Conveyancing terms explained
When buying or selling a house, if you haven’t been through the experience before you might be confused by some the conveyancing words or terms used throughout the process by the estate agents, your conveyancer, surveyor, etc.
To help you understand, we have explained some of the various terms or phrases you might come across when buying or selling a property.
Explaining residential conveyancing terms
Buildings and contents insurance
A buildings insurance policy covers the cost of repairing structural damage to the property and can also include garages, sheds, fences, pipes, cables and drains.
In the majority of circumstances your mortgage provider will require you to have building insurance. It should start from the day you exchange contracts and/or complete the property purchase (if the completion day is the same day as the exchange date).
With contents insurance, a policy will cover damage or loss of items you keep in your home but are not part of the property structure, such as TV’s, computers, furniture and personal belongings. Whilst mortgage providers will not make it mandatory to have contents insurance, it is wise to have it in case anything unexpected happens.
When you build a new property, or carry out certain alterations to an existing property (e.g. building an extension, removing walls, or installation gas appliances) then the works may need to be signed off to confirm that the works comply with The Building Regulations 2010. You must check if you need building regulation approval before going ahead with carrying out any work to the property. Building regulation approval differs from planning permission.
More information on building regulations can be found here.
Buy to let property
A buy to let property is exactly as it sounds. Basically you buy a property in order to rent it out to tenants. It can be incredibly beneficial to purchase a buy to let property if you are looking to make a medium to long-term investment for the future.
More information on buy to let properties can be found here.
Chancel repair liability
This is a long standing law where the owner of a property has a legal duty to contribute towards the costs of repairs made to a nearby parish church.
This legal obligation only applies to a small number of properties across the country but it is worth being aware of this if you are looking to purchase a property which includes chancel repair liability.
Conservation areas are areas of special architectural or historic significance which make it unique. Each Local Authority in England has at least one area. If the property is located within a conservation area, it will be subject to additional planning permission controls.
The completion day is the day when all the financial and legal work has been carried out and the ownership of the property passes over to the buyer.
This is the legal document that sets out the parties to the transaction, the price being paid, and any conditions that are attached to the sale.
Both the buyer and seller must sign the contract.
Covenants are legal obligations set out in a deed which specify what can and cannot be done at the property. For example, a covenant may restrict the way in which a property can be used or impose obligations on maintenance. Generally, they are usually contained within the title deeds when a house is first built.
They are intended to uphold the overall character of the property and/or area in question and keep a level of uniformity between neighbouring homes. Covenants can also be put in place by current owners of a property when they selling it to another party.
A deposit is the payment by the buyer when the exchange of contracts takes place and is the part payment of the property purchase. Additionally, it provides the seller with protection should the buyer withdraw from the transaction after an exchange of contracts.
The deposit amount is usually 10% of the overall purchase amount but this can vary with some types of purchases, e.g. help to buy mortgages.
Your conveyancer will generally have to pay costs to third parties on your behalf during a residential property transaction, such as searches (see below) and official copies of the title deeds/plan from HM Land Registry. These fees are known as disbursements and should be contained in the conveyancing quote you first receive.
An easement is a right granted to a landowner to use someone else’s land in a specific way, e.g. a right of access.
This is a way to access funds that are tied up in the value of your property without having to sell it. There are various ways in which you can release this equity, such as taking out a loan secured against your property or from selling part of your home.
An exchange of contracts means that the agreement to buy or sell a property becomes legally binding between the parties involved. When the contracts have been exchanged you cannot back out of the agreement. Penalties can be imposed on a party involved in a transaction if they try to withdraw from it after the exchange of contracts takes place.
Sometimes the exchange of contracts and completion can happen at the same time but in a lot of instances an exchange of contracts will take place before the completion.
Fittings and contents form
The fittings and contents form is a list of items (e.g. fitted units, curtains and curtain rails, etc.) which the seller intends to leave or take out of a property when the sale has completed.
The form which lists the items is agreed by all of the parties in the transaction and is then attached to the contract and forms part of it.
A freehold ownership means that you purchase and are the outright legal owner of the property and land on which it is located. There is no time limit to this form of ownership.
This relates to leasehold agreements where the leaseholder pays ground rent annually, which is meant to reflect the value of occupying the land/ground on which the property sits.
Land Registry Official Copy
The Land Registry hold electronic records of entries on the registered title of a property. When a property is being sold, your conveyancer will need to obtain an up to date version of the Land Registry Official Copy.
Leasehold ownership, unlike freehold ownership, is where you own a property for a fixed period of time but not the land on which it sits, which is owned by the freeholder.
As a result, the leaseholder will probably be subject to pay an annual ground rent to the freeholder. It is normal for a flat or apartment to be a leasehold property.
