Abortive
When a sale agreed by private treaty breaks down and fails to proceed, this is called an abortive or an Abo. An Abo is never accepted as such until all possible steps have been taken to remedy the situation.
Acceptance
The document which you will need to sign and return to the building society if you wish to accept the society’s mortgage offer.
Advance
The loan (also capital sum, principal).
Agricultural Covenant
This is a planning condition which permits the erection of a residential dwelling providing it is required for occupancy or tenancy of a person employed or associated with working on the land. Properties subjected to such a covenant are effectively “blighted” by this stipulation and values are relatively low because they cannot be sold to anyone who fails to meet the conditions imposed, unless the planning authorities agree to lift the covenant which is very unlikely.
Annuity Mortgage
A repayment Mortgage.
Applicant
The term by which a potential purchaser is referred to.
Assignment
The transfer of ownership to another person of some kinds of property, such as an insurance policy.
Auction
Where instructions to sell are received, and in view of the uncertain market price created by the unusual nature of the property or an anticipated heavy demand, it may be suggested that a sale by auction is advisable.
Sale by auction where, rather than actually stating a required price within the property description, offers are invited at a public gathering. Details for sale are prepared; giving date, time and place of auction, the property is advertised and circulated as widely as possible to create the maximum interest. Potential buyers will view the property in the normal way, will often have the property surveyed and will most certainly be sure of the financial arrangements before attending at the auction.
An agreement to buy at auction is a binding agreement on the day. A poor survey report or inabilities to raise finance are not justifiable reasons for withdrawing from the agreed purchase.
On the day of the auction the agent will invite offers, and in most cases would have previously agreed with his client the minimum price that he is prepared to accept. This price is not disclosed- offers are called for. When the minimum price has been reached the agent will announce that it is his intention to sell the property that day. When the maximum price has been reached the sale will be agreed to the highest bidder. In the event of the minimum price not being achieved, the auctioneer will announce that he is unable to offer the property for sale, and it will be withdrawn from the market.
Beneficial Owner
Person owning land and entitled to it for his or her own benefit
Bridging Finance
A purchaser under certain circumstances may wish to complete the purchase of a property whilst sill offering his own for sale. Bank Managers will advise as to whether the necessary temporary finance can be made available. Key workers may also be advised to approach their employers for assistance should a bridging operation be desirable.
Capital
The loan(also advance, principal).
Caution
Entries on the land register protecting the interests of a third party.
Charge
If a property owner uses his security in the property to service a loan a charge is registered and certified entitling the lender to be regarded as a secured creditor to be paid out of proceeds of sale in the event of a default.
Charge Certificate
The document of title to a mortgage on registered land.
Chief Rent
A payment made on freehold land to the original freeholder for ever. Distinct from ground rent which has a limited period.
Collateral
Property pledged as a guarantee for the repayment money.
Commission
The sum of money paid to the agent, usually on or within two weeks of completion, although legally it is payable on exchange of contracts.
Comprehensive List
A summary of all the properties currently for sale.
Completion
The finalising of the sale when all the monies are passed over and occupation taken.
Contract
Entered into by the vendor and purchaser of a property which only becomes binding on exchange of contracts, i.e. when both parties have signed the contract and the purchaser has handed over the agreed deposit (if any) to the vendor.
Contract Race
Involves two or more purchasers proceeding to buy the same property. It can be instigated by either purchaser or vendor although usually it is the latter. The winner is the first purchaser to exchange contracts.
Conveyance
The legal document transferring ownership from vendor to purchaser.
County Court Judgement (C.C.J’s)
Whenever someone fails to pay for something and is subsequently taken to court, the magistrate will issue a County Court Judgement against that individual to pay the outstanding debt. It will only be removed once the debt is cleared.
Covenant
A legal requirement incorporated in the conveyance requiring either vendor or purchaser to do or not to do something in relation to the property.
Creditor
Someone owed money: the lender.
Decreasing Term Insurance
Life insurance in which the amount that will be paid out decreases throughout the term of the policy: mortgage protection policy.
