Buying or selling your home – your essential jargon buster!
Buying or selling a home comes with plenty of legalistic terms that you don’t come across in everyday life. At Harrisons Residential, we like to simplify things so here’s our quick and easy guide to some of the terms you may stumble over during the process…
Completion
This is the date when the buyer takes legal possession of the property.
Conveyancer
This is the legal representative, either a person or company, who handles all of the legal aspects of the sale and purchase. Conveyance is the process of transferring (or conveying) ownership from one person to another.
Covenants
Property deeds can sometimes include clauses to restrict certain activities such as running a business from the property, these are called covenants.
Deposit
The buyer will pay a deposit (normally up to 10% of the price) on exchange of contracts as a commitment to completing the purchase. The deposit might be forfeited if they pull out after exchanging contracts.
Disbursements
Disbursements are fees for items such as local searches, Stamp Duty and Land Registry paid by your conveyancer on your behalf and reclaimed from you or from the proceeds of your sale.
Exchange of Contracts
Exchange of Contracts
This is the point where buyers and sellers are legally bound to complete the transaction, for an agreed price and on an agreed date.
Freehold
When you buy a property outright including, in the case of a house, the land on which it stands, you own the freehold (see also leasehold).
Fixtures & Fittings
The sale price will be agreed based on any items such as light fittings, curtains and carpets that are included. These become part of the contract.
Gazumping
After an offer has been accepted and before contracts are exchanged it is possible for the seller to accept a higher price from a new buyer. This is called gazumping.
Land Registry
The Land Registry is the official body responsible for maintaining ownership data for all freehold properties and leaseholds with a duration of more than seven years.
Leasehold
Leasehold is the right to have sole occupation of a property for a specified number of years. You may have to pay an annual ground rent for the land on which the property stands as well as service charges.
Negative Equity
If house prices fall you can end up in a situation where your home is worth less than the amount you owe on your mortgage. The gap between what you could get for your home and what you owe is called negative equity.
Property Chain
Your buyer may have to sell a property before they can complete the purchase of your home. Your seller may need your money to complete a purchase of their own. This is a property chain and can involve several transactions. Often, all these transactions have to simultaneously complete at the same time on the same day.
Possession Order
If you fall behind with mortgage payments the lender can apply for a possession order to evict you. They will sell the property to recover their money plus the costs associated with repossession of the property and all their selling costs.
Probate
This is the legal process for dealing with the estate of someone who has died. This has to be completed before beneficiaries of the estate can legally sell any property.
Redemption
A mortgage loan is linked to a specific property; so when you sell your home you will have to settle or ‘redeem’ your existing mortgage in full.
Searches
Searches are carried out by the Buyer’s solicitor to discover anything that could affect the value or use of your property. Searches can cover planning issues, utilities, drainage or any covenants that are in place.
Share of Freehold
If you buy a leasehold flat it can come with a share of the freehold. Normally, a managing company owns the freehold. All leaseholders then own a share of the company so that common obligations for maintenance and service charges can be managed.
Title Deeds
This is a legal document that confirms ownership of a property.
Title Search
This is the process of retrieving legal documents to establish the history of ownership of a particular property.
Keep this blog handy for when you’re reading through contracts or talking to your solicitor. If you ever need help figuring out how it all works, we’re here to give expert advice.