This is the legal document that the buyer will sign to formalise the mortgage agreement.
New home warranty
When a property has been built, it is a requirement that the property has the benefit of a new home warranty. The warranty is to protect the buyer from structural defects.
There are many providers but the most common is National House-Building Council (NHBC). The warranty cover usually lasts for 10 years.
Restrictive covenants, as the name suggests, restrict you from doing or allowing you to do certain things to your land. The most common types of restrictive covenants includes erecting new buildings on a section of land, commercial activity on an area of land and/or to use the land for any non-agriculture reasons.
Searches (coal mining, drainage/water, environmental, bankruptcy, local, etc.)
When buying a property, your conveyancer will make various enquiries with the relevant authorities about the property. These are known as searches and are an essential part of the conveyancing process to help you find out as much as possible about the property being purchased.
Generally, the main searches that are undertaken are searches to the relevant Local Authority, drainage and water searches, environmental searches and mining searches. However, there are many other searches that can be carried out.
These searches will most likely be a requirement of the mortgage provide, if the buyer is purchasing the house with a mortgage.
This allows someone to buy a share in a newly built or existing property on a leasehold basis. The person entering into the shared ownership arrangement pays a mortgage for the share they are buying and additionally pays rent for the remaining shares in the property that they do not own.
The buyer can increase their shares in the property, this is known as staircasing. This means that a person can eventually own all of the property, and would not therefore pay any rent (just a mortgage).
Stamp Duty Land Tax (SDLT)
Stamp duty relates to a party buying a property or land and is a tax that they must pay to the Government upon the purchase completion. The amount of stamp duty that has to be paid can vary based on your current situation.
During the purchase process, if the property is being bought with a mortgage then the lender will conduct a valuation to make sure that the property is worth the value that the buyer is looking to borrow. In addition to this, the buyer can instruct a surveyor to undertake an independent survey report of the property, which is more detailed. This survey will detail any issues with the property that the buyer is not aware of. The different survey options available vary in the level of detail that they include.
Here are different types of reports which a buyer can instruct a surveyor to undertake:
- Basic valuation – As mentioned above, this is generally undertaken as part of the mortgage application. It is a basic report which details the value of the property and may include some information in relation to the physical condition of it.
- Condition report – This generally relates to new build or recently built properties, which uses a traffic light system to indicate the overall condition of the property for various aspects of it. It doesn’t include any detail in relation to the valuation of the house or any advice regarding it.
- Homebuyers report – With this type of report the buyer is provided with greater detail in relation to the property and will also include an insurance reinstatement value (the amount it would cost to rebuild the property if it burnt down).
- Building survey – A building survey provides the most amount of information on a property and its overall structure. It will also include advice on what areas of the property could be repaired/improved, including a rough costs and time estimate for the work and what could happen to the property should these improvements not be carried out. This type of survey is generally used for older or unusual types of properties.
Tenants in Common or Joint Tenants
When buying a property with another person or persons, the buyer will need to choose how the property ownership is shared. There are two ways in which this can be done, which is as Tenants in Common or Joint Tenants.
With Tenants in Common ownership, the property can be owned in equal (50/50) or unequal amounts (70/30, 60/40, etc.). It is worth noting that with this type of agreement, that should one of the parties pass away then their share of the ownership does not automatically pass to the other surviving owner or owners but instead becomes of the deceased person’s estate and it is dealt with in accordance with their Will, or under the rules of intestacy, if there is no Will in place.
With Joint Tenancy agreements, the shares of the property are distributed equally between the parties. When one of the parties passes away, that person’s shares in the home pass to the surviving owner or owners.
This is the legal document that the buyer and seller will sign and has the effect of legally transferring the property from the seller to the buyer.
Our residential conveyancing services
At Nelsons, we have one of the largest firms of conveyancing solicitors in the East Midlands, helping hundreds of families in Derby, Leicester and Nottingham move to their new homes every year. Our residential property conveyancing team can assist with:
- Residential investments
- Joint ownership
- Right to buy
- Matrimonial transfers
- Probate sales
- Shorthold tenancies
We provide a fast, efficient and value for money service to our conveyancing clients using online search tools and other modern technology.
Online conveyancing solicitors
We offer a comprehensive online conveyancing service:
- Fixed fee conveyancing for peace of mind on costs
- Instant quotations
- Email updates and text messages at key stages of the transaction
- 24 hour online case tracking
Our high quality and efficient residential property team is accredited by the Law Society’s Conveyancing Quality Scheme.
In September 2019, our conveyancing solicitors were named ‘Regional Conveyancing Firm of the Year’ for the East Midlands at the LFS Conveyancing Awards 2019. The award win also led to us being shortlisted for the ‘Overall Conveyancing Firm of the Year’, for which we took home the second-place silver award.