Glossary of terms
If you have been appointed as an attorney then you will have the authority to deal with the donors financial affairs on their behalf. The power is derived from a Lasting Power of Attorney which will have been executed by the donor and registered. If you are appointed as an Attorney you are bound by a duty to act within the authority of the power and to act in best interests of the donor
Adverse Possession arises when an occupier takes possession of and occupies land without permission of the owner. The Land Registration Act 2002 came into force on 13th October 2003, this changed the previous requirements and introduced a new scheme for the acquisition of land by Adverse Possession. . If registered land is occupied without the permission of the owner and without payment the period is now 10 years, however, if the land is unregistered the period is 12 years. In some cases depending upon the date of the start of occupation even in registered land it could still be 12 years. There are strict legal requirements as to precisely what will constitute adverse possession.
Apportionment is the term usually used in Leasehold transactions where the amount of service charge and ground rent to be paid to the date of completion is divided fairly between the Seller and the Buyer.
A person, who is appointed by the Court, to deal with the Estate of a deceased person in England, Wales and Northern Ireland. An Administrator is usually appointed where there is no Will or where the deceased did not appoint any Executors in the will. The female version of Administrator is Administratrix.
Aggregate Chargeable Transfer
This is the total amount on which Inheritance Tax is charged
This is the amount you can give away each tax year that will be exempt from Inheritance Tax. The amount is currently £3,000 and it applies to one single gift or a number of gifts adding up to that amount.
A possession, which has value, for example, a car, a house, land, work of art, cash or shares.
A Bankruptcy Search is a search made on behalf of a Lender to ensure that a prospective borrower is not or has not in the past been made bankrupt or has any pending actions against them. You cannot borrow money to purchase a property if there is any such registration.
For the purposes of Inheritance Tax, a beneficiary is someone who receives property or gets some benefit from a will, intestacy or a trust.
Breach of Contract
If the buyer or seller fails to abide by the conditions or terms of the contract they are said to be in breach of contract. E.g., if they fail to complete on the date set for completion. If this happens the aggrieved party may sue for breach of contract and claim damages (compensation). The first action to be taken is to serve a ‘Notice to Complete’ to make time of the essence.
The remedies available for breach of contract will depend on whether there has been a breach of a ‘condition’ in the contract (then the aggrieved party can terminate the contract and claim damages) or a ‘warranty’ (in which case, the aggrieved party can only claim damages). A term of the contract will be viewed as a condition if it is a major or fundamental term. If it is something minor it will be treated as a warranty.
A Bridging Loan is used during a house sale and purchase transaction. If the sale of one property and the purchase of another cannot be concluded simultaneously; for example, the purchase of the second property has to be concluded before the sale of the first, then additional financing may be necessary. This is a ‘bridging loan’ as it bridges the gap between the two transactions.
Buildings Insurance is insurance to cover your property for the risks that are agreed in the policy and for a sum recommended by your surveyor/valuer. Cover usually commences from the moment you exchange contracts.
Building Regulations Approval
THE BUILDING REGULATIONS set out the requirements necessary to ensure a consistent and appropriate standard of health, safety, energy conservation and accessibility is achieved in building work, for both domestic and commercial proposals. They are laid down by Parliament and are accompanied by a series of “Approved Documents” which relate to particular aspects of the Regulations.
|BUILDING REGULATION PARTS||RELEVANT APPROVED DOCUMENTS|
|PART B||Fire Safety|
|PART C||Site Preparation & Resistance to Moisture|
|PART D||Toxic Substances|
|PART E||Resistance to the Passage of Sound|
|PART H||Drainage & Waste Disposal|
|PART J||Heat Producing Appliances|
|PART K||Stairs, Ramps & Guards|
|PART L||Conservation of Fuel and Power|
|PART M||Access & Facilities for the Disabled|
|PART N||Glazing – Materials & Protection|
|REGULATION 7||Materials & Workmanship|
The Regulations cover most building works including the erection of new buildings, conversion and extension of existing buildings, and the installation of heating, drainage or sanitary facilities.
