It’s a sad fact that far too many solicitors use jargon, especially when it comes to conveyancing. And that makes the whole process of buying your own home even more complicated than it actually is.
So what do all those technical terms solicitors use when it comes to buying and selling a house or flat actually mean?
Here’s our guide.
Advance – the mortgage money when it is paid by the lender.
Adverse possession – acquiring property through continuous occupation, without the permission of the legal owner. Often called “squatters rights”.
Click here to read more about adverse possession
Assignment – the process of transferring a lease.
Boundaries – the legal definition of the limits of the property being bought or sold. Boundaries are usually hedges, walls or fences, and will be marked clearly on the deeds.
Click here to read more about boundary disputes
Bridging Loan – a loan taken over a short period to bridge a gap between the purchase of one property and the sale of another.
Capital Gains Tax – for landlords this means the tax paid when selling a property that is not your main home. It applies to any profit you have made on the increase in the property’s price. The rate currently stands at 28%
Chain – a situation where one buyer can only make a purchase when his own sale goes through and so on down the chain. It is often the case that just a couple of links in the chain can make the process much more complicated.
Charge – a sum of money for which the property is being used as security. Banks or Building Societies will register a charge against a property if you are buying it using mortgage funds.
Collateral – an item up as security when taking out a loan.
Common Land Search – a search the conveyancer will carry out to establish whether there are rights of fishing or grazing affecting a property.
Completion date – the finishing post of the conveyancing process. At this point, full payment for a property has been made, and the title deeds have been transferred. Many people use this term to mean the day on which you get the keys and move into a new home.
Completion statement – a financial document detailing all the costs associated with the purchase of the property. This is usually sent out after contracts are exchanged, but before the sale completes. This document is particularly important as it sets out the costs due to the conveyancer, including VAT and disbursements.
Condition of sale – the legal terms of the contract for the purchase of a property.
Contract – this is the agreement between a buyer and a seller which is legally binding.
Conveyancing – The legal process when ownership of a property is transferred from the seller to the purchaser.
Click here to read more about the conveyancing process
Court Appointed Manager – All owners of leasehold flats have the right to apply to the First-tier Tribunal (Property Chamber) to appoint a new manager of their block.
Click here to read more about the Court Appointed Property Manager
Covenant – Any restrictions and obligations which are associated with the purchase of a property. An obligation means you are legally obliged to take responsibility for the upkeep of something on the property. A restriction means you are forbidden from erecting certain buildings or undertaking certain renovations.
Deeds – the legal paperwork setting out who owns a property. This is kept by the owner, or by the mortgage company if the property has been bought with a mortgage.
Delayed completion – when you agree a purchase price and exchange contracts with an agreed deposit in the usual way, but completion of the sale is delayed for a period – which can be years.
Deposit – the amount which is paid at the time contracts are exchanged. This confirms the buyers’ commitment to the purchase.
Disbursements – Expenses incurred by the conveyancer or solicitor when working for the buyer. The conveyancer will pass these costs along to the buyer, but might add an additional service charge.
Easement – legal term for rights of way over land.
EPC – Energy Performance Certificate. A document containing information on a property’s energy use and typical energy costs, along with recommendations on how to reduce energy use and thus save money. In England and Wales, from 2020, all privately rented, domestic properties must have an EPC rating of E or better. Failure to provide an EPC for a property can result in a landlord being unable to evict a tenant.
Equity – the difference between the market value of a property, and the amount outstanding on a mortgage.
Click here to read about how equity release works
Enfranchisement – the process under which the owners of residential long leasehold flats come together to jointly buy the freehold of their block from the freeholder. Also applies to the freehold purchase of a house.
Click here to read more about lease enfranchisement.
Engrossment – the final version of a document which is the one all parties sign.
Exchange of Contracts – at this point in the conveyancing process, the agreement between seller and buyer becomes legally binding.
Fixtures and Fittings – items in the property which can sometimes be included or excluded from the property sale.
Freehold – a type of property ownership in which not only the property is owned, but also the land on which it stands. The freehold title owner will be registered at the Land Registry, and the freehold can be bought and sold.
Gazumping – what happens when you accept an offer on your property but then agree to accept a better offer from a different buyer. Provided the price changes before exchange (when a legal contract is created), this is perfectly legal. It was very common in the 1980s but largely died out. It tends to creep back in whenever house prices start rising rapidly.
