Jargon Buster
A
Absolute Interest: An unconditional interest in land, e.g. a lease for A to 99 years.
Absolute title: The best class of title available in registered land.
Abstract of title: Document setting out the history of a title in an abbreviated form, used when deducing title in unregistered land.
Adverse possession: If a squatter takes possession of land, with the intention of excluding the true owner and the world at large, then the squatter acquires title to land by adverse possession after, usually, 12 years under the Limitation Act 1980.
Assent: Document transferring property of a deceased person from the estate to the beneficiary. S36 Administration of Estates Act 1925 requires an assent to be in writing. It does not have to be by deed – which is noteworthy, because usually any document transferring a legal estate has to be by deed.
Assignment: A document (which must be a deed) transferring the remainder of a lease from
B
BACS: B.A.C.S. is short for Bankers Automated Clearing Services. It's an easy way of transferring money electronically from one financial institution to another. A B.A.C.S. transaction takes three working days to complete.
Bankers Draft: A cheque drawn by a bank, usually on its Head Office. It is generally accepted as the equivalent of cash, although it often needs to pass through the clearing system in the same way as another cheque.
Bankruptcy: If an individual in unable to pay his debts, he may eventually be made bankrupt by the court. The effect is to prevent him from owning property, borrowing money or obtaining credit.
Buildmark Scheme: This is a 10 year protection given by the National House Building Council (NHBC) for new houses. The scheme only applies if the builder is registered with the NHBC.
Building Regulation Approval or Consent: Building work should comply with the standard laid down by the Building regulations in force at the relevant time, even if it does not require planning permission.
By-laws: Laws made by local authorities, which are a type of delegated legislation.
C
Certified Copy: A copy of a deed or document that is certified as being a true copy of the original by the lawyer who is holding it. An example of this wording used is:
“We hereby certify this to be a true copy of the original.
Dated this……day of……2007."
Signed: ……………(lawyer)
Name: ……………..(firm’s name)
Address: …………..(firm’s address)
Chaps: (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 to another via a computer system. The sending bank enters instruction to make the transfer and notifies the receiving branch of the transfer via computer.
Charge: A financial debt or liability affecting the property.
Chargee: The name given to someone who has the benefit of a charge over the property (e.g. a mortgage lender).
Chargor: A company or person who grants a charge or right in security or in favour of some other person (e.g. a borrower).
Chattels: Items of personal property, such as furniture and moveable goods. This is more commonly referred to as “fixtures and fittings”.
Companies Registry: An official organisation where various company documents are available for public inspection.
Company Search: A search carried out against a company that is registered with Companies House. (i.e. A limited Company) to find out a variety of information, including whether there are any floating charges which the company will need to clear from the title of the property the customer is buying.
Completion: Finalising the purchase or sale of a property. The completion date is the date when the bulk of the purchase price is paid, the buyer received the keys, and the deeds are handed over.
Conflict of Interest: The situation where a lawyer’s personal interests conflict with those of the customer; or where the interests of one customer conflict with the interests of another. A lawyer cannot continue to act in a case where a conflict of interests arises.
Contract: A legally binding agreement. This is the agreement between the buyer and the seller which sets out the terms of what has been agreed, such as full description of the property and surrounding land included in the sale, the price agreed, the full names of the seller and buyer, and will incorporate the fixtures, fittings and contents questionnaire referred to above together with details of what happens if things go wrong to protect both the seller and the buyer.
Contract Race: A contract race arises when a seller decides to sell to more than one buyer at a time, with a view to exchanging contracts with whichever buyer is ready first. There are strict rules laid down which must be followed where a contract race exists.
Consideration: This is another work for the amount of the purchase price or sale price being paid. It is often referred to as “consideration” in a transfer deed or conveyance.
Conveyance: The document that transfers the ownership of freehold land from a seller to a buyer. It is equivalent to a Transfer but is only used in unregistered land.
Conveyancing: This is the transfer of the legal title to land and property from one person’s name to another.
Co-ownership: The situation where two or more people own the same parcel of land. Nowadays, the phrase usually refers to a joint tenancy or a tenancy in common.
CLC: Council for Licensed conveyancers: The regulatory body for Licensed Conveyancers.