Beneficial joint tenants
If you hold the property you own as a beneficial joint tenant, this means that it belongs to you and the other owner(s) jointly. You are not able to re-mortgage or sell the property without the agreement of all the other owner(s). However if there is a dispute, any one owner can apply for a court order.
As a beneficial joint tenant, you will not own specific shares in the property and you will not be able to leave a share of property in your Will. If you die, your interest in the property passes automatically to the other owner(s)
Boundaries define the extent of the property and are usually marked out on the ground by fencing or hedging. Boundaries are rarely shown on the Title Plan. Please note that although Land Registry documents may sometimes contain precise measurements and/or dimensions for boundaries, this is the exception rather than the rule. There are sometimes filed at the Land Registry old plans that show inward ‘T’ marks that define the ownership of the boundary but unfortunately this is becoming rarer.
Also known as a Full Building Survey, or a Structural Survey.
The Surveyor’s main objective in providing the report is to assist the prospective homebuyer to make a reasoned and informed judgment on whether or not to proceed with the purchase, assess whether or not the property is a reasonable purchase at the agreed price and enables the homebuyer to be clear what decisions and actions should be taken before contracts are exchanged.
The Homebuyer Report is the only one that is licensed by the RICS. This should not be confused with a Full Structural Survey. The surveyor must rate each element of the property using one of the following Condition Ratings:
Condition Rating 1 (green) : No repair is currently needed. The property must be maintained in the normal way.
Condition Rating 2 (amber) : Defects that need repairing or replacing but are not considered to be either serious or urgent. The property must be maintained in the normal way.
Condition Rating 3 (red) : Defects that are serious and/or need to be repaired, replaced or investigated urgently.
The report is divided into easily readable and logical sections as follows:
1 1. A. Introduction to the report
2 2. B. About the inspection
3 3. C. Overall opinion and summary of the condition ratings
4 4. D. About the property
5 5. E. Outside the property
6 6. F. Inside the property
7 7. G. Services
8 8. H. Grounds (including shared areas for flats)
9 9. I. Issues for your legal advisers
10 10. J. Risks
11 11. K. Valuation
12 12. L. Surveyor’s declaration
The report will also include a number of appendices which provide useful information about what the purchaser needs to do next and, particularly in the case of leasehold properties, any enquiries that legal advisers need to make prior to exchange of contracts. The new format also allows the surveyor to add photographs to the report.
The RICS also offer a product called a ‘Condition Report‘. This is a simplified version of the Homebuyer Report and includes many of the elements discussed above, including the ‘Traffic Lights System’ for flagging up defects. The Condition Report does not, however, include a Valuation or advice on future repairs and maintenance. The Condition Report can be commissioned by sellers, prior to putting their property on the market, to prevent unforeseen issues cropping up when their potential purchaser has a mortgage valuation or survey carried out.
Where a Seller is also buying another property there is a chain of related transactions, all reliant upon each other. Any chain is only as strong as its weakest link.
Chattels is an old fashioned word still used to describe personal and household property including furniture, jewellery, works of art, stamp collections, clothes, books, cars and electrical equipment.
The legal relationship, that exists, between same sex couples who have registered their relationship; under the Civil Partnership Act 2004.
This certificate is issued once the Personal Representatives have supplied the necessary account and paid all the tax and any interest that is due on a deceased's estate. The certificate must be applied for using form IHT 30.
Cleared funds means that any funds paid into the Conveyancers bank have processed through the banking system and are available for use.
CML Lenders Handbook
The CML Lenders’ Handbook provides comprehensive instructions for conveyancers acting on behalf of lenders in residential conveyancing transactions. Every conveyancer must adhere to the rules set out in this handbook when acting for a Lender, there is a set of rules that every Lender complies to and there is a second part that is individual to each Lender. There is a CML Lenders’ Handbook for each legal jurisdiction in the UK.
An addition or change made to a Will. It has to be signed and witnessed in the same way as a Will. A codicil may be needed, for example, to increase a cash legacy, change a guardian or executor named in a Will, or to add another beneficiary. Codicils should only be used to perform minor changes to the existing Will. If more complicated changes are needed it is advisable to make an entirely new Will.