Ground rent – a sum of money which has to be paid by a leaseholder to their landlord each year. The amount of ground rent will be stated in the lease. It could however be subject to change at certain intervals. Ground rent only applies if you have a leasehold property.
HMO – House of Multiple Occupation. A single property with at least three people living together who are not from the same household and share certain facilities (a family counts as one household).
Indemnity Insurance – this is a policy taken out to give the owner cover if problems should be discovered with the legal title.
Joint tenants – If a property is owned by two people who are “joint tenants”, this means that if one of them dies, their share in the property will pass to the surviving tenant. A joint tenancy trumps anything that is stated in a will.
Click here to read more about joint home ownership or joint property ownership disputes.
Land Registry – the official body which keeps records of property ownership in England and Wales.
Lease – an agreement between a tenant and freeholder, setting out the deal for the occupation of a property.
Lease extension – the process by which owners of residential long leasehold flats can individually compel or negotiate an extension of their lease term with the freeholder.
Click here to read more about lease extension
Leasehold – the owner has the right to live in a property for the term given on the lease, but never becomes the owner of the land where their property stands. Click here to read more about buying a leasehold flat
Legal pack – the set of documents prepared by the vendor’s solicitor if the property is to be sold at auction.
Click here to read more about auction conveyancing
Licence to assign – this is the formal permission granted by the landlord to the leaseholder to buy the property’s leasehold.
Local Searches – your conveyancer will conduct searches at your local Council covering services and planning. This is done early on in the property purchase, and is designed to make you aware of any plans the Council might have which could affect your property once you’ve moved.
Mortgage – money given to you to buy a property, using that property are security. If you don’t pay, the lender usually has the right to sell the property.
Mortgage Indemnity Policy – A lender will take out this sort of policy to cover their losses if a property has to be repossessed. The insurer providing the policy usually has the right to try to recover any losses from the person taking out the mortgage.
Mortgagee – the institution lender the money, which is usually a bank or building society. A mortgage is secured against the property.
Mortgagor – the person borrowing the money.
Negative equity – a situation where the amount of your mortgage or other loan on the house is more than the house is currently worth on the property market.
NHBC – abbreviation of National House Builders Council. They give a ten year guarantee on new build properties.
Office copies – this is the legal document which sets out ownership of your property. It is kept filed at the Land Registry. When conveyancing starts, your solicitor will ask for it to be sent to him or her.
Overage – an additional sum which may be due to the vendor after completion if a specified condition is satisfied e.g. grant of planning permission, or sale of properties subsequent built on that sold land
Possessory title – a category of ownership where an owner is unable to provide documentary evidence of their title to the land or where someone has claimed ownership through adverse possession .
Click here to read about Selling Land With Possessory Title
Repossession – when a lender sells a property after getting a possession order from the court (normally following a mortgage default).
Click here to read more about repossessed property conveyancing
Redemption – the act of paying off your mortgage.
Registered land – any piece of land for which the Land Registry holds details about its ownership.
Remortgaging – the process of clearing one mortgage with the proceeds from a fresh mortgage with the same or a different lender and using the same property as security.
Click here to read more about remortgage conveyancing
Requisition on title – questions which the conveyancer might about the legal ownership of the property, and how that should be transferred.
Retention – any money which is held back when buying a new property until that property is fully completed.
Right to manage – the process under which the owners of residential long leasehold flats are legally entitled to come together to jointly take over responsibility for managing their block from their freeholder.
Click here to read more about the right to manage
Service Charge – money payable to a freeholder to cover maintenance and repairs to a property.
Stamp Duty – the government tax on the purchase of property.
Structural survey – a report giving details about the essential structure of a property.
Subject to Contract – An agreement which has not yet become legally binding. In terms of property purchase, the deal is “subject to contract” until contracts are exchanged.
Tenant – someone living in a property owned by a landlord.
Tenants in common – An arrangement made by two or more people who own a property. If one of them dies, their share of the property is passed on according to what their will says. If they haven’t made a will, the normal laws of intestacy apply.
Term – any specified period of time, such as the length of time a mortgage is held for.
Title – the ownership of a property.
Transfer – the legal document for the exchange of ownership of the property.
Utilities – services provided to any property, including gas, electric, water, phone land line and internet.
Valuation Survey – a mortgage lender will require this sort of survey to be done to assess the value of the property they are lending on.