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 Residential
Sales Glossary of Property Terms - Jargon used in the UK
If
you are buying or selling a property your Solicitor / conveyancer / will quite
often refer to certain Terms / Jargon. The following is an alphabetical list used
in the UK Property market. Acceptance:
The document that you will need to sign and return to a lender if you wish to
accept the lender's mortgage offer. Agricultural
Covenant: This is a planning condition that permits the erection of a residential
dwelling providing it is occupied by a person employed or associated with working
on the land. Properties subjected to such a covenant are effectively "blighted"
by this stipulation and values are relatively low because they cannot be sold
to anyone who fails to meet the condition imposed, unless the planning authorities
agree to lift the covenant. Applicant:
The term by which a potential purchaser is often referred to by estate agents
/ auctioneers. Auction:
A means of selling a property whereby it is listed at an auction and if the property
does not reach the reserve price then it is not sold. If it does then the auctioneer's
hammer falls that represents an exchange of contracts and the successful bidder
is legally obliged to pay a 10% deposit and sign a memorandum of sale before leaving
the auction. Usually completion takes places 28 days later and the buyer cannot
re-negotiate any of the stipulated terms and buys the property "as seen". Structural
surveys and searches would have to be made in advance by a bidder. Beneficial
Owner: Person owning land and entitled to it for his own benefit. Not, for
instance, a trust that holds the land for the benefit of another. Bridging
Finance: A purchaser under certain circumstances may wish to complete the
purchase of a property whilst still offering his own for sale. Lenders will advise
as to whether the necessary temporary finance can be made available and the purchase
can go ahead earlier. Some people use this means for a few days to enable them
to move from property a to property b over a couple of days.
Caution: Entries on the land register protecting the interests of a third
party. Any applicant for first registration of title is notified to him whereupon
he can take appropriate action to protect his interests. Charge:
If a property owner uses his security in the property to service a loan, a charge
is registered and certified. This entitles the lender to be regarded as a secured
creditor to be paid out of the proceeds of a sale in the event of a default on
the loan. Charge
Certificate: A certificate issued to a lender by the Land Registry giving
evidence of the lender's charge over the property. Chief
Rent: A payment made on freehold land to the original freeholder forever.
This is distinct from ground rent that has a limited period. (See also Freehold).
Collateral: Property pledged as a guarantee for the repayment of a loan.
Commission of Fee to the Estate Agent /Auctioneer: The sum of money paid
to the agent, usually on completion, although legally it is payable on exchange
of contracts. Completion:
The finalising of the sale when all the monies are passed over and the purchaser
gains access to the property.
Contract: Entered into by the vendor and purchaser of a property that only
becomes binding on exchange of contracts, i.e. when both parties have signed the
contract and the purchaser has handed over the agreed deposit (if any) to the
vendor.
Contract Race: Involving two or more purchaser wanting to buy the same
property. Either purchaser or vendor can instigate it although usually it is the
latter. The winner is the first purchaser to exchange contracts.
Conveyancing: The legal process transferring ownership from vendor to purchaser.
County
Court Judgement (CCJ): Whenever someone fails to pay for something and is
subsequently taken to court, the magistrate may issue a County Court Judgement
against that individual to pay the outstanding debt. It will only be removed once
the debt is cleared. Covenant:
A legal requirement of the owner to do, or not to do, something in relation to
the property. For example; restrictions on its use, changes to its appearance.
Deeds: All the legal documents relating to the property. (See also Title Deeds)
Delayed
Completion: Completion can take place anytime after exchange of contracts.
However, if it is longer than 28 days it is referred to as delayed. Easement:
A right over or under land granted to someone who is not the owner.
Engrossment: The formal and final version of a document prepared by a solicitor
in readiness for signing and sealing following agreement of the final draft between
the parties.
Equitable Interest: Legal rights in a property that do not include the
right to sell its legal title. Exchange
of Contracts: The stage when the buyer and seller exchanged signed, binding
contracts of purchase and sale. Both then become committed to complete the transaction.
