This guide will help you to understand some of the 'jargon'used in the home buying and selling process.
Applicant:
The term used by estate agents when referring to someone looking for a property to buy.
Appraisal:
Carried out by an estate agent to establish, in their opinion, the potential sale price of a property.
Agency Agreement:
The document detailing the terms under which an estate agent is to act for a seller. The document usually states the fee or commission payable to the agent and the circumstances under which it (and any other costs) is payable.
Auction:
Where a property is sold 'on the fall of the hammer' to the highest bidder in an auction room on a given day.
Asking Price:
The price at which a property is marketed and on which buyers may make an offer.
Bridging loan:
Sometimes a buyer may want to complete on a purchase prior to their own property being sold. This short-term loan 'bridges' the time gap.
Charge (on a property):
The legal document held by Land Registry that records who has a claim on your property. E.g. your lender.
Collateral:
Property pledged as a guarantee for the repayment of a loan.
Commission or Fee:
The sum of money to be paid by the seller to the estate agent for their services.
Completion:
The finalising of the sale when all the money changes hands and the purchaser acquires the legal right to the property. The property is now 'Sold'.
Contract:
The legal agreement entered into by the seller and buyer of a property.
Contract Race:
When two or more purchasers want to buy the same property and the seller agrees to issue a contract to each of them. The successful buyer will be the first one to exchange contracts.
Conveyancing:
The legal process of transferring the ownership of a property from seller to buyer.
Covenant:
A legal requirement of the owner to do, or not to do, something in relation to the property. Deeds: Legal documents relating to the property.
Delayed completion:
If completion takes longer than 28 days after exchange of contracts.
Easement:
A right over or under land granted to someone who is not the owner. E.g. drainage.
Exchange of Contracts:
The point at which the buyer and seller exchange the signed, legally binding contracts for the purchase and sale of a property. The seller and buyer become committed to complete the transaction.
Fixtures & Fittings:
Items that are to be included in the sale. E.g. curtains and carpets.
Flying Freehold:
A flying freehold is formed when part of a property overhangs and is supported by a different freehold property or land.
Freehold:
Absolute ownership of land or property without time limit.
Gazumping:
When the seller has accepted an offer, but before exchange of contracts accepts a higher offer from another buyer.
Gazundering:
When a purchaser lowers their agreed offer just before exchange of contracts.
Ground Rent:
An annual payment made by a leaseholder to a freeholder. May be a substantial sum of money or 'peppercorn'. A peppercorn ground rent is a tiny amount of money, or sometimes, literally, a peppercorn.
Instruction:
A term used when an estate agent is formally instructed by the seller to market a property in order to find a buyer. An Agency Agreement confirms the terms under which the instruction is accepted.
Joint Agency:
Where two estate agents act together as joint agents on behalf of the seller and divide the agreed commission between them. Subject to the terms of the Agency Agreement the buyer may also instruct other agents at the same time.
Joint Sole Agency:
Where two estate agents act together as joint sole agents on behalf of the seller. The seller must not instruct any other estate agent during the term of the joint sole agency.
Joint Tenants:
A legal form of home ownership where two (or more) people share common ownership of the whole of the property. Joint tenants do not have separate shares of the property. When one owner dies the survivor automatically takes over ownership. See also - Tenants in Common.
Land Registry:
The Government department where details of properties with a registered title are recorded along with any charges, e.g. mortgages. Also records details of every property sale transaction.
Leasehold:
The ownership of land or property for a fixed period of time. Sometimes subject to payment of a 'Ground Rent' to the freeholder.
Market Appraisal:
Carried out by an estate agent to establish, in their opinion, the potential sale price of a property.
Mortgage:
A loan, usually for house purchases, for which property is the security.
Mortgagee:
The lender of the mortgage.
Mortgage Offer:
The letter from the lender offering you the loan and setting out the terms and conditions upon which it is offered.
Mortgage Acceptance:
The document you will need to sign and return to a mortgage lender if you wish to accept the lender's mortgage offer.
Mortgagor:
The borrower of the loan � whose property is secured for the loan.
Multiple Agency:
Where two or more estate agents are in competition with one another and independently acting for the Seller. The agent who introduces the eventual purchaser is the only one paid.
New Instruction:
A property that has recently been added to the estate agent's list of properties for sale.
