These explanations are here to help you to understand the conveyancing process in England & Wales – and we have simplified these definitions in order to make them more accessible to those without legal training. This page will be continuously evolving as more explanations and links are added. Please click on a link below to go to the explanation of the term.
Please note that this is not meant to be legal advice that individuals can rely solely upon. Proper legal advice can only be given by a solicitor on an individual basis when all the facts and circumstances are known.
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Additional Enquiries Even with sellers’ solicitors usually supplying a Property Information Form it will still be necessary for many additional points to be raised by a buyer’s solicitor. These could be points which are quite technical, but nevertheless important to make sure that there would be no problems selling it and that it complies with various requirements in the CML Handbook. Also there are many points which most buyers will want to know about, and where information has not been given. Sometimes not all relevant documents have been supplied and these have to be requested. If we are acting for a seller we will have to deal with the points raised by the buyer’s solicitors and will normally send you their queries with suggested replies for you to check and, where relevant, asking for more information so that we can deal with them. Apartment Fashionable name for a Flat, used by builders subtly to suggest greater value. Approval of Draft Contract Traditionally, a buyer’s solicitor would wait until all his queries had been dealt with before sending the draft contract back approved, perhaps with some amendments. This used to mean that the buyer was virtually ready to proceed to exchange of contracts. Nowadays, this is often dealt with at an earlier stage. This is because it is usually the case that queries about all the other matters that need to be checked have nothing to do with the wording of the draft contract. If we are acting for you on a purchase, we will try to approve the draft contract at as early stage as we can, to get it out of the way. That does not mean that we will be ready to proceed. Other queries will often still need to be dealt with, search results obtained, and mortgage instructions received. Assumptions People involved in a Conveyancing Chain often make these! There can be assumptions about how long the chain is, and the readiness or otherwise of others in the chain to proceed to an Exchange of Contracts which can be based upon incomplete information. These assumptions can arise because other people don’t continually check things like dates with their solicitors. How often have we been told something like “Everybody in the Chain has agreed to move on the 29th…” When checked it turns out either not true or not possible. So, please don’t make ASSUMPTIONS, but, when people tell you things, ask critical questions, and get them to check with their solicitors or others involved that what they are saying is true/possible. Back to Top of Page or use BACK button in your browser to return to where you were!or use BACK button in your browser to return to where you were! Building Regulations. Consent under these is frequently confused with planning permission. Some work requires to comply with both sets of rules, other kinds of work only Building Regulations. Typically, for instance, a loft conversion where there are no dormer windows, will need to comply with Building Regulations, but not Planning. A small domestic garage in a back garden that backs onto a highway would need Planning Permission but might not need to comply with Building Regulations. These regulations are concerned with the quality and type of materials used, the method of construction, safety of the building itself, fire resistance and prevention of heat loss, etc. The regulations are quite technical and as solicitors we often cannot advise about whether particular work is covered by the regulations or complies with them. Enforcement action can only be taken if work has taken place that does not comply. The presence of an approval of plans means that if the work is carried out in accordance with them it will meet the regulations. A Completion Certificate certifies that the work actually does comply because it has been checked. These will not exist for work carried out before the early 1990s. Sometimes work is done following a Building Notice, which simply tells the Council what is going to be done. The building inspector inspects and checks compliance and eventually issues a completion certificate, but there is no initial approval of plans. Since April 2002 some gas installations have had to have certificates from a CORGI registered installer and double glazing either has to be checked by the building inspector or a FENSA Certificate issued by the installer. Since the beginning of 2005 most electrical work has required to comply and a certificate of compliance has to be issued by an electrician. Building Work. The meaning of this is pretty obvious, but we have included it to remind you that on a purchase or remortgage we have to check that there is no likelihood that action will be taken against you because any work carried out in the past does not have the right permissions, etc. Because of an unfortunate case in 2000, solicitors often have to look into internal works that would have required consent under the building regulations. This can include the removal of walls between rooms and loft conversions. Whether or not permissions etc exist is a factor in deciding if you are happy with the structural condition of the property. However, to take extreme examples, some work carried out 50 years ago in accordance with the rules that applied at the time, may collapse, and something constructed recently in breach of the regulations, may stand for hundreds of years. As solicitors, we are primarily concerned with the legal aspects of the property, and not its structural condition, which is why it is important that, when buying a property, you take advice from a surveyor. Much building work, particularly that affecting the exterior of a building, will require Planning Permission. The law of Town & Country Planning can be quite complicated and we cannot explain it all here, but there is a little more information below under planning permission and permitted development. In some cases Building Work will require consent under Restrictive Covenants even if neither Planning nor Building Regulation consent is necessary. On a sale we will have