Common Land & Village Green Search
A Common Land Search is a conveyancing search usually made on land that has never been built on or which at one time may have belonged to a Lord of the Manor, a town or Village green or any other land you may believe to be common land, i.e. land used by the community at large. The conveyancing search can also be carried out on small vacant urban plots of land as these could be subject to common rights. Many Common Land registrations affect small areas of land such as grass verges between properties and the public highways
Completion is the time when the Contract between the Seller and the Buyer is concluded. The purchaser’s conveyancing solicitor sends the purchaser’s money from their bank to the Sellers conveyancing solicitor’s bank account, the ownership of the property is transferred to the purchaser. The keys to the property are only to be handed over to the purchaser once the money has been received by the Sellers solicitors and completion is deemed to have taken place. The legal completion date is the date agreed on exchange of contracts.
The date when the buyer becomes the new owner of the seller’s house and the day the seller must have left the property. The seller and buyer should discuss dates between themselves and then notify their respective solicitors. You should not make any firm commitments such as giving notice on a job, arranging removals or making holiday bookings before exchange of Contracts has taken place and the completion date is set.
This is a statement of the monies received and the monies paid out on your behalf in the conveyancing transaction (or to redeem a mortgage, Stamp Duty Land Tax, and Land Registry fees etc.) It will also show whether there is a balance of money due back to you on completion or whether there is extra funds to be paid before completion can take place. All funds required must be cleared before completion.
Conditions of Sale
These are detailed in the Contract that the seller’s conveyancing solicitor prepares and sends to the buyer’s conveyancing solicitor. There are standard Law Society conditions to which Special Conditions relating to your transaction alone can be added.
Consent to Mortgage form by Occupier
This is a mortgage form used when a purchaser is purchasing property with a mortgage, and on completion of the mortgage, there will be a non-owning occupier, over the age of 18 also living at the property. By executing the Consent to Mortgage form the occupier is agreeing that, if the purchaser/owner defaults on the mortgage and, as a result, is evicted from the property by the mortgage lender, then the occupier also must leave the property. The Occupier should and in some cases must obtain separate legal advice by an independent lawyer who is not involved in the transaction.
Land affected by contamination which could arise from a past use of a property (e.g. a pottery or petrol station) or by things stored on the property in the past (e.g. gas chambers or other chemical uses)
This is the legal agreement prepared in duplicate for signature by the seller and buyer setting out all the legal rights and obligations agreed between them. It sets out the main terms such as the property, the price and the names of the parties and also deals with the process if something goes wrong. The seller’s solicitor draws up two copies of the same contract, the buyers solicitor then approves the contract and each party signs their own copy. When both parties are ready to legally commit, the two contracts are exchanged.
A contract race is where a Seller offers the property to more than one buyer usually on the basis that the first one to exchange contracts gets the property. The Seller’s conveyancer is obliged to inform all the conveyancing lawyers and the parties concerned if contracts have gone out to more than one Buyer. If you lose out on a contract race you cannot claim your lost expenses from the Seller.
Requirements and rules contained in the Deeds or Lease that relate to the upkeep of the property or place restrictions on its use. Some covenants are said to ‘run with the land’, meaning that the burden or benefit of the covenant is passed to the buyer of the land on transfer of the title.
Deed of Covenant
A document, that the Buyer signs, to confirm that the buyer will comply with the rules and conditions affecting the property.
Deed of Guarantee
A document used where one person agrees to be responsible for someone else’s obligations, such as a debt or mortgage obligation, if that person fails to carry out their own obligations.
The deposit is the amount of money that is handed over to the Seller’s Solicitors upon exchange of contracts. On exchange of contracts the seller can insist on receiving from the buyer a 10% deposit of the purchase price. However, given that many people are not in a position to contribute as much as 10% to the purchase, reduced deposits are often agreed. You should be aware, however, that if you are a buyer and you pay a reduced deposit then fail to complete the purchase through no fault of the seller, you will, under the terms of the contract, be required to make the deposit up to the full 10% immediately upon default. You may also have to pay compensation to the seller if the seller loses out through your failure to complete.
Payments paid on your behalf, such as search fees.
A right granted over another’s property, e.g. a right of way which allows certain persons the right to walk or drive across a piece of land.