Execution:
Signing, sealing and delivering a deed in front of an independent witness.
Fixtures and Fittings: Any items that are to be included in the sale, e.g.
carpets, curtains, curtain rails, wall lights, cooker etc.
Flying Freehold: A flying freehold is formed when part of a freehold property
overhangs a different freehold property or land.
Freehold:
Absolute ownership of land with or without Chief Rent.
Gazumping: A term used to denote a situation where the vendor has accepted
an offer but subsequently accepts a higher offer from another purchaser.
Gazundering: A term used to denote a situation where the purchaser lowers
his offer immediately prior to exchange of contracts.
Ground Rent: This applies only to Leasehold properties and is a sum paid
annually to the Freeholder by the Leaseholder. Improvement
Grant: A grant made by the local authority towards the cost of repairing or
improving property. Further information with regard to grants is available from
your local council / authority.
Instruction: This term is used when the estate agent or auctioneer is formally
instructed by a property owner to market the property, usually by private treaty,
in order to find a purchaser. The resulting contractual agreement confirms the
terms under which the instruction is offered by the vendor and accepted by the
estate agent. Joint
Tenants: Two or more people holding property as co-owners. When one dies,
his share of the property automatically passes to the survivor(s). (See also
Tenants in Common). Land
Certificate: A certificate issued by the Land Registry as proof of ownership.
Land Registry: A Government department where details of properties with
a registered title are recorded along with any charges e.g. mortgages.
Lease: Ownership of property by way of a leasehold interest for a fixed
term, usually with an annual ground rent.
Leasehold: Ownership of land (normally for a fixed period - 99 years 999
years etc) subject to an annual payment of a ground rent to the owner of the freehold.
Lessor:
The person / company who grants a lease - the landlord.
Lien: The legal right of one person to hold the property of another as
security for a debt.
Maintenance Charge: The charge made, usually annually, by the landlord,
to cover the costs of maintaining the property as set out in the lease.
Mortgage: Loan for which property is the security (usually for house/ property
purchase for a private individual or now more and more common - Buy to Let property).
Mortgage
Deed: The document incorporating the conditions of a loan secured on a property.
Mortgagee: The lender - building society/ bank etc. Mortgage
Offer: The letter (advice) from the lender offering you the loan and setting
out the terms and conditions upon which it is offered.
Mortgagor: The borrower - owner (whose property is secured for the loan).
Multiple Agency: A situation where two or more agents are acting for the
vendor. The agent who introduces a successful purchaser is the only one paid.
(See also Joint Sole Agency).
Offer: Make an offer on the purchase price with the intention of purchasing
Part-Possession: The term used when a property is being sold, where a tenant has
legal right of occupation. Peppercorn
Rent: A term used to denote a ground rent of a trivial amount.
Preliminary Enquiries: A set of questions raised by the purchaser's solicitor
and sent to the vendor via his solicitor, prior to exchange of contracts. They
ask for clarification of specific points about the property that is being sold
and the present vendor's ownership of it. Private
Treaty (For sale by Private Treaty): The sale of property by private treaty
is the method employed by most estate agents, preparing descriptive details of
the property and quoting a definitive asking price. Details are circulated - post
email, website local paper etc: potential buyers may view the property and either
agree to buy at the asking price or submit an offer to purchase. Agreement to
buy at this stage (for England and Wales) is subject to formal contracts being
prepared between the vendor and the purchaser and those contracts being signed
and exchanged between the two parties.
Probate: The official process of proving a will is valid. In many cases
part of the estate will involve a property, which might need to be valued for
Inheritance Tax purposes. A probate valuation is generally a negotiated value
with the district valuer representing the Inland Revenue. A sale cannot proceed
to exchange of contracts until probate has been granted.
Registered Land: Land (including buildings on it) the title to which is
registered at the Land Registry and legal ownership is guaranteed.
