have
been 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 therefore for you to let us know at the
start of a transaction if you want information on any
particular point or if you wish us to ask any particular
question of the local authority. We would not normally
advise a buyer to exchange contracts without a satisfactory local authority search.
Survey
This 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.
Most
houses are bought with the assistance of a mortgage and
the bank or building society will require a mortgage valuation.
However, this is not a survey - it merely ensures that
the property is of sufficient value to protect the lender's
interest. Our advice is that you should at least have
an RICS Homebuyer's Report prepared by a qualified surveyor.
This will cost more than a mortgage valuation but it is
money well spent. It is possible to go one step further
and have a full structural survey of the property. Initially
you should not choose this option unless the surveyor
who carries out the Homebuyer's Report thinks any matter
should be investigated further.
Deposit
This causes a lot of confusion.
When most people talk about the deposit they are talking
about the part of the purchase price that the buyer is
putting down him/herself (i.e. usually the difference
between the amount of the mortgage and the purchase price).
When Solicitors talk about the deposit they are talking
about money that is handed over to the seller's Solicitors
upon exchange of contracts.
This might be the same amount, but it might not.
On exchange of contracts the
seller can insist on receiving from the buyer a deposit
representing 10% of the purchase price. However, as many
people are not contributing as much as 10% to the purchase,
reduced deposits are often agreed. You should be aware,
however, that if you are a buyer and you pay a reduced
deposit then fail to complete the purchase through no
fault of the seller you will, under the terms of the contract,
be required to make up the deposit to a full 10%. You
may also have to pay compensation to the seller if the
seller loses out through your failure to complete.
Mortgage
A loan made to help you buy the
house. The loan is 'attached' onto your title deeds which
means that you cannot sell the property without paying
off the mortgage at the same time
Contracts
should not be exchanged until an acceptable written offer
of mortgage has been received. It is not enough that you
have had verbal confirmation from your bank or building
society that they will grant you a mortgage - you need
to have a copy of a written offer of mortgage on this
particular property.
In many cases a mortgage will be supported by an endowment,
pension or mortgage protection policy and in these circumstances
we must confirm to the lender before exchange
of contracts that either there are existing policies
or arrangements have been made for new policies to be
brought into effect as soon as contracts
are exchanged.
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 off the mortgage early. This is obviously 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 obtain a 'cashback' when it was set up.
Contract
This
is the agreement between the buyer and the seller. It
sets out the main terms of what has been agreed such as
the address, the price, the names of the parties. It also
deals with what happens if something goes wrong.
Rather than having to get the buyer and the seller together
to sign the same contract, the sellers solicitor draws
up two copies of the contract, and each party signs their
own copy. When both parties are ready to commit themselves,
these two contracts are exchanged.
Exchanging
contracts
A very important moment. From the minute that contracts
are exchanged, the sale becomes binding. From that moment
on, the seller must sell, the buyer must buy, it must
be done at the price stated in the contract, and this
must all be done at the price set out in the contract.
Until contracts are exchanged, NOTHING is binding - either
party can walk away from the transaction with no penalty.
At
the same time as contracts are exchanged a deposit is
handed over from the buyers solicitors to the sellers
solicitors. The balance of the money will be handed over
on the completion date.
Completion
Date
This is the date that ownership
of the house/flat passes from the seller to the buyer.
The
seller and buyer should discuss dates between themselves
and then notify their respective solicitors who will obviously
try to fit in with the suggested date. If there are unforeseen
delays, for example, if the buyer does not receive a search
or mortgage offer in time or the 'cash buyer' turns out
to have a dependant sale then the completion date may
have to be revised. For this reason you should not make
any firm commitments such as giving notice on a job, arranging
removals or making holiday bookings without first contacting
us so that we can advise you whether you are in a position
to make such a commitment.
Only when contracts are exchanged and a completion date is fixed can you be virtually guaranteed
that the completion date will be met. It is not essential
for you to be present on the completion date but if you
are going to be away then you should let us know so that
we can arrange for one of your relatives (or ourselves)
to act for you through a Power of Attorney.
Land
Registry
A Central body that keeps a record
of who owns what land, and under what conditions.
This
was set up in 1925, when it was decided that this would
be a good idea. However they still don't have records
of all the land in England and Wales. This is partly because
they can only insist on the land being registered with
them when it is sold, and partly because it is such a
huge task. The Land Registry have their own web site and
are making good efforts to provide useful information.
See our Links page for a link to their site.
Stamp Duty
This is simply a tax charged by the government, and only affects you if you are buying for more than £120,000.00. It is paid by the buyer, not the seller.
If you buy for exactly £120,000 you pay nothing in stamp duty; if you pay £120,001 then you will pay £1200 in stamp duty. For prices from £120,001 to £250,000 stamp duty is charged on the whole of the purchase price at 1% of the purchase price. From £250,001 to £500,000 it is charged at 3%, on the whole of the price, and above £500,000 it is charged at 4% of the whole of the price.
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 need this deed to change their records,
and show the buyer as the new owner of the property
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