Deeds
All the legal documents relating to the property, for as long as the property has existed.
Deed of Variation
The means by which a condition in a lease can be changed or removed providing it has the full consent of the landlord and his solicitors.
Delayed Completion
Completion can take place any time after exchange of contracts. However, if it is longer than 28 days it is referred to as delayed.
Draft contract/ document
The document sent by the vendor’s solicitor to the purchasers’ solicitor setting out the terms of the sale.
Early redemption
Paying off the loan before the end of the mortgage term. A redemption premium is often a condition of early redemption. This sometimes amounts to three months interest.
Easement
A right over or under land granted to someone who is not the owner.
Endowment Mortgage
A loan on which only interest is paid throughout the term and is paid off in one lump at the end with the proceeds of an endowment insurance policy.
Engrossment
An undefaced copy of the deed for execution.
Equitable Interest
Rights in a property which do not include the right to sell its legal title.
Equity
The sum of money left once the property has been sold and any mortgages or charges against the property have also been settled.
Equity Mortgage
A scheme whereby interest is paid at lower rates than building societies’ but when the property is sold, or at the end of the mortgage term, the lender adds to the outstanding debt a proportion of any increase in the property’s value. Equity mortgages are rarely found nowadays although some still exist through local authorities.
Exchange of Contracts
This is the stage when the Buyer and Seller exchange signed binding contracts of purchase and sale; both then become committed to complete the transaction.
Execution
Signing, sealing and delivering a deed in front of an independent witness.
Fixtures and Fittings
A list of any items that are to be included in the sale, i.e. carpets, curtains, curtain rail, wall lights, etc. etc.
Flying Freehold
The flying freehold part of the property is not always physically supported by a structure owned by someone else. Where you have a terrace of properties with a coaching entrance leading to the rear in some cases the opening is not owned by the person whose property is situated above.
Freehold
Absolute ownership of land with or without Chief rent.
Gazumping
A term used to denote a situation where an offer has been accepted but further interest is established after that sale has been agreed resulting in a second prospective purchaser making a higher offer. Gazumping is therefore effectively an auction which develops out of a private treaty agreement.
Ground Rent
This applies only to Leasehold properties and a sum is paid annually to the Freeholder by the Leaseholder.
Improvement Grant
A grant made by the local Authority towards the cost of repairing or improving a property. Further information with regards to grants are available from the local council.
Indemnity
A collateral contract used as an insurance against loss.
Instalment
Monthly payment to Lender.
Insurance guarantee Premium or Mortgage Guarantee Policy or a Single Premium Indemnity Guarantee
Where the loan required exceeds the normal maximum advance of (75-80% of the valuation) the amount of the loan from the Building Society can sometimes be increased by the issue of a Guarantee Policy by an Insurance Company. The premium for this Policy is normally paid once and is sometimes added to the loan and repaid with the Mortgage.
Interest
The charge made for the use of the loan.
Instruction
This term is used when the Estate Agent is formally instructed by a property owner to market the property, usually by private treaty, in order to find an effective purchaser. The resulting contractual agreement confirms the terms under which the instruction is offered by the vendor and accepted by the estate Agent resultant upon which commission is paid by the Vendor to the Agent usually on completion of sale.
Joint Tenants
Two or more people holding property as co-owners: when one dies, his share of the property automatically passes to the survivor(s). This is further complicated when a “tenants in kind” situation exists as this will result in the share of the property owned by a deceased co-owner passing on to his estate rather than to the surviving “joint tenants”.
Joint Sole Agency
A situation where two agents are acting as Sole Agents, the commission being divided equally, no matter who sells the property.
Land Registry
A government department where details of properties with a registered title are recorded along with any charges i.e. mortgages.
Lease
Ownership of property by way of a leasehold interest for a term fixed in the lease, usually with the reservation of an annual ground rent.