An Encumbrance is a burden or charge that affects the use or enjoyment of the land. It can include an Easement or Restrictive Covenant.
The process by which the leaseholders of a block can purchase the freehold of the building
Energy Performance Certificate
The EPC provides an energy performance rating for your property – providing prospective purchasers with an assessment of the property’s energy consumption, together with a list of practical measures that can be taken to reduce fuel bills and carbon emissions.
The Energy Performance Certificate (EPC) shows the energy efficiency rating and environmental impact of the property. It uses an A to G rating system similar to the ones used on fridges and washing machines. It also advises on cost effective improvements that can be made to cut bills and reduce emissions. They must be produced by a certified domestic energy assessor or home inspector.
EPCs still remain as a mandatory document for the sale of a property.
A search that enquires into previous use of the land of the property and its surrounding area that may indicate the likelihood of contamination, pollution or flooding.
For Inheritance Tax Purposes, up to the 22nd of March 2006, a person’s estate consisted of the following:
- Assets which were in the sole name of the deceased.
- Assets which were owned jointly by the deceased – i.e., their share of those assets
- Assets which were in trust which the deceased had an interest in
- Nominated assets
- Any assets that were given but over which the deceased retained an interest (e.g. a property that was given away but which the deceased continued to live in)
From the 22nd of March 2006 a person’s estate consisted of the following:
- Assets which were in the sole name of the deceased
- Assets held in trust in which the deceased had an immediate post-death interest, a disabled person’s interest or a transitional serial interest
- Assets which were owned jointly by the deceased – i.e., their share of those assets
- Nominated assets
- Any assets that were given away over which the deceased retained an interest (e.g. a property that was given away but which the deceased continued to live in)
- The value of an alternatively secured pension from which the deceased benefited as he was an original scheme member or as a dependent who continued to receive benefits from the left over alternatively secured pension fund.
Usually means the difference between the value of a property and the amount owed and secured on the property.
Equity release enables you to raise money from your property. Two main types of equity release scheme exist:
- Lifetime mortgage, or taking out a loan with your home as security
- Home reversion, selling outright all or part of your homes’ ownership.
Both forms may pay out a lump sum, regular income, or combination of the two.
Exchange of Contracts
This is the moment that the buyer and seller commit themselves to the deal under a legally binding agreement. When both parties are ready to legally commit, the two contracts are exchanged. This is a very important moment in the house buying and selling process – as soon as contracts are exchanged, the seller must sell, the buyer must buy, and this must all be done in accordance with the terms of the contract, at the price and date set out in the contract. Until contracts are exchanged, nothing is binding and either party can walk away from the transaction with no penalty.
Someone who is named in the Will to administer the deceased’s Estate.
The female version of Executor
This is a type Estate where there is no liability to Inheritance Tax as the spouse, civil partnership or charitable exemption bring it below the IHT threshold
These are gifts that are exempt from Inheritance Tax and include the following:
- Gifts to individuals made more than seven years before death
- Gifts to spouses or civil partners
- Gifts that do not exceed £3,000 in one tax year
- Gifts that are made on consideration of marriage or civil partnership
- Gifts for ‘national purposes’ (gifts to certain institutions such as the National Gallery
- Small gifts (gifts of up to £250 made to any number of recipients)
- Gifts which are made out of income for normal expenditure
FENSA stands for the Fenestration Self-Assessment scheme. It was established by the Glass and Glazing Federation (GGF) and other industry bodies, with Government encouragement , in response to new Building Regulations. FENSA certificates act as documentary evidence that the installation work has been self certified as complying with the Building regulations.
Companies that are in the business of providing residential services must conform to specific fire safety obligations, which often include notifications to or consultation with their local fire authority. Please beware that the consequences of non-compliance with fire safety requirements can be severe. Apart from the potential for loss of life, injury or damage to property, it may also lead to enforcement action being taken. The penalties are set out in legislation and will range from a fine to a custodial sentence and may, in extreme circumstances include both.