to deal with queries about work carried out in the past (not just during your ownership). The main point for a Seller to remember is not to contact anybody who can enforce any of these (e.g. the Council) without first contacting us about it. Back to Top of Page or use BACK button in your browser to return to where you were! Certificate of Title We have to send one of these duly completed to the mortgage lender in order to obtain mortgage funds. Lenders vary but typically want 5-10 working days in order to send us the money in time before completion. By signing this certificate we confirm that all the detailed legal requirements of the lender have been or will be complied with. Some lenders want other documents such as copies of insurance information sent at the same time. Chain In England and Wales people commonly want to be able to move from one house to another on the same day. They will usually be relying on the proceeds of the sale of a property, particularly or completely to fund their onward purchase. This means that a Chain can arise, where say A is buying from B, who is buying from C, who is buying from D, and so on. In our view this is a major cause of delays in moving house. The flow of information up and down a chain is usually patchy, incomplete and frequently out of date. People can make unwarranted Assumptions about e.g. proposed completion dates and then arrange removals, ordering carpets and booking holidays, based upon these. Please do not do this. Chancel Repair Liability Certain land (including any buildings on it) is affected with a liability to contribute towards the repair of the Chancel (usually the area including the choir stalls and the altar) of a local medieval church. At the moment such liability does not have to be shown on the Land Registry entries for the property. Sometimes we do a search about this and the result of this can be that insurance should be taken out in respect of a possible liability. Normally this is now no longer necessary, as the insurance we can now arrange against the risk is cheaper than the cost of the basic search. This is quite complicated, so there is a longer explanation of this at a page about Chancel Repair Liability CML Handbook The Council Of Mortgage Lenders Handbook is the document that sets out all the detailed points that solicitors have to check about a property that is to be mortgaged. Even if you are not getting a mortgage to buy your property your solicitor should check to make sure that there will not be a problem when you sell. Lenders want a no risk position for themselves, and sometimes the details are a little “over the top”, but, because of Lender Bureaucracy, it is normally quicker to do what is necessary to satisfy their requirements than to seek consent to ignore the point. In many cases a private client, when the particular point is explained, might well be prepared to accept the small risk that might be involved, but we cannot so easily give such explanations and obtain quick and sensible replies from lenders. Completion. This is when the buyer’s solicitors pay the balance of the purchase price less whatever Deposit has already been paid and the seller’s solicitors provide the Transfer Deed (or if a new flat is being purchased, the Lease) signed by the seller. Years ago solicitors travelled to each other’s offices with banker’s drafts, and checked the documents as they were handed over, but this rarely happens now. The money is sent by electronic bank transfer and the documents by post or document exchange. The buyers and sellers themselves do not have to come to their solicitors’ offices on the day, unless a last minute signature is needed, which is something we try to avoid! There is some more detail about completion on a purchase on a page about it: Completion of a Purchase Conservatory. For most legal purposes the construction of a conservatory is the same as any other extension on a property. Depending on various factors such as size, location, and whether or not other building work has already taken place at the property, they will very often not require Planning Permission because it is Permitted Development, but this is not always the case, and before having one built you should check with the Council about your particular property. DO NOT RELY on what a conservatory salesman tells you! A conservatory will often be exempt from the Building Regulations. For this, to start with it must be considered as a conservatory, which means having “…not less than three-quarters of the area of its roof and not less that one-half of the area of its external walls made of translucent material”. It must not have a floor area of more than 30 square metres, the glazing itself must comply with certain safety requirements, and the conservatory must be capable of being insulated from the rest of the house by closable doors. There are other detailed requirements for the exemption to apply. In some cases a Conservatory will require consent under Restrictive Covenants even if neither Planning nor Building Regulation consent is necessary. Locally in Eastleigh this is the case in Boyatt Wood but there are many other areas all over the country where a similar point applies. Covenants. These are obligations in set out in a deed usually relating to a property. They can be either Positive Covenants or Restrictive Covenants and the legal rules about them are different. The distinction is the reason why flats and maisonettes are normally Leasehold. Back to Top of Page or use BACK button in your browser to return to where you were! Deeds. A deed is a legal document that has been signed in certain way in the presence of a witness. If a property does not have a Registered Title we have to show proof of ownership by tracing back through earlier deeds to a “good root of title”, which is generally a conveyance for value that is more than 15 years old. This means that for any properties that are not yet registered, it is very important to have the deeds if they are to be sold. These deeds were typically kept in an envelope or folder, which would also have contained a number of other documents, which were not deeds, but were sometimes almost as important, and since registration of title, are sometimes a lot more important than the actual deeds. Historically a whole pack of such documents was referred to as “the deeds”. Mortgage Lenders would keep Deeds as their security and only release them when the mortgage was paid off. Since October 2003 this has been less important and they require much less in the way of documents now, which saves costs of storage. Sometimes the property owners will be sent original documents that the lender does not require. These should be kept safely as they can be very important. Once a property has become registered, and the vast majority are now, proof of ownership is obtained by downloading official copies of the Register for the property from the Land Registry website. From our point of view now, a Deeds Pack of a registered property will contain three categories of documents:
