Conveyancing terms all first time buyers need to know

Purchasing a property can be a daunting prospect, which is why it is important to instruct a conveyancer who will guide you through the process using plain English and not legal jargon. In this article, Coralie Phelan from Prince Evans Solicitors explains the key terms used at each stage of the transaction

STAGE 1 – INSTRUCTION THROUGH TO REPORT ON TITLE

Conveyancer

A conveyancer (or solicitor/lawyer) is the legal professional who will act for a buyer or a seller in the conveyancing process.

Conveyancing

This means the legal process of transferring property or land from one party to another.

Purchaser and Sellers

The parties to the conveyancing transaction, the seller/vendor being the party selling the property and the buyer the purchaser.

Chain

If you are buying a property and your seller is likewise buying a property (whose seller could also be buying a property) then this is known as the Chain of Purchasers and Sellers – the chain of conveyancing transactions which are linked together and must exchange and complete at the same time.

Source of Funds

Your conveyancer will need to check your source of funds to comply with the Government’s Anti-Money Laundering Regulations. This means they will need to see how you are financing your property purchase. This can include copies of wage slips and bank accounts to evidence how you have saved your contribution to the purchase price.

Contract Papers

Contract papers or the Legal Pack are provided by the seller’s conveyancer at the outset to the buyer’s conveyancer. The pack contains the contract, legal title together with the property information and fittings and contents form. It is upon receipt of these contract papers that the conveyancing process really begins.

Transaction Forms

This phrase refers to:

• Fittings and Contents form – indicates which items are included and excluded from sale

• The Property Information form – filled out by the seller confirming information regarding the property including alterations, guarantees and service connections.

Freehold or Leasehold

Freehold is a tenure of property and if you buy a freehold property this means you will own the property and the land it sits on.

Leasehold is a tenure of property and if you buy a leasehold property you will rent/lease the land or property from a landlord for a defined period of time.

Searches

Usually your conveyancer will order the following:

Local Authority Search

This is a search carried out with information obtained from the local council and reveals specific information which you will need to know when buying a property. This includes things such as whether the roads are maintained at the public expense, the planning history of the property and whether there are any orders/regulations that the property owner must observe.

Drainage and Water Search

Confirms water and drainage connections.

Environmental Search

Confirms whether the property would be designated as contaminated land.

Additional Enquiries

Once your conveyancer has received contract papers they will review the legal title and the information provided and will raise any legal questions that they need the seller to reply to, which are commonly referred to as the Additional Enquiries.

STAGE 2 – REPORT ON TITLE

Report on Title

When your conveyancer has all the replies to enquiries and search results they will then prepare the Report on Title.

This is a full report on the contract terms, the transaction forms, Title and the replies to enquiries and often the search results (if not reported on separately). It is usually provided with the contract for signing by the buyer.

Contract/Agreement

This is the legal document which sets out the terms of your purchase and which you and your seller will sign to commit you to purchase the property.

Deposit

This is the sum paid by a buyer to the seller (via their conveyancer) on Exchange of Contracts. This is typically 10% of the purchase price (or 5% in some cases). The deposit is forfeited to the seller if the buyer fails to complete.

Gifted Deposit

Your conveyancer will ask you to pay your deposit at this stage. A gifted deposit is where (typically) a family member is contributing to the purchase by gifting a sum of money. In this case your conveyancer will have to carry out further checks and obtain consent from any mortgage lender.

Lease

A lease is the contract (document) which sets out the terms on which one party rents property from another. If you buy a leasehold property such as a flat you will have a lease of the property. If the property is leasehold you will receive a report on the lease terms as part of the report on title.

Ground Rent

Ground rent is payable under the terms of a lease in leasehold property. This is an annual amount paid to rent the property from the landlord.

Management Company

A management company may be in existence to deal with the management of an estate or development where the property is located. This is more common with leasehold property but may also apply to freehold too. You will generally pay service charges to the management company and may be asked to become a shareholder or member.

Landlord

The landlord is the party who owns land or property and is paid by others for the use of this. If you are a leaseholder you will pay your landlord a ground rent for the use of the land.

Legal Title

Legal Title is the evidence of legal ownership of assets or land. Your conveyancer will check the Legal Title to ensure this is suitable for your needs and is good and marketable. Your conveyancer will report the terms in the Report on Title and send you a copy to read through.

Mortgage Deed

This is the document you sign to legally commit to your mortgage and to comply with the terms of the mortgage (such as to make the repayments). This deed is registered at the Land Registry.

STAGE 3 – EXCHANGE OF CONTRACTS

Exchange of Contracts

When contracts are exchanged you are legally committed to purchase the property and this is also when a completion date is fixed. This is the point of no return in the purchase and failing to complete after exchange of contracts will have serious financial consequences.

STAGE 4 – COMPLETION

Completion

This is the date you legally complete, become the owner of the property you are buying and the day you can collect the keys to the property.

Transfer Deed or TR1/TP1

This is the legal document which transfers property from one person to another and is filed at the Land Registry to evidence the change of ownership. This needs to be signed before completion.

Stamp Duty Land Tax (“SDLT”)

This is a Government tax on the purchase of property. Fortunately, there is relief for first time buyers subject to certain criteria.

There are many conveyancing and legal terms you will hear during your property purchase. This is a summary of the main terms, which should assist in simplifying the terminology and provide you with a better understanding of the whole conveyancing process.

Prince Evans specialise in all aspects of conveyancing.

Please contact Prince Evans for all your conveyancing needs and for a friendly no obligation quote on 020 8567 3477 or nbh@prince-evans.co.uk

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