First-tier Tribunal (Property Chamber)
Formerly The Leasehold Valuation Tribunal, the First-tier Tribunal (Property Chamber) is the formal name given to the body appointed to make decisions on various types of dispute relating to residential leasehold property. The v is an independent decision making body which is completely unconnected to the parties or any other public agency. The Tribunal will look at the matter of the Leasehold Dispute for the property following an application to the Tribunal. One of the earliest functions of the FTT(PC) was to determine disputes concerning lease extensions.
A First-tier Tribunal (Property Chamber) consists of three members; one with a background in property law such as a conveyancing solicitor; one with a background in property valuation generally a surveyor; and a layman.
The First-tier Tribunal (Property Chamber) is not a court and FTT(PC)'s decisions are not capable of binding each other, although, in practice, the FTT(PC) is keen to promote consistency. Despite the fact that the Lands Tribunal is not a ‘court of record’, the FTT(PC) will generally follow the decisions of the Lands Tribunal. It is entirely proper for the Lands Tribunal to give guidance to FTT(PC)s. The First-tier Tribunal (Property Chamber) (and Lands Tribunal) are bound by decisions of the High Court, Court of Appeal and House of Lords. Appeals from a decision of the First-tier Tribunal (Property Chamber) may be made, with permission of either Tribunal, to the Lands Tribunal, and from there to the Court of Appeal.
When part of one property is built on top of part of another property and so the upper property owner does not own the building or land underneath the “flying” part e.g. where part of an upper floor room is built over part of a neighbour’s ground floor room.
Forfeiture is a legal process which enables a landlord to terminate a lease where the tenant is in breach and take back possession of the property. Related terms – forfeit and repossession
A freeholder is normally a company or person that owns the actual freehold of the building. The leaseholder will own the house or flat on a lease for a certain number of years, but the freeholder will own the land and common parts outright. Freeholders are usually responsible for the repair and maintenance of the common parts as well as exterior of the building. A leaseholder may be liable to contribute towards these costs as a service charge under a lease. If you are a leaseholder it is important that you are aware of and understand the terms of your lease, as they set out legal rights and duties as a leasehold owner
Full Title Guarantee
The seller of a property must state the guarantee they are prepared to give. This is the normal guarantee given by a property owner.
Gazumping is when a Seller of a property accepts an offer from one interested party, only to accept a higher offer later on from someone else. By way of example, a property is for sale at an asking price of £150,000. You make an offer of £145,000 which the Seller accepts. A few hours, days or even weeks later, a second buyer makes an offer of £146,000 for the same property. The Seller contacts you and either says that they are accepting the second offer or they ask you to increase your offer to beat the second offer. In either case as a buyer you have been gazumped.
Gifts in consideration of Marriage or Civil Partnership
Gifts that are to be made to a person who is getting married or who is entering into a civil partnership are exempt from IHT up to the following amounts:
- £5,000 made by the person’ parent
- £2,500 made by the person’s grandparent
- £1,000 made by anyone else
Gift with Reservation of Benefit
This is a gift which is not fully given away, e. g, a property which is given away to someone but where the person making the gift continues to leave there. It is therefore a gift with conditions attached whereby the person giving the gift retains some benefit.
Grant of Representation
This is the term used to describe the proof of legal authority which is required by the person who has been entrusted to deal with the deceased’s estate.
Grant of Letters of Administration
This is the term used to describe the proof of legal authority which is required by the person who has been entrusted to deal with the deceased’s estate where there is no Will or the Will is not valid.
Grant of Probate
This is the term used to describe the proof of legal authority which is required by the person who has been entrusted to deal with the deceased’s estate where there is a Will.
Is the rent paid by owners of the land on which a building is sited. In most residential property there is a single owner of a property – the freeholder. However, where property has been developed for apartments, for instance, it is often split into freehold and leasehold titles. The leaseholder will generally own the bricks and mortar whilst the freeholder retains the ownership of the land. In return for the use of the land on which the building is located the leaseholder is required to pay the freeholder a small annual rent known as ground rent.
Home Buyers Report
A Home Buyers Report is produced by a qualified surveyor and is designed to answer basic questions about the integrity of a property that you are considering purchasing. The questions that it answers are set out by the Royal Institute of Chartered Surveyors (RICS).
