Glossary of terms for property transactions

Absolute Title
This is the best classification of title held at the Land Registry and may relate to both freehold and leasehold land held by an individual. Mortgagees (see below) will invariably insist on Absolute Title.

Adverse Possession
If a person takes possession of and occupies land for a period in excess of 12 years without the permission of the owner, adverse possession "may" be obtained. An application would need to be lodged at the Land Registry for a possessory title to the land. This is a complicated legal procedure and you must refer to a lawyer for elaboration on this point.

Apportionment
It is usual when dealing with leasehold properties to apportion rent and service charge on completion of the sale. This may be summarised as an allocation of items (i.e. ground rent/service charge) between the buyers and sellers.

Assign
Used to describe the situation where an individual gives/transfers their rights over an interest in land (leasehold or freehold) to someone else. The person transferring is the Assignee.
The person to who the right or land is transferred, is the Assignor. The document between them is called the Assignment.

Attorney
Describes an individual who acts by a “Power of Attorney” on behalf of an individual and/or company (see below).

Banker’s Draft
A cheque which is drawn by a Bank or Building Society and signed by the Manager (or senior representative) of the Bank. Although it is generally accepted as cleared funds, it is treated the same way as a cheque and must go through the clearing system with your solicitor’s bank.

Bankrupt
A person who is unable to meet his debts and is declared bankrupt following Court proceedings in either the High Court or County Court.

Building Regulation
If you build or extend on your home or the surrounding
land, you may not always need Planning Permission.

Approval/Consent
Building Regulation approval may be required to ensure that you comply with the standards laid down by the Building Regulation Acts, in force at the time you build/extend. Approval is obtained from the Local Authority responsible for the area in which the property is situated i.e. Wimbledon is in the London Borough of Merton.

Caveat Emptor
This usual conveyancing maxim means “let the Buyer beware!”.

Certified Copy
This is an official copy of an original document. A solicitor may certify the document as “a true copy of the original” only if he/she has seen and copied the original.

CHAPS
Clearing House Automated Payments System. Most Banks and Building Societies have access to this system. The system describes a process whereby funds are transferred from one Bank/Building Society account to another by electronic credit transfer. The system is intended to be a same day service provided instructions are received from the sender in good time.

Charge
Another word for a Mortgage which is an advance of money by way of loan from a Bank, Building Society or private individual. The Chargee is the Mortgagee/Lender and the Chargor is the Mortgagor/Borrower. The debt is owed by the Chargor to the Chargee for a specified period of years called a "term".

Completion Date
This date is agreed at Exchange of Contracts and is usually some time after Exchange of Contracts. This is the date upon which the seller has agreed to vacate the premises and transfer the property to the Buyer. It is the day when the keys are handed over.

Contract
An agreement between the Seller and Buyer. It contains the terms agreed between the parties and usually has a fixtures fittings and contents form attached. This additional form contains a list of those items of furniture etc which are being sold/bought in addition to the basic building itself and included in the purchase price. Once the agreement is signed and exchanged by both parties, the Seller enters into a binding agreement to sell and the Buyer enters into a binding agreement to purchase/buy.

Contract Race
To describe a situation where a Seller sends out a contract and draft documentation to more than one Buyer. The Seller will proceed with whichever Buyer is in a position to exchange contracts first.

Contract Rate
The rate of interest applicable under an Agreement/Contract.

Deed
A document to be signed by an individual in the presence of a witness and satisfying various legal formalities which make it a Deed.

Deposit
An amount of money which must be paid at the time of exchange of contracts (or to reserve an option to purchase). It may be between 5% or 10% of the purchase price although 10% is normal. In order for a solicitor to exchange contracts, the deposit must be “cleared funds”. If the Buyer pays less than 10% and is unable to complete the transaction he/she forfeits the full 10% deposit and the Seller can keep it together with interest and any other losses incurred as a result of late completion.

Disbursement
An “out of pocket” expense incurred by a solicitor repaid by the client. For instance, a Local Authority Search Fee, Thames Water Search Fee, Landlord’s Registration Fee, Stamp Duty etc.

Engrossment
A legal document in its final form with no amendments that is ready for signature by all parties. Any amendments are to be initialled.

Exchange of Contracts
The point at which the Buyer enters into the agreement to buy and the Seller to sell. Physical exchange of contracts takes place in accordance with various Law Society Formulas and may either be by telephone or post.

Execution Refers
to the process of signing a Deed with the necessary legal formalities which make it valid in law.

Fixtures, Fittings
Fixtures represent items which have become part of the land.

And Contents List
Fittings are items which may be removed. The list represents the items the Seller has agreed to sell or leave at the property at completion.

Freehold
A legal estate of land, buildings or property, which lasts forever. The person who owns the freehold interest is referred to as a freeholder.

Ground Rent
Rent payable per annum to a Landlord in respect of a long Lease of land.

Joint and Several
When two or more parties to an agreement are declared to be jointly and severally liable or bound by a particular thing. They declare that they accept liability for the whole or part of that particular aspect.

Joint Tenants
Property in England and Wales may be owned jointly either as joint tenants or tenants in common (see later). If the land is owned as joint tenants both parties own the whole of the beneficial interest which means that the property passes by way of survivorship upon the death of one party to the other.

