LEGAL TERMS

Brief explanation of legal terms

Additional Enquiries: These are extra enquiries over and above the standard property information form which a conveyancer deems it absolutely necessary to raise with the seller's conveyancer.

Adopted Highway: A road maintained by the local authority.

Advance: The amount of a mortgage loan.

Apportionment for Fixtures and Fittings: This is the allocation of part of the price of a property to the value of contents that are being included in the sale. For example you might agree that of a £200,000 purchase price, £1000 was allocated to carpets and curtains and £199,000 for the house. The purchaser would then only pay Stamp Duty Land Tax on the sum of £199,000. However, please note that it is illegal to apportion more than the correct second-hand value of the goods in this way, and Inland Revenue operate a strict scrutiny over all such arrangements. It is illegal to make an apportionment for anything classed as a "Fixture" (see below).

Assent: A formal document transferring ownership of property to a person entitled to the property following the death of the owner.

Assured Shorthold Tenancy: A special form of tenancy agreement designed to simplify the process of obtaining vacant possession of the property at the end of the agreed tenancy period.

Attorney: Someone appointed formally to act on behalf of another either generally or for a specific purpose.

Bank Transfer Fee: Fee charged for transferring money electronically from one bank to another, usually on completion day.

Base Rate: The basic rate of interest (usually of a specified bank) upon which other interest rates are based.

Borrower: See mortgagor.

Brine Search: A search to establish if a property might be affected as a result of disused brine workings near the property.

Building Regulation Consent: Approval by the local authority of the design and materials used in building work.

Buildmark Warranty: The Buildmark Warranty is a ten year insurance policy offered on many newly built properties that covers you in the event that the property has not been constructed in accordance with NHBC (National House Building Council) standards.

Capped Rate: A mortgage interest rate which is a variable rate but capped at a maximum upper limit usually for a limited period.

Cashback: A sum of money usually paid by cheque by the lender on completion of a mortgage that contains a cashback offer.

Chain: Where a property seller is also buying another property this is a chain of transactions and some chains can have many links.

Commons Registration Search: A search at the local authority to check the property is not registered as common land or part of a village green resulting in third party rights over the property.

Completion Date: This is the date when the sale or purchase of a property is finalised and the Buyer obtains the keys and can move in. It is therefore usually the same as the "moving date".

Completion Statement: A written calculation of all the receipts and payments due in respect of the transaction

Contaminated Land: Land affected by contamination which could arise from a past use of a property (e.g. oil refinery) or by things stored on the property in the past (e.g. petrol station).

Contract: The legally binding agreement incorporating all the terms and - conditions for the sale of a property made between the Buyer and the Seller.

Creeping Freehold:  This arises when part of the property is built below part of another property so that the lower property owner does not own the building or land above the "creeping" part.

Deed of Covenant: A legally enforceable document confirming an agreement to pay or do something.

Deed of Gift: A document transferring the ownership of property from one person to another without any payment being made for it.

Deed of Guarantee: A document used where one person agrees to be responsible for another’s debt or mortgage obligations if that person fails to carry out his obligations.

Deed of Postponement or Priority: A deed giving effect to an agreement by one mortgage lender to another lender’s mortgage having priority.

Deeds: The official documents confirming who owns a property which are in the possession of the owner or mortgagee if the property is mortgaged.If the title to a property is registered at Land Registry, there will no longer be any physical “deeds”. Ownership is recorded  electronically .

Deposit: The agreed amount to be paid on exchange of contracts. If the Buyer fails to complete the matter, the deposit (or 10% of the price, whichever is the greater) can be kept by the Seller.

Disbursements: The word used by lawyers for the necessary expenses such as search fees to be incurred when buying a property.

Discounted Rate: A mortgage interest rate which will rise and fall with the variable rate but which will always be the discounted amount below the variable rate.

Endowment Mortgage: A mortgage where you only pay the interest on the mortgage together with a premium for an endowment assurance policy. The policy is then intended to “mature” providing a lump sum to pay off the original amount borrowed at the end of the mortgage term.

Endowment Policy: An assurance policy providing for the payment of a lump sum on death or maturity.

Environmental Search: A search against a property to check whether there is any record to suggest that the property may be affected by contamination.

Equity: Usually means the difference between the value of a property and the amount owed to the mortgage lender.

Exchange of Contracts: This is the moment when the contract finally becomes legally binding, and the completion date (usually the same as the moving date) is fixed. (For a newly-built property, a builder will only give a firm completion date at this point if your new home is already structurally complete. Otherwise see "Completion Date" below.)