Apart from original or certified copy lease, the second category are actually the most important in practice these days. The average lay person will not know what is and what isn’t bin material, so we do not advise you throw anything away. A tatty photocopy can be very important and its existence can sometimes save hundreds of pounds or more in replacing it or providing a legally acceptable equivalent. Deeds Store. If you have paid off your mortgage some lenders will offer to keep your Deeds for you and this facility is called “Deeds Store” or some similar name. They will tell you that if you ever want another loan, then the formalities will be reduced. This is because the lender’s mortgage security remains registered at the Land Registry. If you are selling a property please do not pay the nominal £1 or whatever and try to collect the “Deeds” from the lender. This causes a lot of unnecessary work trying to locate them in a kind of limbo between the lender and the Land Registry. It is much simpler for you to tell us the old mortgage account number. We will request the Deeds as if you still had a mortgage and then when the sale completes we will pay the nominal sum out of the sale proceeds and obtain a discharge in the usual way. Deposit. A lot of people think of the deposit as the difference between the purchase price and the mortgage advance. However, solicitors use the term to refer to the amount that is handed over on exchange of contractsto bind the parties to the deal. This is never more than 10% of the purchase price and is usually negotiable, down to 5% and often a little less. If you are getting a 100% mortgage on a purchase, particularly if your seller is buying another property, he will still want you to find a reasonable sum as a deposit to show you are serious. Often people will have saved up some money to cover costs and stamp duty, and this figure can be used at exchange of contracts. If you really cannot find anything as a deposit there are ways of getting round this, which we can explain if necessary. When you are buying and selling we can usually use the buyer’s deposit on your forward purchase. For more explanation about Deposits, particularly where there is a linked sale and purchase click here. Draft Contract This document sets out the details of the seller(s), what is being sold, and for how much. The document will refer to a set of standard contract conditions which deal with all kinds of eventualities and unlikely circumstances. It is our job, as far as possible, to prevent disputes arising and to seek to agree wording to deal with the various situations that can arise. Seller’s solicitors will generally include wording in their draft contract that amends the standard contract conditions to give their seller client more protection. Some of these amendments will be reasonable, some won’t. If we are acting for a buyer we will seek to strike out the most unreasonable clauses. The important thing to understand is that the amendments to the contract wording will only affect anybody in a very small number of cases. If we think a point is significant, we will explain it to you and seek your instructions. In many cases the chances are so small that a lot of clients would dismiss the risk altogether. Therefore, unless we tell you about a specific point, please do not worry about the contract wording. Much is often made of the process of approval of the draft contract, but it is usually more important that we are satisfied that ownership of the property is not going to result in any legal problems for you or for your mortgage lender. Draft Contract Package This is a shorthand term for the package of documents generally sent out with the draft contract. The pack will normally include:
Drainage Search. See Water and Drainage Search Back to Top of Page or use BACK button in your browser to return to where you were! Easement. A right over the property of another, e.g. for access or to use drains running under it. Energy Performance Certificate. A document produced by a domestic energy inspector showing in very general terms how the property performs for energy use. It will not provide accurate measurements and costs but only typical ones related to e.g. a type of central heating boiler. The actual performance of the boiler, for instance, is ignored, it being assumed that it functions adequately even if it doesn’t! Credit is given for the existence of energy saving light bulbs that might be removed by the seller and replaced with ordinary ones. It is a glorified version of the energy ratings that you now see on freezers etc. It was a compulsory element of a Home Information Pack but will continue to be required as a stand alone item for all residential property sales. Environmental Search. This is a search in records, both modern and old (going back to the mid-nineteenth century) giving information about environmental factors that could affect the property. These include the existence of present sources of possible pollution, such as nearby industry, discharges into watercourses, and previous land uses that could have caused and still may cause pollution. These can be the sites of former gas works and various kinds of factory where there could have been leakages into the ground of toxic matter, or filled land, which may still contain matter giving off gases as it decomposes, or even if quite old, then might indicate a higher risk of subsidence as the fill settles. It is important to understand that these searches indicate a level of potential risk, which is sometimes quite generalised. For instance, an old map may show a particular kind of works existed 100 years ago. That kind of works often used certain chemicals at that period and leakages could result in toxic chemicals still being in the ground. However the search cannot say that the factory actually used the chemicals or that there were actually any leaks, but there is a risk of it. Much of the information is of this “potential risk” nature. Sometimes it may not be relevant to the property you are purchasing, e.g toxic chemicals that could result in vegetables grown in the land being poisonous would not be relevant to someone buying a