Buying a house is often a landmark event – representing the next step in life’s journey. Whilst this often an exciting time, it can also become stressful for those unfamiliar with the process. In some cases, the use of terminology by the professionals involved can be daunting to buyers who may not understand such words and how they impact the process. Lets be honest its founded from Land Law which uses 20 words when 1 would suffice!
Here, we provide a guide to some of the frequently used terminology when buying or selling a property.
A leasehold property is one that is situated on land owned by somebody else. The land itself is owned by the freeholder, and there is usually an agreement in place – a lease – for the land to be used for a specified period of time. This can range from 99 -999 years. A leaseholder owns the property for the duration of a lease.
A freehold property means that the property will all become owned by you upon purchase. Changes can be made to the property without seeking express permission, so long as they fall within the parameters of planning permission and the do’s and don’ts of the matters lists in the title (if any).
Gazumping is when a seller accepts a higher offer from another buyer after previously accepting a lower offer.
Gazundering involves a buyer initially putting forward an offer on a property, before reducing it prior to contracts being exchanged. This, for sellers, can create pressure to accept as refusing the offer could lead to the entire chain falling apart.
Exchanging contracts is the point at which the deal becomes binding – everybody is tied into the contract. Before this point, it is legally possible for any of the parties involved to withdraw from the transaction without any come-back. Upon exchange of contracts the buyers are required to pay a deposit – which is usually 10% of the agreed sale price. If you are selling a property, your solicitor will receive 10% of the sale price from your buyer upon exchange. Once contracts have been exchanged, a moving date is fixed.
Completion is when the balance of the payment for the property is passed over to the seller’s solicitor and legal ownership transfers to the buyer. This is usually the day that keys can be collected and in the majority of instances, people will move into the property. There is no set time between exchange and completion; this is entirely dependent on how much time the parties require in order to be able to get themselves ready for the completion date. This time period is agreed before exchange of contracts takes place. If buying a new build property, the completion date will usually be determined by the developer of agent.
The deposit is the amount of money needed on top of a mortgage to buy the property. This is usually written into the contract and represents 10% of the purchase price. The deposit is paid at the point contracts are exchanged. This can cause confusion as the “deposit” you are putting towards the property can sometimes be more than the 10% required on exchange. If this is the case you would pay 10% of the money on exchange and the rest of the money you are putting towards the purchase will fall due just before completion.
Disbursements are the expenses that a conveyancing solicitor pays for as part of a property sale or purchase. This can include things like the costs of searches, fees for registering details with the Land Registry, etc. A solicitor will usually provide a quote for the disbursements involved in your transaction and it is common practice for this fee to be charged up front.
A property title recognises who is its legal owner. The title document proves ownership, and this information is stored electronically by the Land Registry.
This is the document which officially finalises a sale. If you are buying a property, you will usually sign this at the same time as your contract documents and this transfers the title of the property from the seller to you. When completed, the transfer deed will be sent to the Land Registry by your solicitor and the property’s title will be updated to reflect the new ownership.
These are legal promises. Basically the do’s and don’ts relating to what you can and can’t do with or at the property.
O’Donnell Solicitors’ residential conveyancing team are recognised for our straight-talking approach when it comes to assisting clients buying and selling residential property. We always aim to make the process of a property transaction as swift and straightforward as possible, keeping our clients fully informed along the way and taking the time to explain things in as much detail as required.
For more information or advice on any of the above or to obtain a competitive quote for conveyancing, please get in touch.
Claire Egerton is Head of Residential Property at O’Donnell Solicitors.
For any further advice, please contact Claire on 01457 761320 or email email@example.com.