Residential conveyancing can be a confusing process. It involves lots of terminology that you may not be familiar with. This article sets out definitions for 100 of the most common terms involved in the conveyancing process that you may not have heard about before.
1. What is Conveyancing?
Conveyancing is the transfer of the legal title of a house or property from one person to another.
2. What is an AML Check?
An Anti Money Laundering (AML) check is an identity assessment, which consists of checking photo ID, address ID, and usually an electronic data search.
3. What is a Freehold Property?
Freehold is outright ownership of a property, usually a house (subject to any mortgage). There is no time limit to the period of ownership. It means you own both the property and the land on which it stands.
4. What is a Leasehold Property?
A leasehold means that you have a lease from the freeholder, and you can use the property for a number of years, depending on the length of the lease. Flats and maisonettes are usually leasehold. The leaseholder owns the flat, and the freeholder owns the roof and common parts.
5. What does ‘Share of Freehold’ mean?
Buying a share of freehold means that you will own a leasehold interest in the flat you are buying, plus a share of the freehold title. The freehold title is often held in the name of a company, and the flat owners will be the shareholders.
6. What is Registered Land?
Most land in the UK is registered with the land registry. The Land Registry keep a central record of all registered land, and each property is allocated its own Title Number.
7. What is Unregistered Land?
Some land in the UK has not yet been registered with The Land Registry. Proof of ownership of unregistered land is based on original historical title deeds. Upon a sale and other triggers, the land must now be registered with the Land Registry.
8. What is The Land Registry?
HM Land Registry registers land ownership in England and Wales and keeps a central record of land ownership.
9. What is a Property Information Form?
This is otherwise known as a PIF or TA6. It is a Law Society form completed in the sale process by the seller to provide information about the property to the buyer, for example, about boundaries and alterations. Information in this form must not be misrepresented.
10. What is a Leasehold Information Form?
This is otherwise known as a LIF or a TA7. It is a Law Society form completed by the seller to provide information about the leasehold interest and lease to the buyer. This could include details about the landlord and service charges payable. Information in this form must not be misrepresented.
11. What is a Fixtures and Fittings Form?
Otherwise known as a FFC or a TA10, this is a Law Society form. It is completed by the seller to provide the buyer with information about items that will be included in the sale, removed, or sold. It forms part of the contract.
12. What is a Memorandum of Sale?
This estate agent usually provides this document, setting out the heads of terms of the sale. It is evidence of intent and sets out the price agreed and approximate timescale, but is not a legally binding document.
13. What are Office Copy Entries?
This is an official copy of the title register from the Land Registry and is the modern equivalent of title deeds. It confirms the owner of the property and any rights, reservations, covenants and charges that the property may be subject to. It consists of the property, proprietorship and charges register.
14. What is an Office Copy Filed Plan?
The Office Copy Entries of the title will refer to the property being edged in red on the filed plan. The filed plan shows the extent of land registered under the Title Number. The buyer should check this to make sure it represents the property they believe to be buying.
15. What is a Title number?
The Land Registry allocates a unique title number to each property registered with it. This identifies the property from others and is shown at the top of the office copy entries.
16. What is a Contract/Agreement?
This is a legal agreement between the seller and the buyer for the purchase of the property. It sets out the main terms, such as the price. Once exchanged, this becomes legally binding.
17. What is a Full Title Guarantee?
This means that the person selling has the right to sell the property, and the owner will do what they reasonably can to give the buyer good title to the property.
18. What is a Limited Title Guarantee?
A person selling with a limited title guarantee usually has no personal knowledge of the property and cannot give a full title guarantee. The seller may be a personal representative or an attorney.
19. What is a Deposit?
A buyer usually pays a 10% deposit to a seller upon exchange of contracts. The seller’s solicitors hold this until the Completion Date.
20. What is an Exchange of Contracts?
This is the point at which the sale and purchase of a property become legally binding. The actual exchange between solicitors is dealt with through a telephone call. A Deposit is paid, and a Completion Date is set out in the Contract.