first floor flat. Occasionally the nature of the information is such as to deter many potential buyers from proceeding. More often, there is either nothing of relevance in the vicinity or many will take a common sense view if there do not seem to have been any actual complaints about an issue locally. It is also true that there will be an increasing number of people who are concerned about matters that an average person might not be concerned about. For this reason we usually advise these searches are carried out, because it can be exceedingly annoying to find a future sale is lot because the buyer is concerned about some (often quite trivial) matter that shows on an Environmental Search and one was not done when the sellers purchased. Exchange of Contracts. This is when the transaction becomes legally binding. A contract document signed by the seller is literally swapped for one signed by the buyer. These days, this is usually done by telephone contact between solicitors, when by using professional undertakings, the exchange is treated as happening at a particular time. Normally exchange fixes the date for completion. This date has to be a working day (Monday to Friday) and is typically one to three weeks after exchange. In a few cases, particularly where a new house is being sold, and the buyer has to agree a floating completion date, the date is fixed by a formula. More information about what happens prior to this when buying may be found on a page about the Buying Process and there is a page with more information about Exchange of Contracts when Buying. It is very important that you understand that until contracts are exchanged either side can change their mind. You should not make any commitments that would involve financial loss or homelessness until we have definitely confirmed to you that exchange has taken place. We so often find that people make assumptions about when completion will happen and book holidays or give notice on their rented accommodation on that basis. Back to Top of Page or use BACK button in your browser to return to where you were! FENSA Certificate This is a certificate issued by an umbrella organisation for the double-glazing industry that certifies that a double glazing installation complies with the Building Regulations. If you are having replacement windows or doors installed, you should ask for such a certificate. This was introduced because it was obviously not going to be possible for the Council’s building inspectors to check every such installation. However, if there is no FENSA certificate then an alternative is a Building Regulation Completion Certificate. Most new conservatories do not require such certificates. Fixtures & Fittings It is now standard on nearly all transactions for the seller to provide a list with at least three columns showing ticked:
On a sale, our list includes a further column for items that are available for sale by separate negotiation. If items are listed like this, neither the seller nor the buyer should assume that they are going to be sold for the prices stated. It is a matter for the parties to discuss and seek to agree. Unless you tell us about such an agreement we will not assume that any such items are to be bought or sold. One form of list assumes that some items that would normally be included because they would be difficult to remove, are included unless the seller says otherwise. The problem with this form of list is that it does not actually tell you the items exist at all, so if you might not have noticed their existence when you looked round the property. In this part of the list are things like central heating radiators, which would be pretty obvious, but also a burglar alarm, which might not be so obvious, and even less obvious, an immersion heater and loft insulation. These lists are provided to avoid the avoid the legal disputes that arose about whether an item was a fixture or a fitting. If no list is provided, or the list is incomplete, then a sale of a property includes anything that is a fixture but does not include fittings. The distinctions are often lost on most people, so it is a lot easier in practice to go by these lists. Flat Flats include Apartments and Maisonettes. A flat is a dwelling where there is another property above or below it. Flats are normally Leasehold. Floating Completion Date. Sometimes, particularly when a builder is selling a new house or flat and at the point of exchange of contracts, it has not been completed and it is not certain exactly when this will happen, the completion date can be fixed by a formula, which could be along the lines of “10 working days after the builder has notified the buyer that the house has been completed.” Flying Freehold. The situation where all or part of a freehold property is over another separate freehold property. Because problems with the enforcement of positive covenants against adjoining freeholders, flats are normally leasehold. In some cases, where there are small areas involved, e.g. a passageway or a small part of a room, whilst there are theoretical difficulties, these can usually be dealt with in practice by a Flying Freehold Indemnity Policy. Freehold. This is the nearest thing in English Law to absolute ownership. Nevertheless a freehold property can still be subject to easements (rights for other people related to their property ownership) or to restrictive covenants (which can restrict the way a property is used or prevent alterations or extensions.) Back to Top of Page or use BACK button in your browser to return to where you were! Gazumping. This is the practice where a seller increases the price that he had previously agreed (subject to contract). Until there is a legally binding agreement on exchange of contracts, this is lawful, but often considered not very ethical! It tends to happen in a market where prices are increasing rapidly. It isn’t always a calculated piece of greed on a seller’s part. Sometimes he loses a property he wants to buy and a similar property is now that much more expensive so he tells his buyer that the house he is selling is worth a lot more now but he would settle for a smaller increase. This can reverberate down a long chain of transactions. Gazundering. This is the opposite of Gazumping where a buyer seeks to reduce the price that he had previously agreed ( subject to contract). Until there is a legally binding agreement on exchange of contracts, this is lawful, but often considered not very ethical! It tends to happen in a market where prices are decreasing rapidly. It isn’t always a calculated piece of greed on a buyer’s part. Sometimes