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For those of you who have sold or purchased property in the past, presently in the course of doing so or contemplating that first purchase, we recognise that some of the terminology used in the conveyancing process can be bewildering. For that reason we have written down some of the most common expressions with some explanation alongside to assist the general understanding of these terms.
We hope the information provided aids a slightly less confusing process.
A class of title where the legal title that is held subject to the terms of a lease. A tenant under the lease will be bound by the tenant’s covenants contained in the lease originally made with the landlord. Invariably a nominal ground rent is paid to the landlord or freeholder.
Surveys and searches are often confused. Searches are certainly required where a buyer is dependent on a mortgage but even where a cash buyer is concerned a legal adviser will always recommend searches be done. The main searches include :-
Local Search – Undertaken with the local authority in which the property is situate and reveals matters such as planning consents granted or refused for the property, building regulation approvals, whether roads giving access are maintained by the council, whether the property is a listed building or in a conservation area, whether trees within the boundaries are subject to a preservation order preventing their being cut down without prior consent, whether there is any local authority grant taken by the seller which will require repayment by the seller on completion, to name but a few.
Mining Search – A prominent search in West Yorkshire. This can reveal whether the property has been the subject of claims against the Coal Authority for subsidence likely to have occurred as a result of past mining activities. The search will also include approximate location of mine shafts within the vicinity of the property (if applicable) and the dates of last coal workings and at what depths.
Drainage/Water Search – Details whether the property drains to public sewers, takes water from a mains supply, how the property is charged, ie, rateable method or water meter, and more importantly provides plans of mains for which the water authority is responsible although it should be noted not all pipework is mapped.
Environmental Search – Essentially an investigative report undertaken to establish land use and activity, past or present, which could potentially lead the property to being determined as contaminated land. An owner of contaminated land can find themselves the recipient of a bill for ‘clean up’ costs if the original polluter cannot be found. This search can also detail flood risk although a flood risk report can be obtained separately.
Radon Gas – This is a gas that occurs naturally and cannot be seen and is without odour. It has been added to the local search and environmental search within the last few years as it is a gas that is known to be a cause of cancer. Searches can often only say whether the property may be in an area known to be affected. The only way to determine the levels is to have a meter fitted at the property and take readings over a 3 month period. Where levels are high recommendations often relate to better ventilation of the property.
Refers to the situation where you might own a share in the property and another party, often a housing association, retains the other share making up a balance of 100%. A buyer may mortgage the share being acquired and will pay rent to the housing association on the balance they retain.
Traditionally termed stamp duty, this is a tax payable to H M Revenue & Customs within 30 days of your completion taking place. The amount of tax is determined by your purchase price. Your conveyancer can confirm your liability at the point of instruction in this regard.
Not to be confused with a homebuyer’s survey. A basic survey / valuation undertaken on behalf of your proposed mortgage lender for the purposes of establishing whether the property is adequate security against your mortgage loan. A valuation will include the surveyor’s view on current market value.
Legal rights by another name! These can relate to access, drainage, light, air, etc.
We do have a number of these in Huddersfield and the term relates to a freehold property that may sit entirely or partly above or beneath another property.
This is the date on which the monies change hands for the property and, subject to that, ownership of the property also passes. This is essentially your moving date when keys are passed from seller to buyer.
The solicitor, licensed conveyancer, legal executive or paralegal handling your property transfer.
The term used to describe the process of legally transferring property from one person to another.
The legally binding promises entered into by two or more parties in a document and which, if breached, can be enforced through the courts. Covenants can apply on both leasehold and freehold titles.
Refers to a document where two or more buyers agree to hold their equitable (monetary) interest in the property in specified shares. This may apply if one buyer may be putting more deposit down than another and wishes to ‘ring-fence’ those funds in the event of fall-out, sale or death. See also our article on joint ownership. Where property is held subject to a trust deed, buyers should strongly consider making a Will to define who should benefit by that share on death.
This is the sum a buyer will pay a seller on exchange of contracts. Most standard contracts provide for 10% of the purchase price be paid on exchange of contracts but often a lesser figure is accepted in circumstances where, for example, a mortgage loan might have (in the past) been 95%.
This is the point at which your contract is made legally binding, generally undertaken by your legal adviser by means of telephone calls to your seller’s or buyer’s conveyancer. Once contracts are exchanged, your contract is legally binding, the completion date is fixed as well as the purchase price. Signature of the contract alone does not make the contract legally binding. Either party unable to complete on the date fixed for completion following exchange of contracts will be subject to penalties.
If you are purchasing a leasehold property your freeholder or landlord is the party who has a corresponding freehold title to the land on which your property sits and is the party to whom ground rents would be payable save where the landlord uses an agent to collect rents on his behalf.
Most legal advisers will recommend a buyer undertakes their own homebuyer survey of the property which involves an inspection by a surveyor to determine any material defects and provide recommendations for further specialist inspections and / or estimates for required repairs. The survey generally does provide an opinion of the market value of the property.