21. What is a Completion Date?
This is the date when you can move into your new home. Your solicitor sends the balance of the money to the seller’s solicitors. Once it is received, the keys will be released to you.
22. What is a Contract rate of interest?
The Contract usually refers to the Law Society’s interest rate from time to time. If the Completion Date is delayed for any reason, this is the level of interest payable by the party that is late in completing.
23. What is a Vacant Possession?
This means the seller or any previous occupant must have moved out of the property on or before the Completion Date. The property must be empty on completion, including of the seller’s belongings.
24. What are the Standard Conditions of Sale?
These are a set of standard conditions set by the Law Society to which most residential sale contracts are subject.
25. What is a Transfer Deed/TR1?
This is an important legal document in the Conveyancing process. It transfers ownership of the property from the seller to the buyer. It needs to be signed and witnessed.
26. What is The Property Register?
This describes the land in the title and confirms any rights that the property may benefit from, e.g. rights of way.
What is The Proprietorship Register?
This tells us the legal owners of the property and often the price paid when they purchased. It also confirms the class of title (with absolute title being the best form). It may also contain restrictions such as consent needed from a third party to any transfer or charge.
28. What is The Charges Register?
This tells us about any mortgages or financial charges that the property is subject to. It also outlines any Restrictive Covenants, i.e obligations that continue to burden the property.
29. What is a Restrictive Covenant?
These are conditions or obligations imposed on a property to determine what a homeowner can or cannot do with their house or land. They can be quite old, or new covenants could be imposed as part of a new build property. An example is that no alterations should be carried out without consent.
30. What are Additional Enquiries?
The buyer’s solicitor will raise a number of additional enquiries with the seller’s solicitors about matters arising from the property forms or other information. These are designed to glean as much information as the buyer may need to make an informed decision to proceed to exchange. Additional enquiries should be limited to those of a legal nature and not structural.
31. What is an EPC?
An Energy Performance Certificate measures the energy efficiency of a house. It is a legal requirement to have one for a property being sold or let. They are usually valid for ten years.
32. What are Searches?
Searches are enquiries submitted to various authorities by your solicitor to provide you with more information about the property you intend to purchase. These include searches with the Local Authority, a Drainage Search, and an Environmental Search.
33. What is a Local Authority Search?
This is an essential search carried out in the purchase process to find out vital information. For example, about planning applications against a property, whether the road is Adopted, and other vital information such as whether the property is in a Conservation Area or Listed.
34. What is a Drainage Search?
This is an essential search carried out in the purchase process to determine if the property is connected to the mains water supply and how it will be charged for its water supply.
35. What is an Environmental Search?
An environmental search is an essential search carried out in the purchase process to find out whether the property has been built on potentially contaminated land. It will usually also assess the flood risk and risk of Subsidence in the area.
36. What is a Chancel Search/Insurance?
If there’s a church near your property, a chancel repair search will find out if you may potentially be liable to contribute to the church’s repairs. These days, you can take out insurance for this risk instead of the search.
37. What is a Fensa Certificate?
A window installation company issues this certificate to the homeowner to confirm that any double glazed windows or doors that have been replaced comply with Building Regulations introduced in April 2002. It is required upon the sale of a property. You can obtain a duplicate if you do not have this.
38. What is a NIEIC Certificate?
An electrical contractor issues this certificate to confirm that any electrical work carried out after 2005 meets Building Regulation standards. It is required on the sale of a property. A duplicate can be obtained if you do not have this.
39. What is a Gas Safe Certificate?
A Gas Safe engineer issues this certificate. It confirms that any heat-producing gas appliance installed meets Building Regulations standards. Gas Safe replaced Corgi in 2009. You can obtain a duplicate if you do not have this.
40. What is Building Regulation Consent?
Building Regulations Consent may be needed for certain construction works or changes in a property, e.g. constructing an extension or taking down a structural wall. A copy of this will be required upon sale of a property for any such alterations.