Covenant: An agreement or promise contained in a deed or document by which one party binds himself to do or not to do something. Covenants can be positive or negative by the nature (e.g. a positive covenant would be to keep the garden in a neat and tidy condition and a negative covenant would be not to keep pigs or poultry on the land.
Covenantor: The party who gives a covenant, so carries the burden of the covenant.
D
Debentures: Mortgages issued by a company.
Deed: A document that is legally binding (e.g. Transfer or TR1).
Deed of Assignment of Life Policy between policy holders: The transfer of one person’s interest under an insurance policy, usually an endowment policy, to the other policy holder.
Deed of Guarantee: This document allows one person to guarantee the obligations of another, usually in relation to a mortgage or other legal charge.
Deed of Postponement / Grant / Variation: A deed of postponement is a document in which one party agrees to postpone their rights to those of another, usually in relation to the order of mortgages on a property. A deed of grant gives rather than postpones specific rights to the owner of a property (such as rights of way), and a deed of variation varies the terms of an existing document affecting the title of land, usually relations to leasehold properties.
Deed of Rectification: This document usually corrects an error in an existing document affecting the title to land.
Deed of Trust: A deed which sets out the shares of the property owned by the different owners.Deposit: A proportion of the purchase price, payable by a buyer at the time of exchange of contracts to buy land or buildings. It is paid to the seller’s lawyer. 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 seller can keep the deposit. The sum suggested by the Law Society at this stage of the transaction is 10% of the purchase price. If however, the buyer is borrowing 95% of the purchase price then only 5% would be payable.
Discharge of Mortgage: The repayment of a mortgage or the document that confirms that the borrower has paid off all the money due to the lender in respect of the loan. The form used to discharge a mortgage can be a DS1, END, ED or, in case of unregistered land, the original mortgage deed is sealed by the lender.
DX (Document Exchange): An alternative method for delivery and collection of business letters and documents. Each member delivers letters and documents to its local Document Exchange for collection by local members or for carriage and delivery by Document Exchange operator to members of other Document Exchanges organised by the operator.
E
Easement: An easement can be a right of way over a piece of land or even a right to light or air.
Engrossment: A legal document that is ready for signature by the parties referred to in the document. An engrossment is normally typed or printed on plain paper and any plans or documents, which are referred to in the document, are attached.
Environmental Search: This is carried out check if there are any known environmental issues affecting the property, these include matters such as landfill or waste disposal sites in the area, if the property has been built on an old industrial site and whether there are any risks from contaminated land, toxic emissions, flooding, subsidence etc.
Epitome of Title: A chronological index of documents or events that prove ownership of the land that is being sold. It is accompanied by photocopies of the relevant documents.
Escrow: An example of an escrow is where the transfer that has already been signed by the customer (who may be either the buyer or seller) is sent to the other lawyer in readiness for completion. It is sent to them “as an escrow” to allow them to get the transfer signed by their client ahead of completion.
Exchange of Contracts: The point in a conveyancing transaction when the terms of the contract become legally binding. At exchange, the buyer becomes the equitable owner of the property. The buyer’s lawyer will speak to the seller’s lawyer on the telephone and agree that exchange has taken place. Once this is done the contract will be dated, the completion date inserted and both the buyer and the seller will be bound by law to the contract and the facts referred to in the contracts.
F
Fixtures, Fittings & Contents: This is a list of items at the property which are being removed by the seller or which remain as part of the sale. This ensures that there are no disputes between the buyer and the seller as to what is to be left in the property on the day of completion.
Floating Charges: A form of mortgage over a company’s assets, which still allows transactions to take place with those assets.
Freehold: This is one of two legal estates created by the Law of Property Act 1925. It continues for an indefinite period – for all practical purposes ownership forever.
Flying Freehold: A flying freehold exists where a part of one property extends physically in, over, or under a neighbouring property. The two buildings then depend upon each other for support. Where each property is held as a freehold, the flying element becomes a flying freehold.
G
Gifted Deposit: A vendor gifted deposit is when part of the balance (usually 5%) is paid by the company / person(s) selling the house – this is common in new build properties.
