Residential Property

Legal Terms


Building Survey

Formerly known as a Full Structural Survey.

This is top of the range and should cover everything. We recommend this for all older and/or larger houses.


Certificate of Title

A document signed by Conveyancers for Lenders certifying that they have made the enquiries required by the Lenders Handbook and that either the Property complies with the matters set out in the Lenders Handbook orthat any variation has already be sanctioned by the Lender.


Cleared Funds

One of the following:

    Monies received in cash
    Bankers draft
    Cheques drawn by Building Societies
    Solicitors client account cheque from other firms
    Funds transferred to our bank account through the Clearing Banks’ CHAPS system
    Personal and other cheques after they have been cleared through the banking system which takes 5 working days. If it is necessary to use any personal or other cheque within 5 working days then it will be ‘specially cleared’ at a cost to you (raised by the Bank) of £11.00. Special Clearance normally takes 24 hours in any event.



Completion

The moment when the Property actually changes ownership

Normally there is a condition in the Contract that this happens before a certain time (often a set time between 12 noon and 2pm); this is so that the Seller can before the banking system closes either bank their money or use it effectively for a related purchase


Completion Date

The date on which the Property actually changes ownership. In house buying and selling, the day you move. This date is agreed between the parties by free negotiation before Exchange of Contracts. This date is set out in any contract for the sale and purchase of the Property


Contract

The document which sets out all the terms on which the property is being sold. It is prepared and sent out by the Seller’s Conveyancer and approved by the Buyer’s Conveyancer. When both parties are ready to commit to the transaction, there is an Exchange of Contracts.


Conveyance

This is a document that is no longer used and has been replaced by a ‘transfer’ under the Land Registry rules. It was used when land was unregistered.


Conveyancers

The generic description for those who carry out Conveyancing for a fee. They are restricted by law to either Licensed Conveyancers or Solicitors.


Conveyancing

The process of legally transferring the ownership of a house. Normally carried out on behalf of buyers and sellers by Conveyancers who charge a fee for the service.


Deeds

The documents which prove an owners ownership of land. If the land has not yet been registered at Land Registry these will be a bundle of all the previous transactions affecting the land.

If the land is registered at Land Registry these will be a certificate into which is pinned the register recording the land, the owner and any matters to which it is subject (e.g. mortgages, covenants, rights of way etc).

The filed plan which is the definitive plan showing the extent of the Property any relevant ancillary documents and plans


Deposit

This is paid on Exchange of Contracts by the Buyer to the Seller through their Conveyancers. It is normally 10% of the Price.

In a chain, the deposit is often passed up the chain from the bottom so that only the Buyer at the bottom of the chain has to actually find the deposit money

Even if the Buyer is getting a Mortgage of more than 90% of the Purchase Price, a 10% Deposit will be need to be found by the Buyer before Exchange of Contracts


Exchange of Contracts

Before exchange of contracts a sale or purchase is said to be “subject to Contract”. The point in a sale or purchase when the parties become legally bound to buy or sell (as the case may be) a Property. Usually done between Conveyancers on the telephone using set procedures.

The terms on which the property is to be transferred (e.g. the completion date, the price) are then fixed and those terms can only be altered with the written agreement of both parties.


Homebuyers Report

This is a tailored report designed for post war houses (i.e. modern), produced for the buyer. It will include a valuation but will also give a more detailed assessment of the state and condition of the property, although some matters are not covered – you should refer to the small print. We would recommend this as a minimum requirement for any house or flat purchase. This is a medium cost option.


Index Map Search

A search of Land Registry records (by reference to a plan or clear property description) to establish whether a Property is either registered or (if unregistered) affected by any precautionary registration against it by other land owners. A necessary search before any purchase of unregistered land.


Investigation of Title

The process of checking the ownership of land and any ancillary matters affecting the ownership of land. This is done by your conveyancer.


Joint Tenants

One of two ways in which a property can be bought in ‘joint names’ (the other being ‘Tenants in Common’). On the death of one of the owners the property automatically becomes the property of the surviving owner(s).


Land Registry

A government agency which runs the system for registration of land in England & Wales. W ell on the way to computerising all records, including digitising all plans.

See http://www.landreg.gov.uk/info/ to answer questions such as :

    Why register land?
    What is the Land Registry?
    What is the land register?
    What about unregistered land?

Leading the change to a completely electronic conveyancing system on a dedicated intranet.