41. What is Planning Permission?
Planning permission is the consent of the local authority to a building project. It is a formal document issued by the Council consenting to the development and may have conditions attached to it that need to be complied with. A copy of this is required upon sale of a property for any alterations carried out that require consent.
42. What is a General Permitted Development Order?
This is otherwise known as permitted development rights. Certain types of developments and home improvements do not require Planning Permission. It may not apply to certain properties in a Conservation Area, and certain properties will have this right removed. So, it is best to check with the local authority to see if this applies.
43. What is a Listed Building?
Listed Buildings have a special status that means that they must be preserved, usually because the property is of historical or architectural interest. Alterations to listed buildings will be strictly controlled.
44. What is an Adopted Road?
The local authority maintains an adopted road, and the public has a general right of way to pass over it.
45. What is a Smoke Control Order?
The local authority may impose a smoke control order over an area to cut air pollution. Only smokeless fuels will be permitted.
46. What is a Conservation Area?
This is an area of special architectural or historic interest, the character or appearance of which is desirable to preserve or enhance. Planning Permissions will be strictly controlled, and conservation area consent will be required for demolition works.
47. What is a Tree Preservation Order?
A TPO is an order made by the local authority to protect specific trees. It is a criminal offence to cut down, top, lop, or wilfully damage or destroy a tree subject to an order, without the local authority’s consent.
48. What is an S106 Agreement?
This is a legal agreement between a developer and local planning authority, usually about measures the developer needs to take to be granted Planning Permission. They often contain obligations to pay sums of money to the local authority or conditions to include affordable housing, for example.
49. What is Common Land?
This type of land is usually revealed in the Searches carried out by your solicitor. It can be owned by the Council, National Trust or be private. Certain activities can be carried out on common land, but you usually cannot drive across it without permission.
50. What is a Septic Tank?
A septic tank is an underground container in which waste matter and urine is disintegrated by bacteria. These tend to be used in rural areas not connected to the sewage system.
51. What is a Private Road?
A private road is owned and maintained by a private individual, organisation or company rather than the local authority. Usually, maintenance costs are payable to use and maintain a road over which a property owner has a right of way.
52. What is Radon?
This is a colourless and odourless gas that comes from rocks and soil. If the radon levels near your home are high, it can cause lung cancer.
53. What is an LPE1 form/managing agents pack?
When selling a Leasehold Property, this form is sent to the landlords or Managing Agents by your solicitor to collect vital information. This will be information concerning ground rent, service charges, insurance, and more.
54. What is a Managing Agent?
This is a company appointed by the freeholder of a property or a Management Company to manage the property, according to the terms of the lease. Terms will include provisions for collecting rent, service charges and arranging Buildings Insurance.
55. What is a Management Company?
A management company may be a party to a lease or own the freehold of a lease of which the leaseholders are shareholders. The management company will likely employ the services of a Managing Agent to manage the building. Sometimes a management company is set up to manage the common areas surrounding a freehold estate.
56. What is a Survey?
A survey is optional but important to have, as a surveyor will inspect the property and tell you about any defects before you purchase it. Given the amount of money you are spending on a property, a survey is worth the money. There are different types of survey, but the main two types are a Homebuyers Report or a Building Survey.
57. What is a Homebuyers Report?
A homebuyers report is not as in-depth a Survey as a Building Survey but highlights important problems with the structure of a property. This type of survey is usually acceptable for modern, conventional properties in a reasonable condition. A buyer arranges this directly with a surveyor.
58. What is a Building/Structural Survey?
A structural building survey is a detailed inspection report and provides an analysis of the property’s condition. This type of Survey is usually more appropriate for older and larger properties. It is usually more expensive than a Homebuyers Report. A buyer arranges this directly with a surveyor.
59. What is a Mortgage Valuation?
This is not actually a Survey – it is an assessment by the mortgage lender. A valuer will decide if the property is worth the money being paid for it and if the lender should lend you the money to buy it. A valuer may inspect the property or may simply do a desktop valuation.