Good Leasehold Title: If evidence of the landlord’s title is not available, the lease will be registered with Good Leasehold title - the Registrar is only prepared to certify that the lease cannot be challenged by the Landlord, not that it is absolute against the whole world.
Grantor: A person who grants an estate or interest in land.
H
HIPS: Since 14th December 2007, all homes marketed for sale in England and Wales needed a Home Information Pack (HIP), which included a home energy rating. The Pack includes an Energy Performance Certificate (EPC), containing advice on how to cut carbon emissions and fuel bills. Also included are documents such as a sale statement, searches and evidence of title. With effect from the 21st May 2010 the Government suspended the requirement for Sellers to provide a HIP when marketing their property for sale or let. The requirement for the provision of an EPC has been retained.
I
Insolvency: A person or company becomes insolvent if they are unable to pay their debts as the debts fall due. It may lead to bankruptcy in the case of an individual, or to liquidation in the case of a company.
J
Joint Tenants: If land is owned by more than one person, the interests in the land are separated. The co-owners will hold the legal interest and if one party dies, it will pass to the survivor.
K
K15 Search: Another way of describing a full Land Charges Search which is done on an unregistered title. Where we act for the seller, it is our client’s name that we search against. The search is done against our customer to discover whether there is a second charge which exists and which the client may have forgotten to tell us about. Where we act for the buyer, it is the sellers, name or names that will be searched against for similar reasons. The search can be done either through the post or over the telephone or on-line.
K16 Search: Another way of describing a Bankruptcy Search. Where we act on a purchase, we do these searches against our client to find out whether there are any bankruptcy entries registered in their name that would prevent then from obtaining mortgage finance on a property they are buying. The search can be done either through the post or over the telephone or on-line.
L
Land Registry: This is a government authority which registers the transfer of all property in England, Wales and Northern Ireland. Every transfer must be forwarded to the Land Registry after completion. Once the registration has been completed the Land registry will issue a Land Certificate or a Charge Certificate depending on whether there is a mortgage involved. If there is a mortgage this Charge Certificate will be sent to the lender for them to keep, but if there is no mortgage then the Land Certificate can be forwarded to the buyer for them to keep.
Lease: This is one of two legal estates created by the Law of Property Act 1925. The lessor grants the lease to the Lessee for a specified period of time (e.g. weekly, 10 years, 999 years). The lessee is granted exclusive possession, subject to the terms of the lease.
Legal Executive: A person who has become a Fellow of the Institute of Legal Executives, having passed membership examinations, and having a required number of years of qualifying employment.
Lessee: Tenant.
Lessor: Landlord.
Licence: There are different types of licences, but basically this is a consent or permission to enter land (e.g. a theatre ticket). Superficially, a licence may sometimes appear similar to a lease: the distinction between the two is of crucial importance because whereas lessess often qualify for statutory protection in the form of security of tenure and perhaps rent control, al licensee has no such protection.
Licensed Conveyancers: Those authorised by the Council of Licensed Conveyancers to practice conveyancing.
Lien: A right which one person may possess over the property of another to secure payment. For example, if a seller of land is not paid in full, he has a lien over the land in respect of amount due.
Local Authority Search: This is a list of questions which the buyer’s lawyer will send to the Local Authority where the property is situated. It covers such matters, as whether the road is adopted, what planning and building regulation consents exist, whether there are any orders or regulations which affect the property. This could help identify if a road is about to be build near the property. You will always be informed of any items revealed in the search which may affect the future value of your property.
M
Money Laundering: Using illegally obtained money in such a way as to block investigations into its past and making it look “clean”. For example, a drug dealer might seek to carry out money laundering by passing illegally obtained money through a seemingly legitimate series of transactions, using a solicitors’ client account.
Mortgage: Security over land for a loan. If the loan is not repaid, in addition to suing under the covenant to repay, the mortgagee has various rights against the land that can be used to attempt to collect the money owed: e.g. the mortgagee may be able to take possession of the land and sell it.
Mortgagee: Lender under a mortgage, e.g. bank, building society.
Mortgagor: Borrower.
Mortgage Advance: Another phrase to describe the mortgage loan.