See Beneficial Joint Tenants
This is an agreement which allows the buyer access to carry out the works/redecoration before the date of actual completion ( usually only after exchange of contracts ) on the basis that if anything goes wrong or damage is caused the purchaser will indemnify the Seller against any losses. If agreed, access is usually only on the basis that you do not take up occupation
Land Registry Search
The searches at the Land Registry to check matters affecting the property and to get up to date copies of the Land Registry entries that relate to the property. On completion the conveyancer will make an application to the Land Registry who will register the new owner and any new lender
Lasting Power of Attorney
A Lasting Power of Attorney is a legal document that you (the Donor) makes using a special form. It allows you to choose someone now (the Attorney) that you trust to make decisions on your behalf about things such as your property and affairs or personal welfare at a time in the future when you no longer wish to make those decisions or you may lack the mental capacity to make those decisions yourself.
If either the buyer or seller are late in completing, interest is payable to the aggrieved party at the contractual rate (the rate specified in the contract). Compensation and other costs resulting from late completion (e.g., removal costs, bridging finance ) may also be payable, depending on the conditions in the contract.
If the buyer fails to complete, they forfeit their deposit of 10% of the purchase price. If a 10% deposit was not paid on exchange of contracts, the balance of the 10% deposit is immediately payable and the seller may pursue them for the balance of the deposit and can also sue for breach of contract.
Leasehold Advisory Service (LEASE)
Leasehold Advisory Service (LEASE) is an independent advice agency. LEASE provides advice to a members of the public and managing agents on the law affecting residential leasehold property. LEASE was set up in 1994 in response to a need for impartial, expert advice on leasehold law following the Leasehold Reform, Housing & Urban Development Act 1993.
Leasehold Reform, Housing and Urban Development Act 1993
The Act of Parliament which provides for certain Lessees (who meet the necessary qualification criteria) to acquire a lease extension
A person who holds the Lease of a property ( residential or commercial )
A person (otherwise called a landlord) who is entitled to the “Reversion” or ‘Freehold’ , i.e. he can have a property back at the end of a Lease and in the meantime collects rent etc for it.
Letters of Administration
Letter of Administration are granted where:
- The deceased died intestate, i.e., without leaving a valid Will
- where the Executors named in the Will are no longer alive or able to act for whatever reason.
- Where there is a Will but Executors have not been granted probate, then the grant is called Letters of Administration with Will annexed.
- The grant is given by the Probate Registry
- Where the deceased died intestate the appropriate people to whom Letters of Administration can be granted is dictated by the strict Laws of Intestacy where a strict order of persons must be followed. If someone does not wish to act as an Administrator then they can renounce their right by completing a Deed of Renunciation and make way for the next person down the line to apply.
Loan to Value
The term loan to value expresses the amount of a loan as a percentage of the total value of a property. For instance, if a borrower wants £150,000 to purchase a house worth £200,000, the loan to value is 75%.
Local Authority Search
A search which reveals local authority records to confirm the status of the property, it checks for items such as whether the road serving the property should be maintained by the council, whether there are planning applications on the property etc
The Local Authority search is against the property only and does not cover the surrounding area. A word of warning – the search will not show any Planning Permissions or matters affecting land or buildings outside the boundaries of the property. It is important that you let your property solicitor know at the start of the transaction, if you require information on any particular point or if you wish us to ask any particular questions of the local authority.
A seller of a property may require a buyer to enter into a lockout agreement. It is usually drafted by the seller’s solicitor. It requires the buyer to pay an initial deposit to the seller’s solicitor to demonstrate their intention to buy the property. The agreement will usually say that exchange and completion need to happen at a specific time and if they do not and it is the fault of the buyer, they will lose their deposit. If the transaction proceeds, the deposit should be deducted from the actual deposit paid on exchange of contracts. The deposit paid on exchange is different to a deposit paid under a lockout agreement.
A lease exceeding 21 years (for the purposes of the Leasehold Reform Housing & Urban Development Act 1993) or exceeding 80 years in terms of marriage value.
Sometimes the landlord or the residents’ management company carry out the management of the property direct; alternatively, a managing agent may be appointed to manage and maintain the building on behalf of the landlord, in accordance with the terms of the lease, current relevant legislation and codes of practice.
