A ‘Jargon Buster’ for buying or selling your home
Below is a list of common terms that tend to crop up when you’re buying or selling a residential property (or ‘conveyancing’ to give the process its legal name) so we felt it may be useful just to explain what they all mean.
Breach of contract – A breach of contract is when either party fails to meet the agreed completion date after exchange has taken place.
Certificate of Title – This is a form completed by your solicitor to request your money from the lender in time for the completion date. Once the lender has received this they will do their necessary checks to ensure they can release money to us on the date we have requested on the form.
Completion – This is your moving date and the date you become the legal owner of the property. We will have all the monies in place including our fee, any stamp duty payable and the purchase price amount to send over to the seller.
Once the seller’s solicitors confirm receipt of the purchase money we have completed, and you may collect your keys if you are the buyer.
Contract Pack – This is a pack received from the sellers that contains the Property Information Form, Fittings and Contents form, Land Registry documents including a plan of the property and any other supporting documents relevant to the property e.g. Electrical certificates/Building control documents etc. The quicker we get the contract pack the quicker we can apply for searches and begin our investigation of the property.
Contract Rate – You will see this on your contract for sale and purchase. It will be a small percentage that is used to calculate the amount of compensation should a breach of contract occur.
The party that fails to meet the agreed date has to pay compensation to the other party. This compensation is calculated applying the contract rate to the purchase price and is charged for the period between the completion date agreed on the contract; and the actual date we manage to complete.
Exchange – This is a conversation between the solicitors which makes the contract for sale/purchase legally binding. Once we have exchanged you are legally bound to sell/buy the property and complete on the agreed completion date.
Indemnity Policy – These are insurance documents that can be provided by either party in the transaction and covers the property owner for missing documents/information/potential legal and financial liabilities. They are generally payable on completion of the transaction by the party that has agreed to pay for it.
You should keep hold of all indemnity policies provided as it is highly likely you will have to pass this on to any potential new purchasers of the property.
Mortgage Advance – This is the amount of money released to us from your lender in accordance with your mortgage offer. We will receive this in time for your completion date.
Mortgage Valuation – This can often be referred to as a survey. A surveyor/mortgage valuer attends the property to ensure the amount you are lending is in proportion to the value of the property. It is advised that this valuation should not be relied upon as evidence for the market value of the property but only for that specific lender and the terms of that specific mortgage offer.
Survey – There are 3 types of surveys referred to residential conveyancing
- Condition Report – This is the cheapest survey that you can obtain. It provides a general overview of the condition of the property. It does not typically include a valuation.
- HomeBuyers Survey -This is a more in-depth investigation of the property
by an independent surveyor that usually utilises the traffic light system highlighting any potential issues and rating them green, amber or red in terms of severity. This survey can reveal further issues with the property beyond the common untrained eye. This is the most common report undertaken by purchasers.
- Structural Report/Survey – This is the most in-depth report and also the most expensive. This will highlight all issues with the property and generally gives estimates as to how much it may cost to rectify them.
Trust Deed/Declaration of Trust – This is a document drafted by your solicitor which explains to the land registry specifically how you and another own the property and how monies are to be divided upon the sale of the property in detail. There is usually a charge for drafting the trust.
If you would like further explanation of any other phrases/terms defined please feel free to contact Sarah Hack at firstname.lastname@example.org or call Sarah on 0113 399 3444.