Fixed Rate Mortgage: A mortgage interest rate where the mortgage lender agrees to charge a fixed rate of interest over a given period irrespective of whether base rate changes during that period.

Fixtures and Fittings: Fixtures are those permanently fixed items that can be regardedas part of the property itself, for example trees and plants, gates, kitchen/bathroom units, built-in cupboards, fireplaces, gas fires, Aga’s etc. Fittings are essentially portable items that have been attached with a view to easy removal such as curtain rails, carpets, spice racks etc and which do not damage the property if removed. It is important to distinguish between them when making "apportionments" and when deciding what you may or may not remove when selling. A buyer is entitled to assume that no fixtures will be removed unless the contract specifically permits this to be done. Always ask us for advice if you are not sure.

Flying Freehold: This arises when part of the property is built above part of another property and so the upper property owner does not own the building or land underneath the "flying" part.

Freehold: A type of land holding which is permanent and not restricted as to its duration.

Freeholder: See Lessor.

Full Title Guarantee: The seller of a property must state the guarantee he is prepared to give in the contract for sale. This is the usual guarantee given by a property owner.

Further Advance: An additional amount lent to a Borrower under the terms of the original mortgage.

Ground Rent: This is paid by a leaseholder to the landlord where a property is leasehold and is usually expressed as a yearly sum.

High Loan to Value Fee: This is sometimes charged by a mortgage lender where a borrower borrows more than a certain percentage of the value of a property, to insure the lender  against loss arising if the property is sold by them due to the borrower’s failure to pay the mortgage.

Index Map Search: A search at Land Registry to see whether or not a property is registered and if so to establish its title number, and to check whether certain third party rights have been recorded against unregistered land.

Interest Only Mortgage: A mortgage where interest only is paid to the Lender and the capital amount of the original loan is repaid at the end of the mortgage term by an endowment policy, pension or other savings plan maturing.

Land Charges Search: Search made in Land Charges department of Land Registry to check for third party rights noted against the names of parties to a transaction involving unregistered land. Also includes compulsory Bankruptcy search against Borrower on behalf of a Lender.

Landlord: See Lessor.

Land Registry: Central government body which maintains recordsof the ownership of land.

Land Registry fees: Fees payable to Land Registry for registering changes of ownership and other matters affecting land.

Land Registry Search: This is a final search carried out by the Buyer’s Conveyancer at Land Registry to check that nothing new has been registered against the property since the date of the official copy of the register supplied to the Buyer’s conveyancer at the outset of the transaction.

Lease: Where a property is leasehold this is the document giving the Leaseholder the right to possession of the property for the term of the lease and setting out all the rights and obligations.

Leasehold: Where the ownership of property is for a limited period only, commonly  99 years or sometimes 999 years. Possession of the property will be subject to the payment of an annual ground rent.

Leaseholder: See Lessee.

Legal Charge: See Mortgage.

Lender: Usually Bank or Building Society that grants a loan by way of mortgage for the purpose of buying property.

Lessee: Where a property is leasehold the lessee means the current owner of the leasehold property as opposed to the freeholder or landlord who’s interest is subject to the lessees right of occupation until the lease term has come to an end.

Lessor: This means the landlord or freeholder who owns the freehold title and is entitled to the ground rent under the lease and to possession of the property at the end of the lease term.

Limited Title Guarantee: This is the title guarantee given by a seller who, because of his limited personal association with the property cannot give Full title Guarantee (e.g. personal representative/executor  of a deceased owner or a mortgagee in possession).

Local Search/Local Authority Search: A search carried out at the local authority to check whether there have been any notices registered affecting the use of the property or any proposals for the neighbourhood which may directly affect the property.

Mining Search: A search to check whether the property may be affected by historical, present or future coal mining activity which may result in subsidence.

Mortgage: Form of loan that is secured (attached) to your property. This means the property cannot be sold unless the loan is repaid in full. The Lender can also sell the property if the repayments are not made.

Mortgage Deed:  The document signed by the borrower to create a legal charge which the lender can register at the land registry.

Mortgage Offer:  The written offer setting out full details of the terms upon which the mortgage lender is prepared to make the mortgage loan.

Mortgage Term:  The length of time agreed for the repayment of the loan.

Mortgagee:  A person or company that provides someone with a mortgage loan (usually a bank or building society).

Mortgagor:  Somebody who takes out a mortgage (a borrower).

NHBC:  National House Building Council:  the independent regulator and standard-setter for the new homes industry

Occupier’s Consent:  Any adult who lives at the property but who will not be joining in the mortgage deed will be asked to consent to the mortgage being taken out and to agree to move out if the mortgage lender takes possession due to the default of the mortgagor.