he loses a buyer for his property and a new buyer is prepared to pay less (perhaps he has not got as good a price as hoped for his property) so he tells his seller that the house he is buying is worth a lot less now but he would settle for a smaller reduction. This can reverberate up a long chain of transactions. Back to Top of Page or use BACK button in your browser to return to where you were! Home Condition Report. This is the simplified form of survey that was going to be a part of the Home Information Pack (HIP). The idea was that it would flag up defects that could be the subject of negotiation at an early stage in a house purchase, rather than causing delay when discovered later. This could have saved a little time in some cases, but we have always considered that the biggest cause of delay is the existence of long Chains of transactions that can collapse and have to be put together again, with much delay. Nothing about HIPs did anything to address the problem of Chains. Indemnity Policies These are policies (usually on “one-off” basis) that are arranged to provide protection for people involved in conveyancing transactions. There are all kinds of different ones to cover a variety of defects and risks which can be encountered. Criteria for acceptance and premium levels will vary depending on the type of cover required. These are generally only arranged by solicitors and licensed conveyancers, because our specialist knowledge about the technicalities reduces what would otherwise be a heavy administrative burden for the insurers. Some solicitors charge for arranging them. We do not do this, but sometimes, particularly if the premium is fairly small, we will choose a policy that is administratively the easiest for us to arrange, rather than the cheapest. In most cases lenders require us to insure for the full market value of the property, even though this is not always very logical in connection with a particular defect or risk. Arguments about the amount of this cover are not very productive and checking details with a lender can involve time wasted with Lender Bureaucracy. Most policies are either perpetual, or last for a reasonable period such as 25 years, and are available for future owners and their mortgage lenders. If cover is arranged on the occasion of a purchase, and the policy is offered to a buyer on a future sale, if the property has increased in value then a premium may have to be paid to increase the level of cover. Back to Top of Page or use BACK button in your browser to return to where you were! Landlord Another name for a Lessor. The term is more often used in relation to short term tenancies, but can be found in longer residential Leases. Landlord’s Information Fee A Fee charged by a Landlord or Managing Agent to provide information and copy documents on the sale of a flat. These will be required by a Buyer’s solicitors. Sellers will have to pay this fee, which is totally outside our control, and sometimes can be quite unreasonable. A reasonable amount these days would be between £100 and £150, but some charge £300 or more and in some cases more than one company has to be approached for different information and they each make a charge. Lease A legal document that gives a right to possess a building or area of land, or just part of a building, such as a Flat or Maisonette, for a period of time. Even short term lettings are technically leases, but people often use the term “tenancy” in this case. Leases of flats and maisonettes are commonly for 99 or 999 years. In recent years the fashion has been to grant flat leases for 125 years. Leasehold Property held under a Lease is described as Leasehold. A Leaseholder or Lessee is the person who has the lease or tenancy and generally has to pay rent of some sort. The Landlord or Lessor is the person who collects the rent and is often a Freeholder, but in some cases simply has a longer lease. Most leasehold dwellings are flats, but in some parts of the country there are a lot of leasehold houses. These involve a small amount of extra work for a conveyancing solicitor, but nothing like that involved with the sale or purchase of a Flat. This practice does not charge extra when dealing with leasehold houses where there are no service charge provisions in the lease. Lender Bureaucracy This is to emphasise the fact that lenders are large impersonal organisations that cannot make decisions in the same way that private individuals can. They are geared up to deal with new mortgage applications, with paying off existing loans, and with a few other things that happen such as transfers of a mortgaged property from a sole owner to joint names or vice-versa. If there is a non-standard legal query, it can take them ages to deal with it, because the people who receive the request do not know what to do with it. We have many situations where there is some minor problem with the legal paperwork. We can explain the problem to our buyer client, and it is often the case that the legal risks involved are very small, and the client takes a commonsense view and accepts the situation. We cannot have the same kind of conversation with the lender because there is generally nobody that we are allowed to talk to who has the authority to make the decision. If we refer it in writing, we may get a helpful answer by fax very quickly, or we may have to wait weeks while the point goes round different people, and then we may get an answer which is not at all helpful. The result is that it is often quicker and easier not to consult the lender but to insist that the seller supplies some documents or provides an insurance policy which will give the lender some protection if some unlikely event occurs. Sometimes, if the seller will not pay for the insurance, we have to ask that our client pays for it. Unfortunately, a lot of solicitor’s time is taken in dealing with issues which are not of great practical significance but which only really exist because of this bureaucracy factor. Lessee A person who has a Lease of a property, which could be a flat, a house, commercial building or open land. The word “Lessee” is legally interchangeable with “Tenant” although the latter word tends to be used more for short term lettings. He would usually have to pay rent and sometimes other charges for services or maintenance to his Landlord or Lessor. The lessee has the property for a limited period – a few months or as much as 999 years – and subject to any legal rules about security or extending a lease, it reverts to the Landlord/Lessor at the end of the period. Lessor A person (otherwise called a landlord) who is