Conveyancing Transactions – Legal Jargon Explained
Chartered surveyor
A Royal Institute of Chartered Surveyors (RICS) surveyor who is qualified to carry out a survey on a property.
Completion date
The date on which the ownership of the property passes from buyer to seller. Usually this happens some time after exchange, though it is possible to have simultaneous exchange and completion.
Contract
The contract sets out the terms of the sale. It will be drawn up by the seller’s solicitor, but will be subject to negotiations before being agreed.
Deposit
Not to be confused with the deposit that you agree to put down when you take out a mortgage. In the context of conveyancing, the deposit is the amount (usually 5 – 10%) paid by the buyer to the seller upon exchange of contracts. Once exchange has taken place the contract is a legally binding document and if the buyer fails to complete then they may forfeit their deposit (unless they were misled into signing the contract).
Disbursements
This is the fancy terms for “expenses” used by solicitors. Disbursements will include things like search fees and land registry fees. Check that disbursements are included in your quote (most are known in advance) otherwise your bill could be a lot higher than you expect.
Environmental search
A search carried out to check whether the property may be affected by things like flooding, landfill, waste disposal, contaminated land, etc.
Exchange
The swapping of signed contracts between buyer and seller. Once exchange has taken place the contract is legally binding and the buyer may lose their deposit they don’t complete (unless they were misled into signing).
Fixtures, fittings and contents form
This sets out what fixtures and fittings are included in the sale, which ones may be included at a specified price and which ones are negotiable. It can either be included in the HIP or sent after an offer has been made. It is prepared by the seller.
Freehold
When the property comes with the land on which it is built.
HIP
Home Information Pack containing information and search results for the property. HIPs are now compulsory and you are required to have a HIP before you market your property (some documents can be added up to 28 days after marketing starts).
Indemnity contribution
Solicitors must take out insurance to protect their clients in the event of mistakes or fraud when dealing with their case. This is usually charged to the client.
Land Registry
The Land Registry record who owns what land. When a property changes hands the buyer’s solicitor will make sure that this transfer is recorded at the Land Registry.
Leasehold
A leasehold property does not include the land on which it stands, which is owned by the freeholder. Once the lease expires ownership of the property goes back to the leaseholder.
Local authority search
A search that asks the local authority about things that may affect the property, such as: whether the road the property stands on is maintained by the council; planning applications that may affect the property; possible planning restrictions; and rights of way.
It’s important to check what area the local authority search covers. If it only covers a limited area you may want to ask for additional enquiries.
Mortgage
The loan from your bank used to buy a property. Because the mortgage is linked to the property being bought the property cannot be sold until the mortgage is paid off.
Mortgage deed
This is a legal document that gives the mortgage lender rights over the property while the mortgage is being repaid.
Mortgage fees
Fees charged (usually to the client) by their solicitors for acting on behalf of their client’s bank or building society.
Mortgage valuation
Before your bank or building society before they will lend on a property they will have a valuation survey dont. This is to make sure that the property is worth at least the amount they are proposing to lend. It is not the same as a property survey carried out by a Chartered Surveyor – see Surveys.
Property information form
A questionnaire covering basic information about the property. The seller completes this and is legally obliged to answer the questions honestly.
Redemption fee
Banks will often charge a redemption fee for paying off a mortgage early. Sometimes this only applies for a certain number of years after the mortgage is taken out.
Redemption payment
The payment made in order to pay off the outstanding balance of a mortgage.
SDLT
Stamp Duty Land Tax – see Stamp Duty
Stamp duty
Also known as Stamp Duty Land Tax (SDLT). This is the tax charged by the government for buying a property and is usually paid by the buyer. The amount varies depending on the value of the property.
Surveys
Not the same as the valuation survey carried out by a lender. A property survey is carried out by a Chartered Surveyor and looks at things like the structure of the building and its value. There are different levels of surveys and their costs vary greatly.
Title deeds
The ownership documents for a property which also set out any rights or obligations affecting the property. If the property is mortgaged then they will be held by the lender until it is paid off.
Transfer deed
Known also as a TR1 (its official form number) this transfers ownership of the property. It is prepared by the buyer’s solicitor after completion and sent to the Land Registry so the transfer can be recorded.
Water and drainage search
A search of the properties water and drainage supplies. It will check whether these are connected to the main water supply and sewerage system and how the property is billed for these services.
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