Offer:
The amount a buyer offers for the property.
Power of Attorney:
The legal authority for a representative to act and sign legal documents on your behalf should you not be in a position to do so yourself. E.g. living abroad or incapacitated.
Preliminary Enquiries:
Questions raised by a buyer's solicitor prior to exchange of contracts, asking for confirmation of specific points about the property which is being sold and the seller's ownership of it.
Price Reduction:
Where the asking price of a property has been reduced after an initial period of marketing and advertising.
Private Treaty (For Sale by):
The sale of a property by private treaty is the most common method used by estate agents, preparing descriptive details of the property and quoting an asking price. Details are circulated and potential buyers may view the property and either agree to buy at the asking price or submit an offer. Agreement to buy at this stage is subject to formal contracts being prepared and agreed by the seller's and buyer's solicitors and those contracts being signed and exchanged between the seller and buyer.
Probate:
The official process of proving a will is valid. The sale of the property of a deceased person cannot proceed to exchange of contracts until probate has been granted by HM Revenue and Customs.
Registered Land:
Land and its buildings, the title to which is registered at the Land Registry and legal ownership is guaranteed.
Retention:
A proportion of a loan that is held back by the Lender until certain repairs/improvements have been carried out on the property or in some cases to cover possible road charges on a new estate.
Right of Way:
An individual's legal right to use any particular part of an adjoining property in order to gain access to any particular part of
their own property.
Searches:
A term used to describe documents showing any adverse factors affecting a property (e.g. new roads, nearby developments etc) whether already in effect or planned to take place. Obtaining the Searches is part of the conveyancing procedure conducted by the solicitor.
Security (of a loan):
Lenders ensure that their money is always safe by making borrowers agree that if they fail to repay the mortgage loan then the lender can take the property and sell it to recover their money. The loan is said to be 'secured' against the property.
Sole Agency:
Only one agent has the authority to sell the property. The seller must not instruct any other agents during the term of the Sole Agency. If they did, they might risk having to pay two sets of estate agency fees.
Sole-Selling Rights:
Where one agent has the right to a fee or commission however the property is sold and whoever sells it - including a private sale by the owner.
Stamp Duty Land Tax (SDLT):
This is a tax normally paid to the Government by the buyer of a property and is based upon the following rates (as of June 2007):
Below £125,000 - Exempt
£125,001 - £250,000 - 1%
£250,001 - £500,000 - 3%
£500,000+ - 4%
Note that this is not a sliding scale tax. For example,
if you buy a property at £255,000 the 3% is payable on the whole amount.
Sold Subject to Contract:
An offer for a property has been accepted but the details of the contracts have not been finalised and they have not yet been exchanged. Buyer or seller may still withdraw from the transaction.
Survey (Structural):
An inspection commissioned by a buyer and carried out by a surveyor to report on the physical condition of a property and to highlight defects requiring repair.
Survey (Valuation):
Also called a Valuation Inspection. A report paid for by the buyer but carried out on behalf of a lender to ensure that the value of the property is sufficient to cover a loan (mortgage). Buyers should not rely on this type of inspection to confirm the physical condition of the property.
Tenant:
The person who is in possession of property, usually by way of a lease.
Tenants in Common:
A legal form of property ownership where each person owns a separate share of a property and may sell or transfer that share as a separate entity. Usually split 50/50 between husband and wife or partners. See also - Joint Tenants.
Tenure:
Whether a property is freehold, leasehold or commonhold.
Title:
Proof of ownership of a property. Title - Abstract of: Documents used in the conveyancing of unregistered properties to prove that the seller has the right to sell.
Title Deeds:
Legal documents describing the rights and liabilities of ownership and occupation of a property.
Title - Report on:
Solicitor's certificate confirming that the title to the property is acceptable. A Lender will usually insist on having this before releasing the loan to the buyer.
Under Offer:
When the seller has accepted an offer for their property, but contracts have not yet been exchanged. Buyer or seller may still withdraw from the transaction.
Vacant Possession:
The present occupants will vacate the property before completion of the sale.
Valuation:
When carried out by a potential selling agent the valuation is, in their opinion, the current potential sale price of the property. For any other valuation purposes, e.g. insurance, probate, capital gains tax, appropriate professional advice should be sought.
Vendor:
The seller of a property.