Understanding Property-Related Legal Jargon

Understanding Property-Related Legal Jargon

One of the problems with the legal process is that it often uses words that are rarely heard and may not be fully understood anywhere outside the lawyers' world.

Let's try to make things simpler by explaining a few words and phrases - we hope it helps!

HM Land Registry

The national organisation that keeps records of who owns what land, and under what conditions.

HM Land certificate or Charge certificate (if you have a mortgage secured on the property)

The document that acts as evidence that the person selling the property actually owns it and which sets out any rights or obligations affecting the property.

Local Authority Search

This is a list of questions about the property which are sent to the local authority. It covers such things as whether the road serving the property should be maintained by the council, whether there have been planning applications on the property, and a number of other things.

But it won't show any planning permissions or matters affecting land or buildings outside the boundaries of the property.

So you'll need to let us know at the outset if you want us to find out any particular information from the local authority. We would not normally advise a buyer to exchange contracts without a satisfactory local authority search.

We also advise on other searches required, such as environmental and coal-mining searches where applicable.

Survey

This is a report carried out by a surveyor on the physical state of the property you are buying. If you are buying a property you should be aware that the property is 'sold as seen'. It is for you, as the buyer, to discover any physical defects by means of inspections and surveys.

We can advise you on the various standards of survey available and which is appropriate in your circumstances.

Deposit

This can cause some confusion. When most property buyers talk about the deposit they are meaning the part of the purchase price that the buyer is putting down him/herself (i.e. usually the difference between the amount of the mortgage and the purchase price). When property lawyers talk about the deposit they are talking about money that is handed over to the seller's solicitors on exchange of contracts. This might be the same amount, but it might not.

Again, we'll talk to you about all of this and about any implications if anything goes wrong.

Mortgage

A loan you can get to help you buy the house. The loan is secured onto your property and is registered on your Charge Certificate which means that you cannot sell the property without paying off the mortgage at the same time.

We can advise you on all legal aspects of obtaining or redeeming a mortgage and will deal with your mortgagee direct in relation to your sale or purchase.

Contract

This is the agreement between the buyer and the seller. It sets out the main terms of what has been agreed such as the address, the price, the names of the parties. It also deals with what happens if something goes wrong.

The seller's solicitor will draw up two copies and each party signs their own copy. When both parties are ready to commit themselves, these two contracts are exchanged.

Exchanging contracts

This is a crucial time because it's when the sale becomes binding. When contracts are exchanged the seller must sell, the buyer must buy and this must all be done at the price set out in the contract. The date for actual completion of the transaction is stated in the contract. Failure to complete on that date is likely to result in penalties being imposed upon the defaulting party. Until contracts are exchanged, NOTHING is binding - either party can walk away with no penalty.

Completion Date

This is the date that ownership of the property passes from the seller to the buyer.

Sellers and buyers usually discuss this with each other and then arrange for their property lawyers to sort out the paperwork accordingly.

As this date can change for a number of reasons during the process it's a good idea not to make any firm commitments such as arranging holidays, booking removal firms or changing jobs, without talking to us first. We'll advise you on whether it is sensible for you to make such commitments, taking into account the current position in relation to your property transaction.

Stamp Duty

Is a tax charged by the government, and means you have to pay different amounts depending on the value of the house you are buying. We will advise you about this as there have been some recent changes in the prices for which it applies.

Transfer Deed

Is the legal document signifying that a property's ownership has passed from one person to another. It is signed by both parties and becomes effective on completion of the transaction.

It will be sent to the Land Registry after completion and they will issue a land or charge certificate to show that you are the new owner of the property.