Leasehold
Ownership of land, subject to an annual payment of ground rent to the owner of the land. Invariably a leasehold property is a flat or maisonette, although in some areas conventional house and bungalows of a leasehold tenure do exist.
Legal Charge
The Mortgage Deed.
Lessor
He or she who grants a lease- the landlord.
Lien
The legal right of one person to hold the property of another as security for a loan.
Maintenance Charge
A charge made, by the landlord, to cover costs of maintaining the property as set out in the lease.
Management Committee
A committee consisting of representatives from a group of owners, who although leasing a property, have formed their own Management Company and act in effect as landlords.
Mortgage
Loan for which property is the security.
Mortgage Deed
The document enshrining the conditions of a loan secured on a property (also called a legal charge)
Mortgagee
The Lender.
Mortgage Offer
The Letter from the building Society offering you the loan and setting out the terms and conditions upon which it is offered.
Mortgage Protection Policy
Life insurance taken out by the borrower to cover the outstanding mortgage loan in case of the borrower’s death.
Mortgagor
The borrower (whose property is security for the loan)
Multiple Agency
A situation where two or more agents are acting for the vendor, the agent who introduces a purchaser who exchanges contracts, being the only one paid.
Non-Dependent
A purchaser who is able to proceed to exchange of contracts and completion without requiring the proceeds from a related sale.
Offer
A presentation of intent to purchase a property, at a price, not necessarily below the
asking price.
Panel Solicitor
A solicitor who is recognised by the lending institution as being competent to act on behalf of the building society as well as for his client, thus saving time and cost. Some small building societies have only one such solicitor and if he is different from that being used by the client, the building society will insist on their own solicitor being used for the legal work in addition.
Part-Possession
The term used, where a property is being sold, where a tenant has legal right of occupation.
Peppercorn Rent
A term used to denote a ground rent which is so small in payment it is virtually not even worth considering.
Phone-Out
A procedure by which potential purchasers are advised of the availability of a property by telephone rather than by post, or e-mail.
Preliminary Enquiries
A set of questions raised by the purchaser’s solicitor sent to the vendor via his solicitor prior to exchange of contracts asking for clarification of specific points about the property which is being sold and the present vendor’s ownership of it.
Premium
Payment (one-off or periodical) for an insurance policy, the amount depending on the sum insured and the type and degree of risk to the insurer.
Principal
The Loan (also advance, capital).
Private Treaty
The sale of property by private treaty is the method employed on a day to day basis by most Estate Agents, preparing descriptive details of the property and quoting a definite asking price. Details are circulated: potential buyers may view the property and either agree to buy at the asking price, or submit an offer to purchase. Agreement to buy at this stage is subject to formal contracts being prepared between both the vendor and the purchaser and those contracts being signed and exchanged between the two parties.
Arrangements, therefore, for private structural survey and finance are often put in hand after the purchaser has agreed the purchase, enabling him to withdraw from negotiations should he fail to raise the necessary finance, or wish to cancel his agreement in view of a poor survey report. The majority of would-be buyers whose purchase of a property is subject to the sale of their own existing property, will prefer to buy by private treaty, as this affords them time to place their own property on the market for sale and to raise the capital from the sale of their own property-distinct difference between sales by auction and by tender.
Probate
A term used when someone has died and his estate needs then to be valued for Inheritance Tax. In many cases part of the estate will involve a property, which needs to be valued. A probate valuation is generally a negotiated value with the district valuer representing the revenue authorities. A sale cannot proceed to exchange of contracts until probate has been granted.
Property Management
Administrative service entailed in looking after and collecting rent of empty properties.
Purchaser
The proposed buyer of the property.
Rateable Value
All residential properties are assessed to gross value and rateable value. Rateable value is reached after statutory deductions from gross value and is the amount on which local rates are levied.
Registered Land
Land (including buildings, houses on it) the title to which is registered at the Land Registry and legal ownership is guaranteed
Repayment Mortgage
Loan on which part of the capital as well as interest is paid back throughout the period of the loan.