entitled to the “Reversion”, i.e. he can have a property back at the end of a Lease and in the meantime collects rent etc for it. Loan to Value Ratio This is the ratio between the amount of the loan being taken on a mortgage and the value of the property. For instance, A mortgage of £120,000 on a property worth £150,000 would have a loan to value ratio (LTV) of 80% Local Authority Search A search carried out in registers of local charges kept by the local authority. This contains information about Planning Permissions, certain kinds of Planning Agreements, Agreements Under the Highways acts about making up roads, Tree Preservation Orders, Compulsory Purchase Orders, Smoke Control, and all kinds of miscellaneous matters. A standard set of questions (Local Enquiries) is also asked of the Council, and most people treat these as part of the Local Search, although strictly they are not. These enquiries ask about proposals that affect the property itself. These could be proposed compulsory purchase orders, traffic orders, notices about various kinds of contravention, and highway proposals within 200 metres of the property. It is very important to understand that apart from some information about the highway proposals in the immediate vicinity, no information is given about what might be happening on nearby land. Some more information on this aspect can be gained by having a Plan Search carried out. Back to Top of Page or use BACK button in your browser to return to where you were! Maisonette This is a kind of flat. Most people think of them as typically single storey flats with a separate outside door and garden so that a building with say four maisonettes in it would typically look at first glance like a pair of semi-detached houses. However some people refer to a flat on more than one floor as a maisonette. Managing Agent A person or company appointed as an agent to act for a Landlord or Management Company usually to manage a block of flats, but sometimes to deal with maintenance of open areas around an estate of freehold houses. They will deal with the day to day matters, collecting service charges, and often ground rent, and arranging maintenance and insurance. They are only agents and represent those who have legal responsibility for management. Good managing agents will foresee likely future expenditure and arrange to set money aside for this so that there are not sudden large increases of service charge when works are required. Management Company A company whose main purpose is to manage property is often called a Management Company. Sometimes they are large organisations, but frequently the term applies to a company set up for a particular building or development, for which it will normally have legal responsibilities for maintenance and insurance. Management Companies are not to be confused with Managing Agents who often work for such companies, doing the day to day work. Such a company may:
Mortgage . Technically a mortgage is the legal document that gives the lender security for its loan, by registration of it at the Land Registry. It is not the loan itself. However, people tend to use the term in a loose way to refer to the loan as well, so we will use it in a way that most people understand, but in a few cases we will point out the technical distinctions. Mortgagee This is the lender who has the benefit of the security of the mortgage registered at the Land Registry. Mortgage Application. It may seem obvious, but before you can get a Mortgage Offer you must have submitted such an application. It is not enough just to have an illustration from the lender of the likely costs or a decision in principle taking into account your income, you must complete the necessary forms yourself, or through a broker, or online. Make sure they are filled correctly using the same versions of your names that you have given us. We so often find mortgage offers come through and middle names have been missed out. Even if you are transferring (Porting) the terms of a mortgage from the same lender from the house you are selling to the one you are buying, you must still make a fresh application. Mortgagor The borrower, the person who gives the security by allowing the mortgage to be registered at the Land Registry against his property. Mortgage Offer This is a document which will be several pages long setting out the amount of the loan, the terms of and method of repayment, the interest rate and details of any fees or costs associated with the loan. It may set out specific conditions that have to be complied with, often, for instance, requiring repayment of an existing mortgage loan. This is produced following the lender investigating, to the extent it considers necessary, the credit worthiness of the borrower, and having some kind of valuation/appraisal carried out on its behalf by a surveyor. Such a valuation is not a proper Survey. A formal mortgage offer typically takes 2-4 weeks to be produced from initial application and whilst it can be revoked by a lender, this would not normally happen unless there was some dishonesty involved. Do not confuse a formal offer with a lender’s decision in principle, which is not the same. We would never advise someone obtaining a mortgage to Exchange Contracts without a satisfactory formal mortgage offer. Usually at the same time as the formal offer going to the borrower, the lender will send us Mortgage Instructions, which will contain a copy of the offer and details of any additional things we are required to do to protect the lender. There will be many points which will not be set out expressly in such an offer or in our instructions, but which we will nevertheless have to check/deal with in order to comply with the requirements of the CML Handbook. Many of these points will not be familiar to staff in lenders’ offices, so questions about them there are likely to cause confusion to such staff. Back to Top of Page or use BACK button in your browser to return to where you were! Permitted Development Minor kinds of building work that meet certain criteria and therefore do not require planning permission. The rules are quite technical, and it is easy to assume that permission is not needed in a particular case, when actually the exemption does not apply. Councils sometimes take away the normal right to add such small extensions etc without consent when they give planning permission for the original construction of the building. Plan Search This search gives information about planning decisions in the vicinity of a property (not given in an ordinary Local Authority Search. ) There is also some information about