Mortgage Instructions: A set of papers sent to the lawyer by the mortgage lender to confirm the terms upon which the lawyer may proceed to act in connection with the mortgage offer. The mortgage instructions include all papers that the lawyer will need from the mortgage lender during the purchase instructions.
Mortgage Offer: Issued by the mortgage lender to the borrower confirming the lender is happy to advance the borrower the money. The mortgage offer will only be issued once the lender is satisfied the borrower is credit-worthy and the property offers good security.
N
Negative Equity: The shortfall between the value of the borrower’s property and the total amount secured on it. (i.e. when the borrower owes more money that the house is actually worth.)
NHBC Guarantee: If a builder is registered with the National House Building Council (NHBC) the property will have the benefit of the NHBC guarantee. This means that the property has insurance against structural defects within the first ten years of being built.
O
Office Copies: A common term for Official Copies of the Registers of Title, which are issued by the land registry.
OS1 & OS2 Search: An OS1 search will be carried out against the whole of the land comprised in the Land Registry Title Number. An OS2 search will be carried out against part of the land comprised in the Title Number. In very simple terms, the search is done to request a comparison of the registry entries kept by the Land Registry and will confer priority on the applicant for the purposes of registering a disposition against the Registered Title searched.
P
Possessory Title: A Land Registry title that is used for titles based on missing deeds or on adverse possession (squatter’s rights). Possessory title does not carry the state guarantee in respect of any third party claims that arise from before the date of first registration.
Precedent: A printed standard form document that is used as a basis when drafting a document, e.g. those found in the encyclopaedia of Forms and Precedents, or in Kelly’s Draftsman.Property Information Form: Initial documentation to the client (sale): This is a questionnaire completed by the sellers of a property to provide the buyer with such information as to whether there have been any disputes with neighbours, whether there are any guarantees or warranties on the property and whether the current owners have made any alterations to the property during ownership and if so what consents were necessary and whether they were obtained. Copy evidence of which will be supplied to the buyers lawyer during the transaction and all original guarantees and warranties will be handed to the buyers lawyer on completion.Power of Attorney: A deed where the seller or buyer authorises someone else (the attorney) to do something on his behalf (e.g. sign the contract). This is often necessary if a buyer or seller will be abroad during the conveyancing transaction.
Puisne mortgage: A legal mortgage that is not protected by the deposit of title deeds with the mortgage. As the first mortgagee invariable requires deposit of the deeds as part of his security, a puisne mortgage is invariably a second or subsequent mortgage. In unregistered land, the puisne mortgage must be protected as a C(i) entry at the Land Charges registry.
Q
Qualified Title: A Land Registry title where there is a specified defect. Such a title has the same guarantee as absolute title – except for matters relevant to defect, which are not covered by the state guarantee.
R
Redemption Figure: The amount required to repay a mortgage loan.
Registered Land: Land where the title is recorded through registration at the land registry. Interests that may exist against registered land can be classified as registered interests, minor interest and overriding interests. Contrast unregistered land.
Registration: A method of protecting rights in the land by entering them in an official record. (1) In unregistered land, various rights (mostly equitable interests) need protection by registration against the name of the estate owner at the Land Charges Registry. (2) In registered land, the title to the freeholder or leasehold land is registered at the land registry; and interests in the land are protected by registration against the title number (although some interest are overriding and so do not need to be protected by registration.
Rentcharge: An annual rent (normally) secured on freehold property which is one of the interests mentioned in s1 Law of Property Act 1925. This is frequently encountered in some areas of the country, e.g. Manchester.
Report on Title: A standard form supplied by the mortgage lender. The lawyer signs the report on title to certify to the mortgage lender that there is good and marketable title to the property and to request the mortgage advance.
Requisitions on Title: (see also “undertakings”) also called “completion information”. Contains questions, requirements and possible undertakings addressed by the buyer’s lawyer to the seller’s lawyer. The aim of the Requisitions is to check the legal documentation and its accuracy, and to require any defects in the documentation to be corrected. Where acting for a seller, it is vital replies to Requisitions on Title are completed carefully and accurately, particularly in relation to any Undertakings that may be given.