60. What is Subsidence?
This is a problem that can occur to a property when the ground beneath it sinks, taking some of the house foundations with it. It puts a strain on the structure and can cause cracks to appear. Subsidence needs to be reported to the house insurer, and the property may need to be underpinned.
61. What is a Mortgage Offer?
This is an official offer from a lender stating that it will provide you with a mortgage. It will only be issued after the mortgage application process has been gone through, underwriters have approved you, and the valuation has been carried out.
62. What is an Interest Only Mortgage?
With an interest-only mortgage, you will be paying back to the lender the interest element of the mortgage, not any of the capital borrowed. This means your monthly payments will be less, but you will still owe back the original amount owed at the end of the term.
63. What is a Repayment Mortgage?
With a repayment mortgage, you will be paying back to the lender the capital and interest over an agreed term. By the end of the term, you will not owe any monies to the lender.
64. What is a Mortgage Deed?
This is a legally binding document that will get Registered at the Land Registry to protect the lender’s interest. It confirms that you are happy to proceed with the Mortgage Offer provided by the lender.
65. What is a Gifted Deposit?
This is when somebody, usually a parent, gifts the homebuyer a sum of money to assist them in buying a house. The important thing here is that the money is a gift with no agreement to repay. ID and proof of funds will also need to be checked.
66. What is Occupier’s Consent?
A lender usually requires this form when a mortgage is taken out, and an adult occupier intends to live in the property. By signing the form, the occupier will waive certain rights in favour of the mortgage lender.
67. What is Buildings Insurance?
This is an insurance policy that covers the financial cost of repairing damage to the physical structure of a property in the event of damage or theft, for instance. Buildings insurance needs to be put into place on Exchange of Contracts by the buyer. On a Leasehold Property, the freeholder usually insures the property.
68. What is Contents insurance?
This is an insurance policy that protects your belongings in the event of damage or theft, for instance. The policy covers the cost of replacing your belongings, not the property’s structure. On a Leasehold Property, a buyer generally needs to insure contents from completion.
69. What is Reinstatement Cost?
The reinstatement cost of a home is the amount it would cost to rebuild the property if it were totally destroyed. It is not the same as the value of a property. The Mortgage Valuation will usually include a reinstatement cost, which is the minimum amount a property should be insured for.
70. What is a Completion Statement?
This is a financial breakdown of your sale and purchase that is normally sent after Exchange of Contracts but before completion. It will detail monies coming in and out and any amount due from you prior to completion.
71. What is a Telegraphic Transfer/Chaps?
A chaps payment is usually a faster method of transferring a large sum of money from your bank account to your solicitor. It is usually a same-day transfer, and the bank may charge a fee to arrange the transfer.
72. What is a Bacs?
This is a method used to electronically transfer money from the bank to your solicitor. It typically takes three working days to receive payment, but there is usually no fee.
73. What is a Land Registry fee?
This is the fee charged by the Land Registry for registering and dealing with property. It includes registering the purchase into the buyer’s names and any mortgage.
74.What is a Redemption Statement?
This is a statement from your lender that outlines exactly what you owe to them to repay your mortgage fully.
75. What are Disbursements?
This is a payment made to a third party for a service, e.g. Local Authority Searches or a Land Registry fee.
76. What is a Report on Title?
This is a full report that the buyer’s solicitor will produce once they have all the Searches and checks against the property. It is a summary of all the important aspects of your purchase.
77. What is a Stock Transfer Form?
This is a legal document that transfers the shares of one person to another, usually in respect of a share in a Management Company.
78. What is Snagging?
This is a process of checking a new build home for minor faults or small unfinished jobs to be rectified. A surveyor can carry out a snagging survey.
79. What is Retention?
This is a sum of money held back from the sale proceeds on the Completion Date and retained by one of the solicitors until some action or further information is obtained. For instance, on a Leasehold Property, a sum of money may be held until the final service charges are established for the year-end in case there is a deficit.
80. What is an Allowance?
This is a sum of money held back from the purchase price by the buyer to pay for something to do with the purchase, e.g. repair work or an Indemnity Insurance policy. It has the same effect as reducing the price, and depending on the amount and reason, it may or may not have to be reported to a lender.
