Conveyancing Transactions – Legal Jargon Explained

Chartered surveyor

A RICS (Royal Institute of Chartered Surveyors) qualified surveyor who is entitled to carry out a survey on a property.

Completion date

This is when ownership of the property passes from buyer to seller. Usually it is after exchange, though simultaneous exchange and completion is possible.

Contract

The contract sets out the terms of the sale. It will be drawn up by the seller’s solicitor, but will be subject to negotiations before being agreed.

Deposit

Not to be confused with the deposit that you agree to put down when you take out a mortgage. In the context of conveyancing, the deposit is the amount (usually 5 – 10%) paid by the buyer to the seller upon exchange of contracts. Once exchange has taken place the contract is a legally binding document and if the buyer fails to complete then they may forfeit their deposit (unless they were misled into signing the contract).

Disbursements

This simply means “expenses” and is the term used by solicitors. Disbursements include things like search fees and land registry fees. Ask for disbursements to be included in your quote (most are known in advance) otherwise your bill could be a lot higher than you expect.

Environmental search

A check on records for things like flooding, landfill, waste disposal, contaminated land, etc. that might affect the property.

Exchange

The exchange of contracts between buyer and seller. Once exchange has taken place the contract is legally binding and if the buyer fails to complete then they may forfeit their deposit (unless they were misled into signing the contract).

Fixtures, fittings and contents form

This is a form prepared by the seller setting out what fixtures and fittings are included in the sale, which ones may be included at a specified price and which ones are negotiable. It may be included in the HIP, but does not have to be and can be given after an offer has been made.

Freehold

When the owner of the property also owns the land on which it is built.

HIP

A HIP or Home Information Pack contains information and search results for the property. HIPs are now compulsory and you are required to have a HIP before you market your property (though some documents can be added within 28 days of putting the property on the market).

Indemnity contribution

Solicitors must take out insurance to protect their clients in the event of mistakes or fraud when dealing with their case. This is usually charged to the client.

Land Registry

The Land Registry record who owns what land. When a property changes hands the buyer’s solicitor will make sure that this transfer is recorded at the Land Registry.

Leasehold

A leasehold property does not include the land on which it stands, which is owned by the freeholder. Once the lease expires ownership of the property goes back to the leaseholder.

Local authority search

A search of local authority records for things that may affect the property, e.g: whether the road the property stands on is maintained by the council; planning applications affecting the property; planning restrictions; and rights of way.

Check the area covered by the local authority search. If it only covers a limited area you may want to ask for additional enquiries.

Mortgage

The loan from your bank used to buy a property. Because the mortgage is linked to the property being bought the property cannot be sold until the mortgage is paid off.

Mortgage deed

The legal charge that gives the mortgage lender rights over the property until the mortgage has been repaid.

Mortgage fees

Conveyancing solicitors will, if acting on behalf of their client’s bank or building society, charge mortgage fees.

Mortgage valuation

This is the valuation survey carried out by your bank or building society before they will lend on a property. It is to make sure that the property is worth at least the amount they are proposing to lend. It should not be confused with a property survey (of which there are different kinds) carried out by a Chartered Surveyor – see Surveys.

Property information form

A questionnaire to be completed by the seller covering basic information about the property. The seller is legally obliged to answer the questions honestly.

Redemption fee

Banks will often charge a redemption fee for paying off a mortgage early. Sometimes this only applies for a certain number of years after the mortgage is taken out.

Redemption payment

The payment made in order to pay off the outstanding balance of a mortgage.

SDLT

Stamp Duty Land Tax – see Stamp Duty

Stamp duty

Officially known as Stamp Duty Land Tax (SDLT). This is the tax charged when buying a property and is usually paid by the buyer. The amount is based on the value of the property.

Surveys

Not the same as the valuation survey carried out by a lender. A property survey is carried out by a Chartered Surveyor and looks at things like the structure of the building and its value. There are different levels of surveys and their costs vary greatly.

Title deeds

The documents that prove ownership of a property and which set out any rights or obligations affecting the property. If the property is mortgaged then the deeds will be held by the mortgage lender.

Transfer deed

Also known as a TR1, this transfers ownership of the property from the seller to the buyer. It is completed by the buyer’s solicitor following completion and sent to the Land Registry.

Water and drainage search

A check on whether the property is connected to the water supply and sewerage system and how the property is billed for there services.

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