Retention: An amount held back from the initial loan by the Lender until
certain repairs or improvements have been completed or in some cases to cover
possible road charges on a new estate
Right of Way: An individual's legal right to use any particular part of
a property, in order to gain access to any particular part of his own property. Searches:
A term used to denote the physical and written procedure for determining any adverse
effects in/on a particular property, whether already in effect or planned to take
place. Sitting
Tenant: To occupy the property as tenant, but have legal rights without a
lease. Any sale would be subject to any rights of a tenant who has occupation.
A property with a sitting tenant can often have a much reduced asking price. Sole
Agency: Where only one agent has the authority to sell the property. Sole
Selling Rights: Where one agent has complete control of the sale, and is entitled
to his fee however the property is sold.
Stamp Duty: This is the tax paid by the purchaser of a property to the
Government in the UK. Currently based on the following rates:(from March 2006
Budget)Up to £125,000 - nil £125,001 to £250,000 - 1% £250,001 to £500,000 - 3%
More than £500,000 - 4% Subject
to Contract: A
phrase used as a provisional agreement before contracts have been exchanged where
either party may still withdraw from the transaction. Often seen on estate agents
boards. Superior
Lease or Head Lease: This is the lease that the landlord holds. This is often
the case in an apartment/flat where the owner has the leasehold interest, but
another individual owns the freehold. There is then this lease under which the
Property owner is responsible for the obligations / covenants. When a property
is let out the tenant renting a property then also has to comply with any of these
obligations - e.g. not to hang out washing on a balcony etc. Survey:
Valuation, Home Buyers and Structural. Inspection of the property by an independent
surveyor. The last one is the most comprehensive.
Tenancy at Will or Licence: After exchange of contracts a purchaser may
seek to take possession of a property before financial, legal completion. This
could be to carry out repairs and decorations or to take up residence early. This
can often be organised and a licence arranged between both parties' solicitors.
The purchaser paying an appropriate rate of interest on the balance of the outstanding
monies (i.e. purchase price less deposit paid) instead of rental. Tenant:
A person, persons (company or organisation) who is entitled to occupy a property
under the terms and conditions of a tenancy agreement. Tenants
in Common: Two or more people holding property as co-owners. When one dies,
his share of the property automatically passes to his estate. (See also Joint
Tenants).
Tender - For Sale by Tender: This is the situation where the asking price
is not actually stated, but offers (in writing) are invited. Details of the property
are prepared, circulated and advertised. The closing date for the tender is noted.
In most cases the vendor will reserve the right to refuse the highest offer, thereby
not being committed to sell. Offers tendered are usually opened in the presence
of the vendor's solicitors, at a prescribed date and time. An acceptance of an
offer by the vendor constitutes an immediate contract, and in most cases, the
party tendering will have made their financial arrangements and have had a structural
survey carried out in advance.. Tenure:
Whether a property is freehold or leasehold. Title: The rights and liabilities
that attach to the property. Title
- Absolute: The highest form of tenure available. Title
- Abstract of: A summary of title documentation used in the Conveyancing of
unregistered properties to prove that the vendor has the right to sell.
Title Deeds: Legal documents describing the rights and liabilities that
attach to the property and prove ownership of property. Title
Report on: Solicitors' certificate confirming that the title of the property
is acceptable. A Lender must have one before an advance cheque for the mortgage
monies can be issued. Unadopted
Road: A road which has not been accepted by a Local Authority possibly as
a result of it not meeting the standards laid down (e.g. road surfaces, drainage
etc.). This indicates the possibility of a road charge liability if and when the
road is adopted. Under
Offer: When the vendor has accepted an offer for his home but contracts have
not yet been exchanged. Either party may still withdraw from the transaction.
The agent will often display a board saying "Sold subject to contract"
at this point Vacant
Possession: The previous occupants must vacate the property before you move
in, including any tenants. Vendor: The owner of the property to be sold. Writ
of Summons: Mode of commencing legal proceedings. The
above has been compiled to assist people with rental terminology. We advise that
this information is for guidance only and cannot be relied on for accuracy and
that you should consult a qualified legal representative if you require full explanation.
© jml Property Services June 2005
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