81. What is Apportionment?
This is the term used when dividing outgoing costs on a property between a seller and a buyer. For example, on a Leasehold Property, the service charge will be apportioned between the seller and the buyer from the Completion Date to the date they have been paid.
82. What is a Statutory Declaration?
This is a formal statement affirming that something is true to the best of the knowledge of the person making the statement. It can be used, for example, to confirm a right of way has been used over a Private Road.
83. What is Indemnity Insurance?
This type of insurance policy protects a buyer if there is a defect with the property they are buying that could result in a dispute or legal action. It is a one-off payment and is used instead of rectifying a defect, e.g. lack of right of way or lack of Building Regulations Consent.
84. What is Stamp Duty Land Tax?
You must usually pay SDLT if you buy a property or land over £125,000. Different rates apply to First Time Buyers or investors, and you will need to speak to your solicitor or tax adviser to establish the amount due. You will sign an LTR form confirming the amount of stamp duty due.
85. What is a First Time Buyer?
This is someone who has never owned a freehold or leasehold interest in a property and is purchasing their main residence. If buying jointly, this must apply to both parties.
86. What is Multiple Dwellings Relief?
This is a stamp duty relief that is available if you are purchasing more than one dwelling. It can reduce the rate payable by taking the average value of the properties and multiplying it by the number of dwellings. You will need to speak to your solicitor or tax adviser to establish the amount due.
87. What is Higher Rate Stamp Duty?
Higher SDLT rates will be payable if you buy a residential property which is an additional property. This applies whether your current property is in the UK or anywhere else in the world. You will need to speak to your solicitor or tax adviser to establish the amount due.
88. What is a Remortgage?
This is a process whereby you take out a new mortgage on a property you own to replace your existing mortgage. It could be with the same lender or a different lender.
89. What are Joint Tenants?
This is where two or more people own a property together and, upon the death of either of them, the property automatically passes to the survivor. A joint tenancy can be severed to create a tenancy in common.
90. What are Tenants in Common?
This is where two or more people own a property together, but each person has a defined share in the property, which can be left under the terms of that person’s will to someone else. The shares can be defined in a Declaration of Trust.
91. What is an OS1 Priority Search?
This is an HM Land Registry search carried out by your solicitor immediately before completion. It gives a period of “priority” for your land registry application and confirms that no entries have been made on the seller’s title since the date of the Office Copy Entries provided.
92. What is a Bankruptcy Search?
Your solicitor carries this out prior to the Completion Date to ensure you are not bankrupt. It is carried out to protect the lender.
93. What is the CML Handbook/UK Finance Mortgage Lenders Handbook?
This provides standard instructions for conveyancers acting on behalf of lenders in Conveyancing transactions.
94. What is a Declaration of Trust?
If you purchase a property as Tenants in Common, you may want to enter into a declaration of trust to confirm the shares in which you hold the property.
95. What is a Transfer of Equity?
This is when a jointly owned property is transferred to a single one of those owners, or a single owner transfers a property they own into joint names. Basically, it is the process of altering the ownership of a property.
96. What is a Deed of Variation?
This is a legal document that changes the terms of another legal document, e.g. a deed of variation of a lease may change the terms of the lease, such as the amount of ground rent.
97. What are Cleared Funds?
These are funds that can be used immediately by your solicitor. If you send a cheque, this could take several days to clear. A direct bank transfer is usually cleared funds. Funds must be cleared to be used for completion.
98. What is a Keys Undertaking?
This is a document signed by the buyer when a seller allows them access to the property they are buying prior to completion, e.g. to carry out works or decorate.
99. What is a CQS?
The Law Society’s Conveyancing Quality Scheme provides a recognised quality standard for residential Conveyancing practices.
100. What is a Contract/AgreemWhat is Gazumping?
This is when an offer is accepted on a property, but the seller then accepts a better offer from another buyer before Exchange of Contracts.