Glossary of Terms
We have included (in alphabetical order), some definitions of some of the legal and formal terms that you may come across when you are moving house.
Absolute title - This is one of the four classes of title that the Land Registry can give to freehold or leasehold land. It is the best of the four, and proves without doubt who owns the land
Abstract of Title - An abstract of title is a list of all of the documents that proves the title to the land
Administrative Area - The name given by the Land Registry to the area in which the property is situated. This is usually a County or District
Adverse possession - This is where someone has taken possession of a building or land without having the permission of the owner. If this has happened for 12 years or more, it may be possible for the occupier to claim a type of title to the land called a Possessory title
Agent - Usually this refers to an Estate Agent for either the seller or buyer. It can also be whoever is holding any monies by way of deposit on the property.
Agreement for Sale - A written and signed contract for the purchase and sale of property or Land
Assign - To transfer a right or an interest in property from one person to another
Assignee - The person to whom the right or interest in property has been transferred
Assignor - The person from whom the right or interest in property has been transferred
Bankers Draft - A cheque drawn by a bank. Although a bankers draft still needs to be paid through the ‘clearing system’ just like any other cheque and is not strictly ‘cleared funds’ we will usually treat a bankers draft as the equivalent of cash.
Beneficial Owner - The person or people who are entitled to receive the proceeds of sale for their own benefit and use.
Breach of Contract - Where one of the parties to a contract fails to keep to the terms and conditions of the agreement.
Bridleway - A path or route over which it is lawful to walk, ride a horse or to cycle
Building Regulation Approval - All building work in England and Wales is required to comply with the standards set out in the Building Regulations, even if the work that is done does not require planning permission. The local authority is responsible for inspecting and issuing any necessary building regulations approvals or consents, although the NHBC normally inspects any new house which is being built with the benefit of an NHBC guarantee. If work has been done on a property that would normally require building regulation consent, but there is no evidence of it, you should think carefully before going ahead with any purchase.
Caveat Emptor - This is a phrase taken from Latin which means ‘Let the buyer beware’
Certificate of Title - A standard form, usually provided by a Building Society, Bank or a Solicitor to request the mortgage or loan funds from the lender
Charge - A loan of money, payment of which is secured against land or property e.g. a Mortgage. A Charge is also the Land Registry name for the document creating a legal Charge
Chattels - Items of personal property such as furniture.
Client Account - The Bank account that we have which is only for money belonging to our clients. In order to safeguard your money, we keep client’s money completely separate from money belonging to the firm.
Completion Date - The date that the contract takes effect and ownership of the property passes from the seller to the buyer. This is also usually the day when the seller is obliged to move out of the property and the buyer moves in.
Completion Statement - This is a list of all of the financial transactions that we have dealt with on your behalf. It will give details of all of the monies that we have paid to others (to redeem a mortgage or pay Land Registry fees etc). It will also show whether there is a balance of money from the transaction that is to be paid to you, or whether there is a shortfall that you will need to make up before we can complete the transaction.
Conservation Area - An area or district that the Local Authority has decided is of special historical or architectural interest that needs to be preserved. Usually, special planning requirements apply if you wish to make alterations or repairs to property that is in a conservation area.
Contract - A written and signed agreement made between the buyer and seller. It will give full details of the property and all of the other terms and conditions of the sale that have been agreed.
Contract Race - Where someone selling property decides to deal with more than one prospective buyer, exchanging contracts with whoever is ready first.
Conveyance - The formal document that transfers freehold land or property from the seller to the buyer
Covenant - An agreement contained in a contract or a deed, where someone agrees to do, or not to do something
Curtilege - An old-fashioned legal term that usually refers to an area of land attached to a property; a garden or a driveway for instance. It can also mean anything contained within the boundary of the property. Another old-fashioned word with a similar meaning is Messuage
Deed - A formal document that is ‘executed’ by signature, with the signature being formally witnessed.
Defect in Title - Where good title to the property cannot be proven, for example, where a previous transfer deed is missing
Deposit - The money that is paid by the buyer when contracts are exchanged. The deposit is a part payment and a gesture of good faith that the buyer will complete the purchase. If the buyer does not go on to complete the purchase, the seller normally keeps the deposit.
Disbursement - Fees that must be paid to third parties such as Local Authorities (for searches) and Land Registries. We will normally make these payments on your behalf and recover them from you either as a payment on account before the payments are made or out of the proceeds of sale.
Easement - The right to use a piece of land that you do not own. If you have a right of way over a path or driveway that is owned by a neighbour, that is an easement.
Epitome of Title - A list of documents in date order that prove title to the property being sold.
Exchange of Contracts - Contracts must formally change hands in order to make them legally binding, that is, each solicitor hands a copy of the signed contract to the other side. This can be done in person or by post, but is now more usually done by telephone!
Fixtures and Fittings - Fixtures are items on a building or land that have become part of the building or land and are therefore included in the sale. They are items that are usually physically fixed to the building such as shelves or fitted wardrobes.
Fittings are items that are not attached to the building or land and are not subject to the sale unless they are specifically included, carpets and curtains would normally be thought of as fittings.
Flying Freehold - This usually refers to property that is directly above land that belongs to someone else, but gains a structural benefit from doing so, there are for example a number of houses with bedrooms built above next door’s garage.
Footpath - A path or route over which it is lawful for any member of the public to walk.
Freehold - A type of land ownership. The ownership usually lasts forever.
