When buying or selling a property it can seem like there is a lot of jargon. We explain some of the terms you might come across.
Caveat emptor means it is the buyer’s duty to ensure they are happy with the purchase. This is why their solicitor takes time with preliminary enquiries (initial questions) which are sent to the vendor’s solicitor and checks things such as who the legal owner is through the title deeds and abstract title and arranges a survey (a report on the physical condition of the property). The solicitor may, for example, discover a defect in title which means that a third party may have a legal claim to the property.
Each solicitor performs an identity check on new clients called a money laundering check.
Property can be co-owned under a joint tenancy – when one of the owners dies their share automatically passes to the surviving owner – or a tenants in common agreement, where their share does not automatically pass to the surviving owner.
A deposit (normally 10% of the purchase price) is paid during the purchase of a property.
Gazumping is where a vendor sells to another buyer at a higher price after accepting an offer from someone else. Gazundering is where the buyer lowers a previously agreed price.
Covenant, conservation area, listed building or tree preservation order are all terms relating to restrictions or obligations that may affect what can or can’t be done with a property or its land. An easement is a right over adjoining land.
Exchange of contracts is when a house sale or purchase becomes legally binding and the terms of the transaction are detailed in the contract.
A contract race is where more than one prospective buyer is seeking to purchase the property and favours the purchaser who can exchange contracts first.
On the completion date, ownership of the property passes from vendor to buyer. The deed which transfers ownership is signed. The solicitor sends a certificate of title to the mortgage lender ahead of the release of the money. Previous mortgages are redeemed (repaid) and the monies for the purchase are transferred to the buyer. The banks normally charge a telegraphic transfer fee for this. If funds are not immediately available, a bridging loan is required to “bridge the gap”.
The solicitor also pays out for various items on the client’s behalf. These are known as disbursements and include items such as Land Registry fees for recording the title of the land and stamp duty – a tax when purchasing a residential property above £125,000.
Sometimes the seller will need indemnity insurance to cover them for a possible risk to do with the property or a retention of money is agreed until certain conditions are met.