A brief explanation of terms commonly used when dealing with property ....

Property

Building Regulation Approval or Consent
Building work should comply with standards laid down by the Building Regulations in force at the relevant time, even if it does not require planning permission. Local authorities should be notified of works to be started and will thereafter monitor specific stages until completion, when an approval certificate is issued.

Chattel
An item of portable property such as furniture.

Fixtures and fittings
Items such as carpets and fittings screwed to walls, the removal of which will leave marks and degrade the building, which may be included in the sale price of a property. Fixtures such as light fittings and electrical outlets, kitchen units, taps, bathroom suites, etc. are normally considered to be part of the property but are not always left behind by sellers! Similarly, purchasers often assume that prized garden plants will be left but the owners do not always see it this way. If there is any doubt, specific reference to the items should be made in the contract of sale.

NHBC Guarantee
If a builder is registered with the National House Building Council (NHBC) the property will have the benefit of the NHBC Buildmark Scheme. This means that the property has insurance against structural defects in the first ten years. Claiming against such insurance can be a long and difficult process, however.

Valuations and surveys
There are three types of valuation survey normally encountered when purchasing residential property.
The basic valuation is prerequisite if a mortgage is required. This valuation is mainly for the lender's purpose to ensure the property price is accurate and that the property is structurally sound.
The second type is the Home Buyers report. This covers the basic valuation for the lender but also gives a detailed report to the purchasers on work that needs to be done or may need to be done in the future.
The third type includes a full structural survey and covers all aspects of the property, including the structural condition.
These vary considerably in price depending on the property value and the nature of the survey.

Legal

Certified Copy
A copy of a document which is certified as being a true copy of the original by the Solicitor who is holding it.

Contract Race
When a seller decides to sell to more than one buyer at a time and issues multiple contracts, with a view to exchanging contracts with whoever is ready first. There are strict rules governing contract races, not least of which is the requirement for the issuing solicitor to advise the other parties of the issue of further contracts.

Conveyance
The document which transfers the legal title to freehold land and property from the seller to the buyer. It is the equivalent to a transfer but is used for unregistered land.

Covenant
A legally binding contractual obligation under which a landlord or a tenant agrees to do something, or agrees to refrain for doing something.

Engrossment
A legal document for signature by the parties. An engrossment is normally bound up with any relevant plans or documents.

Exchange of contracts
The point in time when buyer and seller, through their respective conveyancers, become legally bound to sell/buy the property.

Freehold
Absolute ownership of a property - title absolute.

Joint Tenants
When land is owned by more than one person, the legal and beneficial interests in it are separate. The co-owners will hold the legal interest in property on trust. Their beneficial interests can then be held either as Tenants in Common or Joint Tenants. They are Joint Tenants when each owns the whole of the beneficial interest. This means that if one of them dies the other person will have an automatic right to the property.

Land Charges Department
The Central Land Charges department keeps five separate registers of entries which have been made against the owners of the land.

Landlord
The person who owns a superior right in a property. Often incorrectly referred to as the freeholder, a landlord can be an intermediate lessee who pays rent to a superior lessor (perhaps the freeholder) and collects rent from a lessee.

Land Registry Office
The government department responsible to the Lord Chancellor for keeping and maintaining the Land Register of England and Wales - a record of who owns land. The Land registry office also has statistical data available to the general public including the number of properties bought and sold in any given year, sale prices and type of property etc.

Leasehold
Ownership of a property, usually flat or maisonnette, under a lease for a fixed number of years.

Lessee
A person who owns a lease - also known as the leaseholder or tenant.

Lessor
A person who grants a lease on property to another party - also known as a landlord.

Office Copies
Office Copy Entries of the register , issued by the Land Registry, being a copy of the title deeds.

Power of Attorney
A Deed by which the owner of the property authorises someone else (the Attorney) to do something on their behalf.

Report on Title
A standard form supplied by the mortgage lender. It provides them with written confirmation that the property has a good and marketable title and it also asks for the advance money.

Search
Usually conducted by the buyer's solicitor who obtains a certificate from the local authority providing information on a particular property and its location to determine any prospective development or the presence of any local conditions which may affect the property.

Statutory Declaration
A statement made in writing and sworn before a person who has authority to administer it e.g. a solicitor.

Subject to Contract
A term often used by estate agents to signify that a statement or offer they make is subject to ratification by a formal contract and is not binding upon them or their client until that time.

Tenants in Common
Each tenant in common owns a specific share of the property, which can be left by Will or dealt with under the rules of intestacy. Useful if a parent wishes to will their share of a property to their children rather than their spouse.

Without Prejudice
Normally used in letters to a third party such as a purchaser, this term signifies that the statements made can not be produced as evidence in a court of law or tribunal.

Mortgages

Capped Rate Mortgages
The interest rate charged is on the standard variable rate but with an upper limit . For example the rate may be capped at 7% so that if the standard variable rate was 6% you would be paying 6%, but if rates increased to 8%, you would only pay 7%. The capped rate is set for a specific period and at the end of that period usually reverts to the standard variable rate, depending on scheme's criteria.

Cashback Mortgages
This is where borrowers would receive a cashback incentive, on or shortly after completion. This is generally a percentage of the amount borrowed and would usually tie the customer in for a specific time-depending on scheme's criteria.