Party Wall:  A dividing wall owned jointly with a neighbour and repairable at shared expense.

Planning Permission:  Approval by the local authority for building or change of use at a property or extension to an existing property.

Power of Attorney:  A legal document formally appointing a third party to act on behalf of another person as their attorney.

Private Road:  A road that is not maintained by the local public highway authority, which often means it is maintained by property owners in the road in question. The property owners will need to have a specific legal right of way over it as there will be no general public right of access.

Property Information Form:  A document completed by a seller to give information about the property to the buyer (e.g. who maintains boundaries, whether there have been any disputes etc.).

Purchase:  The buying of a property.

Purchaser:  See buyer.

Radon Gas:  A naturally occurring radioactive gas which may if above certain safety levels require preventative action to be taken (e.g. more ventilation in a property).

Redemption Figure:  Final mortgage settlement figure sent to Conveyancer when completion date is known in relation to the SALE of a property.

Redemption:  The complete repayment of an existing mortgage.

Redemption Penalty:  A penalty charged by a mortgagee for redeeming a mortgage within a fixed rate, discounted rate or cashback period.

Registered Land:  Property which has already been registered at Land Registry.

Remortgage:  Changing a mortgage from one mortgagee to another.

Rentcharge:  Some freehold properties are subject to a rentcharge. This means that payment of a specific periodic charge (e.g. monthly or yearly) is “attached” to the property in question and the responsibility for paying it will automatically pass from owner to owner of that property. It is usually created  to ensure payment of a contribution towards the upkeep of shared facilities on an estate, such as communal parking areas and access ways etc. The rent charge is usually payable to a residents company or management company.

Repayment Mortgage:  A mortgage in which the mortgagor repays both interest and some of the initial capital borrowed each month.

Reservation Fee:  An administration fee charged by some mortgage lenders to cover the cost of reserving a borrower’s entitlement to a loan on certain terms. Can also refer to a fee paid to a builder to reserve a particular new property.

Sale:  The sale of a property.

Seller:  Someone who sells a property.

Service Charge:  A payment required by a lessor or managing agent to cover the costs of insuring, maintaining and running a development or block of flats (e.g. gardening, exterior decorating etc.).

Smoke Control Order:  An order made by the local authority designating an area to be one in which only smokeless fuels may be burnt.

Stamp Duty Land Tax:  Tax charged by government when buying a property for £125,001.00 or more. It is charged at increasing rates for each portion of the price. You'll pay nothing on the first £125,000 of the property price, 2% on the next £125,000, 5% on the next £675,000, 10% on the next £575,000, 12% on the rest (above £1.5 million). From 1 April 2016, if you are buying a second home (as defined in the relevant regulations) the amount of duty will be increased. In that case, you will pay nothing on a purchase up to £40,000; on a purchase over £40,000 and up to £125,000 the duty is 3% of the whole price, on the next £125,000 it is 8%, on the next £675,000 it is 13%, and on the rest (above £1.5million it is 15%). Companies may also have to pay the higher rate of duty on the purchase of residential property.

Subsidence:  Where a property moves due to inadequate foundations or severe change to the underlying ground resulting in instability in the structure, often evidenced by cracks in walls.

Survey:  An inspection and report on the condition and value of a property by a qualified surveyor.

Tenant:  See Lessee.

Term Assurance:  Life insurance which is for a period of time specified in the insurance policy.

Tin Search:  A search to establish whether the property may be affected by tin mining activity which may result in subsidence.

Title:  The owner’s right to a property.

Title Deeds:  The legal documents that prove the ownership of property or land and contain details of rights and obligations affecting it (applies to unregistered title only).

Transaction:  A dealing with property (e.g. sale or purchase).

Transfer:   Formal Land Registry document used to transfer property between Seller and Buyer.

Transfer of Equity: The transferring of ownership of a share or interest in a property from one person to another.

Tree Preservation Order:  An order made by the local authority designating a tree or group of trees as protected and requiring the local authority’s permission to lop or fell them.

Unregistered Title:  Where the title to a property has not previously been registered at Land Registry and ownership is proved by the production of a complete chain of documents showing successive ownership.

Vacant Possession:  Possession of a property free of the presence of any people, possessions or rubbish.

Valuation:  A very simple form of survey designed only to establish the market value of the property.

Variable Rate:  A mortgage interest rate which is variable and which is set by each individual mortgagee.

Vendor:  See Seller.

Wayleave Agreement: A formal agreement entered into with a property owner to give a service provider (e.g. Electricity or Telephone Company) a right for their pipe or cable to pass through or over their property.

legal terms