Retention
An Amount held back from the initial loan by the building society until certain repairs or improvements have been completed or in some cases to cover possible road charges on a new estate.
Rights of Way
An individual’s legal right to use any particular part of a property, in order to gain access to any particular part of his own property.
Searches
A term used to denote the physical and written procedure for determining any adverse effects in/on a particular property, whether already in effect or planned to take place.
Send Out
This refers to the postal distribution of property details to applicants that are registered within the office’s mailing list.
Sitting tenant
To occupy the property as a tenant, but have legal rights without a lease. Any sale would be subject to any rights of a tenant who has occupation.
Sole Agency
Where only one agent has complete control of the sale, and is entitled to his fee however the property is sold.
Stakeholders
A person or company with whom money is deposited pending the result of negotiations.
Stamp Duty (Stamp Duty Land Tax)
This is a tax paid by the purchaser of a property to the Government, currently based on the purchase price on any sales over £125,000 – and at the following rates:
| Property Sale |
Rates |
| Up to £125,000 |
0% |
| Over £125,000 - £250,000 |
1% |
| Over £250,000 - £500,000 |
3% |
| Over £500,000 |
4% |
Status
A term used to refer to the potential buyers ability to proceed with the purchase both speed-wise and financially
Structural Survey
A detailed survey to ascertain the structural condition of the property.
Subject to Contract
A phrase used as provisional agreement before contracts have been exchanged where either party may still withdraw from the transaction.
Sub-Agency
Where one agent, who is the main agent, seeks the assistance of another agent. Terms between the agents are agreed, with the main agent always maintaining control of the sale. An instruction passed to another agent from a main agent is known as a sub-instruction.
Survey
Also known as a structural survey. Inspection of the property by an independent surveyor.
Tenancy at Will or Licence
After The exchange of contracts a purchaser may seek to take possession of a property before financial completion, either to carry out repairs and decorations or to take up residence prematurely. This can often be organised and a licence arranged between both parties’ solicitors with the purchaser paying an appropriate rate of interest on the balance of the outstanding monies: (i.e. purchase price less deposit paid) instead of rental, until legal completion.
Tenant
Person who is in possession of property usually by way of lease.
Tender-For Sale By
This is a situation, where the asking price is not actually stated, but offers are invited in writing. Details of the property are prepared, circulated and advertised. The closing date for the tender is noted, the vendor will reserve in most cases, the right to refuse the highest offer, thereby not being committed to sell. Offers tendered are opened usually in the presence of the vendor’s solicitors, at a prescribed date and time. An acceptance of an offer by the vendor constitutes an immediate contract, and in most cases, therefore, the party tendering will ensure they have made their financial arrangements, and have had a survey carried out.
Tenure
Whether a property is freehold or leasehold
Title
The legal document describing the property containing all rights and liabilities that attach to the property.
Title- Absolute
The highest form of title available.
Title-Abstract Of
A summary of title documentation used in unregistered conveyancing to prove that the vendor has the right to sell.
Title Deeds
Legal documents which prove ownership of unregistered property.
Title-Freehold Absolute
Absolute ownership of property to be disposed of on death according to the wishes of the owner.
Title-Report On
Solicitor’s certificate confirming that the title to the property is acceptable. A building society must have one before an advance cheque for the mortgage monies can be issued.
Top Up
A second mortgage granted by an insurance company or bank.
Unadopted Road
A road which has not been accepted by a local Authority as a result of various specifications not meeting standards laid down (i.e. road surfaces, drainage, etc.) indicating the possibility of a road charge liability if and when the road is adopted
Under Offer
When the vendor has had an acceptance offer for his home but contracts have not yet been exchanged.
Vacant Possession
A condition of the purchase that the previous occupants vacate the property before you move in.( not occupied by a tenant).
Valuation
An assessment of the value of a property. A building society or other lender must commission a valuation before a loan can be made. A valuation survey is quite distinct from a structural survey in that it is not a detailed inspection of the property.
Vendor
The owner of the property to be sold
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