lgog green

Your Legal Dictionary to moving home

Completion Date

If you are selling or buying a property this is the date on which ownership of the property changes hands from Seller to Buyer.

This date should be agreed between the parties and is fixed when contracts are exchanged.

If you are re-mortgaging your home this is the day on which your existing mortgage is paid off using the money provided by your new Lender.

Contract

This is the formal document which contains the main terms – such as the parties names, address, price and any particular conditions relating to the transaction agreed between the Seller and Buyer of a property. It is prepared by the Seller’s solicitor and is in two identical parts – one signed by the Seller and one by the Buyer.

Deposit

This is the money paid on exchange of contracts by the Buyer. The contract will require the Buyer to pay a sum equivalent to 10% of the purchase price for the property but often the sum actually paid is less than this (eg. if the difference between the Buyers mortgage advance and the purchase price is less than 10% of the purchase price.

Exchanging Contracts

Perhaps the most critical moment when buying and selling a property. Prior to contracts being exchanged neither party is bound to the transaction. When contracts are exchanged both parties are legally committed to the transaction, the price for the property and the date on which your move takes place and are fixed.

Fixtures, Fittings and Contents List

This is prepared by the Seller and sets out which household contents are/are not included in the sale. It is sent by the Sellers solicitor to the Buyers solicitor with the contract and the title deeds to the property.

Land Registry

A Central Government body that records who owns individual plots of land in England and Wales.

Mortgage

A loan from a bank or building society formally secured against the property to which it relates meaning that you cannot sell or re-mortgage the property without repaying the loan.

Mortgage Offer

This is the formal document confirming the terms on which your proposed lender will provide you with the loan needed to purchase or re-mortgage your property. Until this is available you will not be able to legally commit yourself to the purchase. It will set out any conditions which you must satisfy before the Lender will release the loan to you.

Mortgage Deed

This is a legal document which you must sign by which you promise to repay the money loaned to you by your chosen Lender and which is sent to the Land Registry after completing your purchase or re-mortgage and enables the title to your property to be amended to record the loan against your property.

Property Information Form

This is a series of multiple choice questions filled in by the Seller of a property. It contains details of (amongst other things) which boundaries are the property owner’s responsibility to maintain, if there are any guarantees for the property, if there have been any disputes or notices served affecting the property and if any extensions or alterations have been made to the property.

If the title to the property is leasehold it also gives details of the landlord and the ground rent and service charges payable.

Searches

a) Local Search

A series of questions about the property you are buying or re-mortgaging addressed to the Council in which the property concerned is located. We submit the search ‘on line’ and it takes on average 3 to 4 days for the result to be returned. It asks such things as what planning permission/building regulation approvals relate to the property, if the road on which the property is located is maintained by the Council, if there are any road improvement schemes in the close proximity of the property or if there are Tree Preservation Orders affecting the property and various other matters which may affect the saleability or market value of the property.

Some other searches which may be made are with :

b) Coal Authority – giving details of underground mining affecting the property , the proximity of the property to old mine entries, opencast mining in the vicinity of the property and any subsidence damage claims settled on the property.

c) Drainage search – a check with the local water authority to ascertain that the property is connected to mains drainage and water supply and if any main public water supply or sewer runs through the property – this may limit any plans to extend the property without express permission to build over the sewer.

d) Environmental Search – this provides details of the previous use of the land within a 250m radius of the property you intend to buy. It may reveal that the land was previously used for industrial purposes or as a land fill site or was formally a pond. In this event further enquiries can be raised to ensure that before the property was built that any pollutants were removed or the land was re-inforced to provide a stable base to build on.

e) Chancel Repair Search - is designed to check if the property may be accountable for contributions towards repair of the parish church chancel by right of the medieval law relating to chancel repair liability. if so insurance can be obtained to provide cover against such risk.

f) Flood Search - As flooding becomes more prevalent, more property owners will find their insurance premiums increase significantly and the value of their homes may be affected.

The property - specific Flood Report features clear assessment and detailed flood risk information from leading data providers as well as providing a valuable insurability rating and information on past insurance claims.

Redemption Statement

The written confirmation from the Lender of the amount required to repay the mortgage on a property on the Completion Date. It may contain details of any penalty imposed by the Lender if you have a fixed or discounted interest rate mortgage.

Stamp Duty Land Tax

A tax payable to the Inland Revenue by people buying properties where the purchase price is over £125000. The tax is charged at 1% of the whole purchase price for residential properties costing £125000 to £250000 – (relief is available for first time buyers for transactions occuring before 25th March 2012)  3% for properties costing £250,000 to £500,000  4% on properties costing over £500,000 and 5% for properties over £1,000,000.

Certain properties if located in “Disadvantaged Areas” and costing less than £150000 are exempt from stamp duty. If the property you intend to buy is under £150000 and you provide us with the post-code for the property you are to buy we will check if it is exempt from the tax. As a buyer you will be required to complete a tax return form and submit this with any tax payable to the Inland Revenue within 30 days of completing your purchase otherwise HMRC will impose a £100 penalty for late submission of your tax return.

Different price bandings apply for non-residential properties.

Survey

A report prepared by a qualified surveyor on the physical condition of the property you intend to buy.

The responsibility for satisfying yourself about the state of the property falls upon you as the Buyer.

There is a distinction between a survey and a valuation. If you are borrowing money from a bank or building society it will require a valuation of the property and it is for the benefit of your Lender – in essence to give the Lender the peace of mind that if you fail to make your mortgage payments and the Lender recovers possession of the property and sells it, the sale proceeds will be sufficient to repay your loan.

A survey is a more detailed report and is for your benefit. We recommend that any buyer obtains a RICS Homebuyers Survey and Valuation Report before exchanging contracts to buy a property. If this reveals defects in the property it will enable you to negotiate a price reduction from your original offer for the property, or alternatively that the Seller makes good the defect before you complete the purchase.

Title Deeds

The documents which confirm who the legal owner of a property is and the extent of what is owned and what rights of way, obligations and restrictions affect the property. If there is a mortgage affecting the property, the deeds are held by the Lender. The Land Registry holds the central record of titles to the vast majority of properties in England and Wales and issue official copies of the title deeds of properties on request.