educational and crime statistics for the general area. The search can produce negative information that might deter someone from buying a property, but it is important to understand that because something that could affect the value and enjoyment of a property is not shown, that does not mean it will not happen. This could be because the information in the search is not completely up to date (this cannot ever be completely guaranteed), an application for a permission is submitted after the search was submitted, or the change in question did not need such a consent, e.g. delivery lorries much larger than previously used arriving at otherwise innocuous light industrial premises at anti-social hours. Searches such as these reduce, but do not completely remove, risk factors for buyers. Planning Permission This is needed whenever “development” takes place. There are two types of development (1) operational, e.g. building work, but mining and engineering work are also included, and (2) material changes of use. Do not confuse Planning with Building Regulations. Planning is about what effect the work or change of use will have on the neighbourhood generally, whilst Building Regulations are concerned with the construction in terms of its stability, safety, heating efficiency, fire protection, etc. The main issue for people buying a property is whether the building itself has planning permission and any conditions have been complied with. If the building was constructed before 1 July 1948 then the permission would not have been needed and therefore many older houses do not have any relevant permissions at all. Extensions or alterations may have been made later and these may have required such permission too. Some small extensions and alterations and buildings in back gardens do not normally require Planning Permission, being Permitted Development. The rules about this are complex, and sometimes Councils impose conditions when houses are built, which remove these “rights”. The law relating to what is a material change of use is fascinating, and has been developed over the years since modern Planning Law was introduced in 1948, but is not often relevant to a residential sale or purchase, so we won’t explain it further here. If it is relevant to your situation (e.g. where there has been a conversion of an integral garage to a habitable room) we will explain it when necessary. Porting. A new expression used by mortgage lenders to cover the situation where the terms of a mortgage “deal” are transferred from one property to another when one is sold and the next purchased. It is typically the case that early redemption penalties are not payable if the new loan completes at the same time as the old. However, lenders do not always make it clear in their paperwork that if the transactions happen at the same time, the penalty is not payable. A buyer’s solicitor wants an absolute commitment to clear off an old mortgage and therefore we need a clear written statement from the lender that in the particular case the penalty isnot payable. Sometimes getting this information is surprisingly hard! If the existing loan is repaid without the new loan also being completed, then if the related new loan is then completed within a few months (depending on the lender’s detailed terms) a refund of some or all of any penalty may be made at some time after completion of the purchase. Positive Covenants. These are covenants to do something, such as maintain a fence or part of a building, or pay sums of money. This type of covenant is only normally enforceable against the person who signed the original deed containing the covenant. An exception is when there is a Landlord/Tenant (Lessor/Lessee) relationship in a lease. There, whoever happens to be the Landlord/Lessor at the time can enforce the covenants against the Tenant/Lessee, and vice-versa. Pre-Contract Report. On a Purchase we always prepare a written report explaining the significance of the documents that you are asked to sign, the result of our searches and enquiries, with explanations of any risk factors or matters that it has not been possible to check fully. We want you to be able to read this and understand it and have the opportunity to ask us about anything which is still not clear to you, before you are committed to a legally binding obligation on Exchange of Contracts. Property Information Form otherwise known as Sellers Property Information Form . A form completed by a seller giving information about a property, such as boundaries, rights that go with the property and rights that others have over it, utilities, building work, and relevant guarantees. Conveyancing solicitors produce their own versions of these forms with slightly different names, such as “Property Use Form”, “or Property Details Questionnaire”, “Property Information Questionnaire”, and “Home Use Form”, but they all give broadly the same information. The form usually goes out with the Draft Contract Package. A Buyer’s solicitor will read through this in conjunction with other documents looking for missing details or inconsistencies and these will be taken up in Additional Enquiries. If the Property is a flat or maisonette there will often be a further Leasehold Information Form or a section of the main form devoted to Leasehold matters. Back to Top of Page or use BACK button in your browser to return to where you were! Redemption In the conveyancing context this is the legal process of paying off and clearing off a mortgage security. If you are selling, we will obtain a Redemption Statement of the amount required to pay off the loan from your lender. Even if you are staying with the same lender, most lenders still deal with the loans as entirely separate and send us the new loan and expect the old loan sent back them as two separate exercises. If the terms of the mortgage “deal” are being Ported there can be other complications. Registered Land Most land in England & Wales is now registered but not all of it. If a Freehold or Leasehold property has been held by the same people for many years since before it was necessary to register in that particular area then that interest in the land may still be Unregistered. The Registry gives each registered title a number, keeps a plan of each title’s extent, details of the owners (“registered proprietors”), of any mortgages secured on the property, and of any rights that go with the property or to which it is subject. What is contained on the Register is definitive and official copies are issued at a small cost. Once a property has been registered the old pre-registration deeds are usually