Lender

Colloquially referred to as “the Building Society” – a hangover from the days (only 15 years ago!) when most lenders were Building Societies. The organisation lending you money to help you buy your new property. Can be a Bank, Building Society or specialist finance company.


Lenders Handbook

A handbook prepared by the Law Society and the Council of Mortgage Lenders giving Conveyancers standard instructions as to matters relating to residential property which must be dealt with before mortgage moneys can be released.


Local Search

A search of the local authority registers covering matter affecting the Property only. These matters include:

    Highways – is the road outside the property a highway maintainable as public expense or private?
    Planning – a history of the planning permissions affecting the Property
    Conservation areas/listing – is the Property in a Conservation area or Listed
    Drains – is the property connected to the mains drainage system; some authorities no longer give this information

The weakness of a Local Search is that it only covers the Property itself and so gives no information about neighbouring properties, e.g., planning matters and intentions affecting neighbouring properties.


Mortgage

A mortgage has two elements:

    It is a loan of money to you by a Lender
    That loan is secured by a charge or mortgage on your property

The mortgage will be subject to detailed conditions – see the documents sent to you with your Mortgage Offer.

If you don’t make the payments due under the terms of the mortgage, the Lender can evict you from the property and sell it to repay the loan (the charge element).

If the loan cannot be repaid in full (with all interest and charges arising under it) from the net sale proceeds, then any part of the original loan left outstanding will still be a debt due from you to the Lender (the loan element).


Mortgage Offer

An offer by a Lender to you to lend you money to help you buy your new property on condition that you give it a Mortgage on that property. You will need to have this in writing before you Exchange Contracts. The Mortgage offer will contain detailed conditions which you should check before you accept the offer.


Presale Agreement

A way of legally tying in both the Buyer and Seller while the transaction is still Subject to Contract. Both parties deposit a small percentage of the Price with their solicitors as security for its performance.

Rare as it stops the rest of the conveyancing process while it is agreed and implemented – can take more time and anxiety than its saves when balanced against the speed and anxiety of the precontract process itself. A Lockout Agreement is a type of Presale Agreement.


Surveys

There are 3 levels of inspection – a Basic Valuation, a Homebuyers Report and a Building Survey.

Even if you are just buying a flat, you should have a Survey of the whole building carried out as the Lease is likely to contain an obligation on your part to contribute towards the cost of structural repairs and maintenance of the whole building of which the flat forms part, including the roof and foundations.


Sellers Pack

A new idea being brought in by the Government to speed up Conveyancing.

For the government view see
http://www.housing.dtlr.gov.uk/hbs/index.htm

For another view
http://www.findaproperty.com/cgi-bin/www.findaproperty.com/story.pl?storyid.2555

For the Surveyors view see http://www.rics.org.uk/ricscms/bin/show?class=policy&template=/includes/showpolicy.html&id=302 http://www.rics.org.uk/ricscms/bin/show?class=policy&template=/includes/showpolicy.html&id=21

For an article in the national press on 23rd November 2001 see http://www.independent.co.uk/story.jsp?story=106461


Subject to Contract

In the early stages of a sale or purchase (before Exchange of Contracts) there is no binding contract for the sale/purchase so any term (e.g. the price, the Completion Date) can be renegotiated on the initiative of either party. Either party can pull out without incurring liability. The party who is abandoned cannot claim any of their costs expenses or inconvenience from the party who pull out unless there is a Presale agreement in place.


Tenants in Common

One of two ways in which a property can be bought in ‘joint names’ (the other being ‘Joint Tenants’). Each owner has a separate but as yet undivided share in the value of the property. This type of ownership is most appropriate to a ‘business-type’ arrangement. If one of the owners dies, his/her share does not automatically become the property of the surviving owner. Instead, it will form part of the deceased owner’s estate.


Transfer

The document which transfers ownership of land.


Valuation

A valuation is not a survey, only a superficial inspection of the property. If you are obtaining Mortgage Finance your Lender will insist on a valuation for its own purposes. However your Lender will only get this level of survey; if you want a more detailed survey, you will need to either upgrade the type of survey being done by the Surveyor before he/she does the Lender’s valuation or get your own separate survey (see Homebuyers Report / Building Survey) using another Surveyor. The Surveyor doing the Valuation will only have a limited liability to you. You should not rely on this as an accurate assessment of the condition of the property.