Glossary

Below are a number of terms you are likely to come across when buying, selling or re-mortgaging your property

Completion Date

This is the date that ownership of the property passes from the seller to the buyer.

The seller and buyer should agree a suitable date between them and notify their solicitors. You should always bear in mind unforeseen delays i.e searches not returned on time. Only when contracts are exchanged and completion date is fixed can you virtually guarantee a completion date will be met. Therefore we advise that firm commitments to things like time off work or arranging removals should not be made until you have a fixed date.

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Contract

This is the legally bidding agreement between the buying and selling parties. It sets out the main terms of what has been agreed such as property, price and names in the party. Two copies of the contract are drawn up and each party signs their own copy, meaning both parties do not have to meet up to sign one contract. When both parties are ready to commit the contracts will be exchanged and become legally biding

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Deposit

There is often confusion around the deposit with most people assuming it is the part of the price the buyer is putting down themselves (the difference between the mortgage amount and purchase price). Rather it is the amount of money handed over to the sellers’ solicitor upon exchange of contract.

This can be anything up to 10% of the selling price and should be negotiated in advance. You should be aware that if you pay a reduced deposit and fail to complete through no fault of the seller, you will be liable to make the deposit up to the full 10%. You could also be liable to pay further compensation to the seller through your failure to complete.

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Disbursements

Disbursements are all the payments that solicitors make to other people on your behalf. These are standard costs and include local authority searches, official searches and stamp duty.

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Exchange Contracts

This is probably one of the most important moments in the house buying process. The entire matter becomes legally binding, the seller must sell, and the buyer must buy, at the price stated on the contract. Before contracts are exchanged nothing is legally binding and either party can walk away at any time.

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Fixtures, Fittings and Contents Form

This is the list of what in the property is included in the sale. The form is completed by the seller and sent to all legal parties and a copy sent to the buyer so everyone knows exactly what is included in the sale.

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Freehold

Means you own both the property and the land the property stands on

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Land Registry

It is a central body that retains records of who owns land and under what conditions.

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Leasehold

Identifies a property that is of temporary ownership and stands on rented land. When the lease expires ownership of the property returns to the freeholder.

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Local Authority Search

This is a list of questions about the property, which are sent to the local authority. It answers questions like, whether the council maintains the road serving the property, and what planning applications have there been against the property.

However it does not cover any planning applications made or in progress against nearby properties.

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Mortgage Offer

This is the formal offer, in writing, from the lender to lend you the money you need to buy the property. It will set out any conditions that the lender is applying to the offer e.g. that your existing mortgage is repaid before your new one starts.

Contracts should not be exchanged until the solicitors have received written confirmation of the mortgage from the lender.

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Mortgage Deed

The legal document the mortgage lender uses to secure their interest in the property until the loan is repaid.

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Property Information Form

This is a questionnaire about the property completed by the sellers. It covers such items as guaranties, neighbours disputes and boundaries.

As a buyer, if you have any specific queries about the property you should ask them now.

As a seller if there is a question you do not want to answer you must discuss it with your legal representative. Failure to disclose information could give the buyer grounds for legal action against you.

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Redemption

This is the final payment of a mortgage loan

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Redemption Statement

This is the document sent by your existing mortgage lender that sets out the amount required to pay off their mortgage. This will include any Early Repayment charges or other fees that are due to them

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Stamp Duty

This is a tax paid by the buyer of a property valued at over £125,000. If the property you are buying is £125,001 - £250,000 stamp duty is charged at 1% of the purchase price. £250,001 - £500,000 at 3%, and above £500,000 at 4%.

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Title Deeds

These documents act as proof that the person selling the property owns it to sell. Secondly it sets out any rights or obligations that affect the property.

If selling time can be saved by obtaining your deeds as early as possible. Most people’s deeds are held by the bank or building society and they may charge you to release the deeds.

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Transfer Deeds

This is the documentation required to show ownership of the property has changed from the seller to the buyer.

It is dated with the completion date and will be forwarded to the Land Registry after completion. The Land Registry require this to demonstrate that there is a new owner of the property.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

You can choose how we are paid: pay a fee, usually 0.5% of the loan amount; or we can accept commission from the lender.

The FSA do not regulate some forms of mortgage.

The FSA do not regulate Legal Services.