only of historic interest. However the expression Deeds is often used to include a number of other documents and this is explained in the Deeds link. Freehold and long leasehold properties changing hands on a sale anywhere in England & Wales since December 1990 have had to be registered, gifts of property and transfers following a death have had to be registered since 1998, and many shorter (mainly commercial) leases have had to be registered since 2003. This compulsory registration has been gradually introduced over a long period, starting with Inner London by 1901, Hastings and Eastbourne in the 1920s, Middlesex in 1937, the rest of London and some of the Home Counties and a few of the bigger cities in the 1950s and 1960s, but did not seriously get going in large areas of the country until the 1970s when most of the major towns were covered and more rural areas later. In this firm’s area, for example, Southampton became compulsory in December 1975, Eastleigh in October 1977, Winchester and Test Valley in March 1988, and Salisbury not until 1990. Restrictive Covenants. These are covenants that restrictive or negative in nature, e.g. not to build an extension without some other person’s consent or only to use a property as a single family dwelling. Unlike Positive Covenants, they can bind future owners of a property. With Registered Land the details will usually be set out in the Land Registry entries or in a document filed with them, which is often the original conveyance or transfer deed when a house was sold new. These can relate to Freehold properties as well as Leasehold ones Back to Top of Page or use BACK button in your browser to return to where you were! Search. A report containing information held in records of one kind or another about a property or its neighbourhood. Not to be confused with a Survey, which will give information about the condition of the property itself, or aspects of it. There are various different kinds of searches, some are virtually always obtained, e.g. a Local Authority Search, and now for some reason because it has been a compulsory element in the Home Information Pack, the Drainage and Water Search. Because of an increased risk factor over the next few years resulting from a half baked government attempt to abolish an ancient and now inappropriate right, we used to carry out a Chancel Check Search in all cases but we can now provide equivalent insurance at a slightly cheaper cost than such a search, so in most cases this actual search is not now necessary. The cost of this insurance is included in the global cost for “Searches” shown in our estimates. In many cases it is either prudent or necessary to carry out an Environmental Search and a Plan Search. Others are specific to particular areas e.g. a Coal Mining or Cornish Mining Search. Sellers Property Information Form See Property Information Form. Stamp Duty Land Tax. (SDLT). The tax on property transfer. There are some complicated provisions for shared ownership and new leases, but in its simplest form the tax is based on the price as follows:
From 6th April 2011 for transactions over £1million the rate of SDLT will be 5%. In some “disadvantaged” areas, the threshold below which tax is not payable is set slightly higher at £150,000. Even if no SDLT is payable, in most cases we still have to complete a fairly lengthy and detailed form about the transaction. This firm does not charge extra for this, but many solicitors do! Survey. Report usually by a Chartered Surveyor about the physical state and condition of a property. Do not confuse Surveys with Searches. The general rule when buying a property is one of “Caveat Emptor” (let the buyer beware). It is therefore very important that a buyer takes advice about the physical state and condition of the property being purchased. A Valuation Report prepared for a mortgage lender is for the lender’s benefit to enable it to assess the risk in lending and should not be relied on by a buyer. A buyer must either accept the risks involved in not having advice from a surveyor about the property being purchased or should arrange to have a Survey of some kind. There are two types of survey commonly available: (1) A Home Buyer’s Report and (2) A Full Structural or Building Survey. The first kind is cheaper. It reports on all the main matters that most people would want to know about, but the comments are usually quite short, and background explanation is limited. The Full Structural Survey is more comprehensive and more expensive, and therefore is better. It will depend upon the circumstances whether the extra cost is worth it. Some would not consider the more expensive one necessary for a fairly modern property of a standard construction type. Also, word processing technology allows surveyors to incorporate a lot of standard explanation about a particular matter and the issues involved in a Full Structural Report, with a short paragraph following explaining how these issues affect the particular property. However an older property, or one with unusual features or extensions, would perhaps warrant the more expensive and more detailed report. Back to Top of Page or use BACK button in your browser to return to where you were! Tenant The person that has a tenancy or lease of land or premises from a Landlord. The term tends to get used most in connection with short term “tenancies”, but legally is interchangeable with Lessee or Leaseholder. The tenant has the property for a limited period – a few months or as much as 999 years – and subject to any legal rules about security or extending a lease, it reverts to the Landlord at the end of the period. Unregistered Land. The freehold or a lease of a property that has not changed hands for some years may not yet have been registered and there may be no official record of its existence. Ownership is proved by producing copies of the relevant Deeds and it is therefore very important that these are kept safely. Water and Drainage Search. This search confirms whether or not the property has a mains drainage connection and a mains water supply and provides plans showing the location of these services. The vast majority of urban properties have mains drainage and water connections, so in a lot of situations it does not provide any information that would make a difference to a decision about buying a property, but in certain cases it can be important. The Water Companies have managed to persuade the Government of its importance because it was a compulsory part of a Home Information Pack. Back to Top of Page or use BACK button in your browser to return to where you were! |