Restrictions: An entry in the proprietorship register to restrict dealings. It is one of four methods or protecting minor interest in registered land. A restriction is used, e.g. as a method or warning to a buyer of the need for overreaching when buying from sole survivor of tenants in common.
Restrictive covenant: A promise by deed not to do a particular act, e.g. not to build an extension to a house without first obtaining the covenantee’s consent.
Retention: This forms part or all of the mortgage advance that the lender will not release until certain works have been completed (e.g. a lender may impose a retention where there is some rewiring required at the property). Once the work has been completed to the lender’s satisfaction (either by the seller or borrower), the retention will usually be released.Right of way: Another term for easement (e.g. a right of way to cross over land owned by someone else to get to your property.
S
Solicitor: A lawyer regulated by the law society.
Stamp duty land tax: This is a tax imposed by the government when you buy a house. If the house price is £125,001 or over, then the stamp duty will be payable on a sliding scale, depending on the purchase price. The percentage payable for stamp duty increases when the purchase price in over £250,000 and again when it exceeds £500,000. The three bandings are 1%, 3% and 4% of the total purchase price. There are some exemptions that apply to stamp duty land tax details of which can be found on the Inland Revenue website.
Statutory Charge: A means by which the government recovers money spent on state funded cases (formally legal aid payments) by deducting the amount due from the property recovered by the claim.
Statutory Declaration: A statement made in writing and sworn before a person who has authority to administer it (e.g. a licensed conveyancer, solicitor, legal executive – sometimes referred to as a Commissioner of Oaths).
Statutory Declaration for Title rectification: A formal declaration by an individual explaining any problems associated with a property’s title and usually claiming the existence of rights acquired by the passage of time.
Sub-lease: A tenant can grant a sub-lease for a term that is shorter than the residue of his own leasehold interest.
T
Telegraphic Transfer (TT): A transfer of funds via a bank, usually CHAPS.
Tenancy in Common: Equitable co-ownership, where the beneficial interest of the tenant can be left by will. There cannot be a tenancy in common-law; it can only exist in equity.
Tenancy: Lease. Often, the word tenancy is used to describe leases with very short terms.
Tenant: (1) Lessee. (2) A general term for someone who holds land, e.g. a joint tenant (who may, or course, hold a freehold or leasehold estate.
Title Deeds: These documents act as evidence that the person selling the property does own it and sets out any rights or obligations which have to be complied with. We need these documents to enable us to register the new ownership on their records.
Title Guarantee: This is the guarantee given by the seller of property, which may be full or limited. Various covenants are implied accordingly by the Law of Property (Miscellaneous Provisions) Act 1994.
Transfer Deed: This is a document which actually transfers the legal title from the name of the seller to the name of the buyer. This is the final document and is also the document forwarded to the Land Registry to register the new ownership on their records.
Transfer of Equity / Deed of Gift: A transfer of equity is the transfer of one owner’s share of the property to the remaining owner subject to an existing mortgage. A deed of gift is where no payment is made.
Trust of Land: The principal method by which land is held on co-ownership situations since the Trusts of Land and Appointment of Trustees Act 1996. The legal estate in the land is held by trustees, who have the power to sell the land and power to retain the land. The equitable interest is held by the beneficiaries, who may be joint tenants or tenants in common, or have successive interests in the land. The trust of land is a replacement for the trust for sale.
U
Undertaking: (see also “Requisitions on Title”) A promise given by a lawyer, which must be honoured at whatever cost! Mostly used when acting for a seller who has a mortgage to pay off on the sale property and given to the buyer’s lawyers prior to completion. Once given, the undertaking is binding on the lawyer who gave it. If an undertaking is not fulfilled then the Licensed Conveyancer or Solicitor who gave it can be enforced by the Council for Licensed Conveyancer or the Law Society and by the courts, resulting in the Licensed Conveyancer or Solicitor possible losing the ability to practice as a lawyer.
NB – IF another lawyer alleges a breach of an undertaking we have given them this must be escalated to a member of the Management Team immediately!
Unregistered Land: Land where the title is not yet registered with the Land Registry.
V - Z
Voluntary First Registration for a sale property: An application by the current owner of an unregistered property for registration at H.M. Land Registry, usually required when the original deeds to a property have been lost or destroyed.