Lease
A document granted by an individual or company to an individual or company allowing the second party to occupy property for a fixed period. If the lease is for more than 21 years it is registered at the Land Registry. The property under which an individual occupies with a lease is referred to as “leasehold property”. The Landlord is the “Lessor” and the tenant is the “Lessee”.

License
Permission by one party to another to enter, use, occupy premises/land on specified terms. The person granting the License is the Licensor. The person to whom the License has been granted is the Licensee. The licensee has no interest in the actual property/land occupied.

Local Authority Search
Search carried out by a Local Authority in which the property is situated. Sometimes a Personal Search may be carried out which may be returned to the solicitor within 24 hours. Personal searches are not often accepted by Banks and Building Societies who may lend by way of Mortgage/Charge.

Managing Agents
An individual or company appointed by either the Landlord and/or Lessee of the premises to manage the property on its behalf.

MIRAS
Mortgage Interest Relief at Source (discontinued after April 2000).

Mortgage
The same as a Charge (see above).

Mortgage Instructions Instructions received by a Solicitor from a Mortgagee (Bank/Building Society). The document confirms to the Solicitor the terms upon which the Solicitor is to act on the Mortgagee's behalf. Mortgage instructions must be received before exchange of contracts.

Mortgage Offer
Offer sent by Mortgagee to Mortgagor. The offer will be accepted once the Mortgagor has signed and returned it to the Mortgagee. The Lender who advances the money is the Mortgagee, the person who receives it is the Mortgagor (these terms are synonymous with Charge, Chargee and Chargor).

Office Copies
An official copy of the entries of a register held at HM Land Registry.

Peppercorn Rent
Is a nominal rent which is less than one pence.

Perpetuity
Forever.

Power of Attorney
Document made by Deed, which authorises the Attorney to do something on behalf of the donor of the power (used where an individual may sign a Transfer on behalf of someone who is out of the country).

Quarter date/days
When you buy an Assignment of a Lease (see definition above), a document will state the days upon which rent and/or service charges are payable. This is usually referred to as the quarter days namely:

• 25th March - Lady Day
• 24th June - Midsummer Day
• 29th September - Michaelmas
• 25th December - Christmas

Rack Rent
Commercial transactions referred to as “open market rent”.

Redeem
To repay a Mortgage/Charge or other debt.

Redemption Figure
The sum required to redeem the Mortgage and confirmed by the Mortgagee (see above).

Redemption Statement
Statement supplied by the Mortgagee/Lender showing the amount required to redeem a Mortgage as at a particular date. In conveyancing transactions this is usually the completion date of the sale.

Reinstatement Value
The sum specified by the property valuer as the sum required to re-build the property in question. This differs from the Valuation.

Rent
Payment made by Tenant/Lessee to Landlord/Lessor in return for the use of the Landlord’s property held under a Lease/License.

Report on Title/ Certificate of Title
Standard form to be completed by a Solicitor to Certificate of Title confirm mortgage instructions and to be sent to the Mortgage Lender. The Lender upon receipt will act upon it to forward the funds required under the Mortgage.

Restrictive Covenant
A promise which restricts the use of land in a particular way for the benefit of land next to it (dominant tenement).

Retention
Some mortgages have a retention in respect of works to be carried out on the property. The retention is usually paid within a specified period after the works have been carried out.

Service Charge
This is a payment made by a Tenant/Lessee in return for work carried out by the Landlord in respect of the Landlord’s covenants (promises) under a Lease/License for example the promise to repair and/or maintain the property.

Stamp Duty
A tax payable on a Conveyance/Transfer/Assignment of an interest in land. Stamp Duty is payable if you are purchasing a property for more than £60,000. Stamp Duty will only be payable on transactions proceeding at a price of less than £60,000. If the sale or part of it relates to a larger transaction or series of transactions in which the aggregate amount is £60,000 or more.

The rate of duty is currently:

• 1% between £120,001 and £250,000
• 3% between £250,001 and £500,000
• 4% over £500,000

Please note with the grant of a new Lease, Stamp Duty is also payable on the annual rent in addition to the premium and your solicitor will advise.

Subsidence
Damage to building caused by movement of land.

Sum Assured
The value of an insurance policy.

Telegraphic Transfer
Please see CHAPS earlier.

Tenant
Another word used for Lessee.

Tenants in Common
If the property is held as “tenants in common”, each hold in separate shares and the beneficial interest may pass by way of Will or intestacy to any person.

Term of Years
Refers to the length of the Lease, License/Tenancy Agreement.

Title
Proof of ownership of land.

Title Deeds
The Deeds and documents which confirm or prove the ownership of land.

Title Number
The reference held by the Land Registry in respect of each registered title. This is a unique number and is often prefixed by letters.

Transfer
The document by which title is transferred from one individual to another. This document is also referred to as an Assignment and Conveyance (see above).

Tree Preservation
Order All Local Authorities within London have been made subject to Tree Preservation Orders which prevents trees from being cut down or lopped without the Local Authority’s permission. It does not relate to all trees and those trees which are the subject of an order will be specified in the results of the Local Authority Search.

Vacant Possession
On completion of any transaction, vacant possession is usually given. This will be confirmed and specified in the Contract. It is where the property has no tenants or occupiers.

Vendor
The person who is selling the property.

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