Full Title Guarantee - Where land or property is sold with a full title guarantee, the seller is confirming that he has the authority to sell it and that it is free from any charges or adverse rights other than those that he has previously disclosed to the buyer.
Further Advance - A second or additional amount lent to the buyer by the same lender.
Good Leasehold Title - This only applies to Leasehold Property and is a lower class of title than Absolute Leasehold. The Land Registry will normally award Good Leasehold Title where it has not seen the freehold title or a superior lease. It means that they cannot confirm that the Landlord had any authority to grant the lease.
Ground Rent - The rent payable for the lease of land
Incumbrance - A loan or mortgage secured against the property. This can also refer to other agreements or covenants that apply to the property.
Joint and Several - Where two or more people agree to be jointly and severally liable, they are agreeing that each person is liable for the repayment of the whole of a debt and not just a proportion of it.
Joint Tenants - The property is jointly owned so that all of the owners have an equal interest in the property. If one of the owners dies, then the survivors will automatically own the whole of the property. NOTE: See also Tenants in Common
Lease - A document of agreement by which a Landlord grants a Tenant the right to occupy property, usually in return for a capital payment or rent (or sometimes both!). The lease is usually granted for a fixed and specified time.
Leasehold Property - Property that is occupied under the terms of a lease.
Limited Title Guarantee - Where land or property is sold with a Limited title guarantee, the seller is confirming that he has the authority to sell it. However, the freedom from any charges or adverse rights are not as complete as if it were being sold with full title guarantee. You will need to discuss the limitations wit whoever is acting for you on the purchase of the property.
Managing Agent - A person appointed by the owner of a property (usually a landlord) to act on his behalf, usually in collection of rents or maintenance of the property
Mortgage - A deed by which the buyer of a property borrows money. The property is then taken as security for repayment of the loan.
Mortgage Advance - The money loaned under a Mortgage
Mortgage Offer - The formal document making an offer of a loan under a mortgage which will say how much the loan is for, the period and amount of repayment and all of the terms and conditions attached to the loan. The Mortgage offer will normally be sent by the lender to the borrower, with a copy to us.
Mortgagee - The lender who had made an advance of money under a mortgage. Usually a Bank or Building Society.
Mortgage Retention - A sum of money not released by the lender until certain conditions have been complied with, for example, they may require that essential repair work is carried out. The remainder of the loan will be released when the work has been completed.
Mortgagor - The person to whom money has been lent under a mortgage (the borrower)
NHBC Guarantee - This will usually relate to a new or fairly new property, where the builder is registered under the NHBC scheme, and which provides some insurance protection against structural defects in the property for 10 years after it was built.
Negative Equity - The shortfall in the amount that a property can be sold for and the amount of Mortgage or loan secured on it, for example, if someone is only able to sell their house for £80,000 but have a mortgage with an outstanding balance of £90,000 they have a Negative equity of £10,000
Office Copy - An official copy of a document held by a Public Office such as a Land Registry
Party Wall - The wall between two properties that both owners have rights over and responsibilities for.
Peppercorn Rent - A nominal rent, often only a few pounds per year
Perpetuity - For Ever. Sometimes properties are said to be ‘Held in perpetuity’
Planning Permission - Permission granted by a Local Authority to carry out improvements or developments on a property e.g. to build an extension.
Possessory Title - The Land Registry may give posessory title to a property where the existing owner has lost the title deeds or where ownership has been established through Adverse possession
Redeem - To pay off a loan or mortgage.
Redemption figure - The exact amount of money needed to pay off a mortgage or loan. The redemption figure will include any penalties that are due (for example if there are penalties in your mortgage for paying it off early). The amount of the redemption figure can also change from day to day as many lenders add Interest on a daily basis and the amount of the redemption figure can also be affected by exactly when you made your last mortgage payment.
Restrictive Covenant - A covenant that restricts the use of land, which is binding not only upon the current owner, but also upon future owners. A common restrictive covenant in new properties for example, is that the owners are not allowed to keep poultry!
Searches - We will ask for searches from the Local Authority, the Water Authority and a number of other organisations, so that we can find out everything possible about the property that you are buying. If you want to know more about the different types of searches we can obtain on your behalf, click on the following link:
Service Charge - A payment made by a tenant to a landlord or his agent for repairs or maintenance to a property.
Stamp Duty Land Tax - A tax payable to the Government on the completion of purchase of a property or land. The amount of duty depends on the purchase price of the property, although there are some areas in England and Wales where no Stamp Duty Land Tax is payable at all!
Successor in title - A subsequent owner of the property
Telegraphic Transfer - The electronic transfer of money from one Bank account to another. Usually used to send money from the buyers solicitors to the sellers solicitors on the day of completion. The system ensures same-day transfer of the money and it is a very quick and reliable method of transferring money. However, it is not an instant transfer.
Tenants in Common - Each owner owns a precise and specified share of the property and each is able to leave their share of the property by Will to whomever they choose. If you are to own the property as Tenants in Common, you must be specific about the proportions of ownership, that is, do you wish to own the property in equal shares or is one person to own a greater proportion than the other? e.g. Owner A is to own 60% and owner B is to own 40% NOTE: See also Joint Tenants
Title - The ownership of property.
Title Deeds - The formal documents that prove who owns the property.
Title indemnity policy - An insurance policy that covers the Owner and mortgage lender from any defects in title (up to the limits that will be set out in the policy)
Transfer - The document that transfers Title from one owner to another
Vacant Possession - Having no tenant or occupant