Discounted Rate Mortgage
For a specified period the interest rate charged will be set at a certain percentage below the lender's standard variable rate, going up and down in line with the standard variable rate. At the end of the period, the rate of interest will usually revert to the standard variable rate-depending on the scheme's criteria.

Discharge of Mortgage
The repayment of a Mortgage or the document which confirms that the Borrower is under no further liability to the Lender in respect of the loan. The Form used to discharge mortgages is a Form DS1.

Interest Only Mortgage
With this mortgage, you only pay the lender the interest on the amount borrowed and at the end of the term you must repay the amount originally borrowed. Unless you have sufficient assets to repay the loan, you are normally required to take out and maintain an approved investment product (endowment, ISA, pension etc) to build up funds to enable you to pay back the original advance at the end of the mortgage term.

Endowment Mortgage
An endowment policy is taken out by the purchaser which, on maturity, should at least equal the amount of the mortgage loan. The policy premium is paid together with interest on the amount borrowed. On maturity the loan is discharged from the proceeds of the endowment, any extra being a bonus for the policyholder. Such policies are the subject of some bad press at present as many are not performing well and will not be sufficient at present rates of growth to pay off the loan.

Fixed Rate Mortgage
The rate of interest is fixed for a certain period so that your payments remain unaltered by changes in the variable rate (this generally changes in line with the Bank of England). At the end of the set period, the rate of interest will generally revert to the standard variable rate-depending on the scheme's criteria.

Mortgage
The loan made by a bank or building society to enable the purchase of a property - in return the property owner mortgages the property to the lender and it is used by them as security for the loan. If the borrower defaults on repayments the lender can force the sale of the property in order to repay the loan.

Mortgage Advance
The Mortgage monies.

Mortgagee
The building society or bank that accepts the mortgage and makes the loan.

Mortgagor
The property owner who grants the mortgage and to whom the bank or building society gives the loan.

Mortgage Instructions
A set of papers sent to the solicitor by a Mortgage Lender to confirm the terms upon which the solicitor may proceed to act in connection with the mortgage. The Mortgage Instructions include all papers that the solicitor will need during the transaction.

Mortgage Indemnity Fee
This is a charge made by the lender when customers borrow over a certain percentage of the purchase price, normally around 90%, although at present many lenders do not charge it. It is always prudent to find out how much, if any, is chargeable and how it is payable (whether you have to pay it in full on completion, whether you can add it on to the mortgage over the full term or whether you pay it off over a certain shorter period)

Mortgage Offer
The formal document issued by a Mortgage Lender to a Borrower confirming that the lender is happy to advance them the money. This will only be issued once the lender is satisfied that the borrower is creditworthy and the property offers good security.

Mortgage Retention
A proportion of the mortgage is kept back by the lender when essential repair work is required. The retention is released when the work is completed.

Repayment Mortgage - capital and interest
This is a mortgage where you pay off both the interest and the capital over the term of the mortgage. In the early years, you pay mostly interest but with the amount owing decreasing throughout the term, so that at the end your mortgage is cleared.

Standard Variable Rate Mortgage (SVR)
This is the lender's standard mortgage interest rate. This usually changes in line with interest rates, hence your payment can go up and down.

Finance

Certificate of Value
A certificate contained in a document, confirming that the "consideration" or purchase price does not exceed the limit above which the Buyer must pay Stamp Duty i.e. not more than £60,000, £250,000 and £500,000.

CHAPS
The Clearing House Automatic Payment System provides a same day guaranteed sterling electronic credit transfer service within the UK. The system allows for the payment of any amount to be transmitted from one bank branch to another via a computer system. The sending bank enters instructions to make the transfer into a computer which immediately makes the transfer and notifies the receiving branch of the transfer via computer.

Charge
A financial debt or liability affecting the property, e.g. a mortgage.

Chargee
The name given to someone who has the benefit of a charge over the property e.g. a Mortgage Lender.

Chargor
The name given to someone who has charged his property with the repayment of debt e.g. a Borrower.

Equity
The sum of the market value of your property less the mortgage - if your mortgage is smaller than the market value of your home, the amount is referred to as equity. If larger, the difference is known as negative equity.

Ground rent
The money paid to the Freeholder by the holder of a lease. This is usually paid annually or semiannually.

Negative Equity
The shortfall between the value of a Borrower's property and the total amount secured on it i.e. when the borrower owes more than the house is worth.

Pre-contract deposit
Part of the purchase price, (usually between 5- 10%) which is paid to the seller's solicitor when contracts are exchanged. It acts as a part payment and also a guarantee that the Buyer will actually complete the transaction. If the Buyer unjustifiably refuses to complete, then the deposit can be kept by the Seller.

Redemption Figure
The amount required to repay a mortgage or other loan.

Service Charge or maintenance charge
The charge made by the managing agent or landlord of a property. These charges vary and can be substantial. They usually are applied to large blocks of flats and are paid by the leaseholder (tenant) to the landlord. The charges may cover insurance, water, heating and the maintenance of lifts and the common areas of the building.

Stamp Duty
This is a government tax charged when purchasing a property - see our information page for more details.

Telegraphic Transfer
A transfer of funds via a bank, usually by CHAPS. Often referred to as a "TT". This is probably the quickest way to get a deposit to a conveyancer, but the banks make a charge for this service.