The managing agent takes instruction from the landlord, not the leaseholders, but should constantly be aware of the leaseholders’ wishes and requirements. The agent will receive a fee which will usually be paid by leaseholders as part of the service charges.
This may be based on a specified percentage of the day-to-day service charges, but good and common practice is for it to be a fixed fee per annum.
For a lease extension, the value of the leaseholder’s interest increases when they buy a lease extension while the value of the landlord’s interest falls. However, there will often be an overall increase in the total value of the two interests. The difference between the total value of the interests before and after lease renewal is known as the marriage value and determines the price payable by the Leaseholder for a Lease extension
This is a document that must be signed by the borrower and must be in place prior to completion of the purchase taking place. By signing the deed the borrower is agreeing to the terms of the mortgage offer and agrees for the lender to have a secured charge over the property. The mortgage deed is sent to Land Registry after completion, when the borrower applies to have the property registered in his name.
Negative equity occurs when your mortgage borrowing exceeds the value of the property.
Nil Rate Band
This is the amount of the estate where there is no Inheritance Tax to pay.
Where a 3rd party who has an interest in a particular piece of land or property ( commercial or residential ) that party may register a notice against the property’s title register at the Land Registry. By registering a notice a party who has an interest in the land may prevent another individual from purchasing the land free of the interest. The notice does not necessarily confirm that the third party has a valid interest – only that they claim to have one.
Notice to Complete
Following exchange of Contracts if either the Purchaser or the Seller fails to comply with the terms of the contract on the completion date, the non-defaulting party may serve a Notice to Complete. This Notice will set out the fact the party is ready, willing and able to complete in accordance with the contract and put the other party on notice that he is entitled to interest – at the rate set out in the contract – plus costs and compensation for any losses incurred as a result of the delay and may be entitled to forfeit the deposit. Other penalties and damages may also apply depending on the circumstances
The Official Receiver is an independent, impartial party appointed by a bankruptcy court as an interim receiver and manager of the property to which debt is charged. He or she presides over the creditors’ meetings in examination of the property in receivership and often, when winding-up order is issued by the court, serves as a provisional liquidator.
Not all matters affecting property are registered or capable of being registered at the Land Registry. Nonetheless the property is still subject to such matters.
In simple terms, a party wall divides the building of two properties or the boundary between properties usually, but not always, positioned at the centre of the wall. The Party Wall Act 1996 became effective throughout England & Wales on 1st July 1996, and makes provision in respect of party walls, and excavation and construction in proximity to certain buildings or structures.
A gift of a sum of money under a Will.
If a property is to be divided ‘per stirpes’ among the children of a deceased person, then each child takes an equal share. If a child has predeceased, that child’s children will take equally between them the share that the predeceased child would have taken.
This is the person who administers the deceased’s estate. If the deceased left a Will the person appointed to deal with the Estate is known as the Executor. If the deceased did not leave a Will then the person appointed to deal with the estate is the Administrator.
Possessory title is one of the classes of title the Land Registry may approve. Often approved when the owner claims to have lost the title deeds, or to have acquired title by adverse possession. A possessory title means that the title is subject to any adverse interests which exist at the date of registration, e.g. which could be unknown covenants or even the claims of the true owner.
Potentially Exempt Transfer
Up to the 22nd of March 2006 a potentially exempt transfer (PET) was an outright gift to an individual, to an accumulation and maintenance trust or to a disabled person’s interest, which becomes an exempt transfer where the donor lives for more than seven years after making the gift.
For transfers that are made after the 22nd of March 2006, a PET is an outright gift to an individual, to a disabled person’s interest, or to a bereaved minor’s trust on the coming to an end of an immediate post-death interest which becomes exempt where the donor survives for seven years after the gift is made.
This is a Will made by a soldier on active service or a sailor at sea and is one that does not need to comply with the usual requirements for making a valid Will. It does not have to be in writing; it does not need to be witnessed by two witnesses and can be made by a minor.
This is a term commonly used when talking about applying for the right to deal with a deceased person’s estate. It’s sometimes called ‘administering the estate’.
When someone dies leaving an Estate worth at least £5,000 an application should be made for either Probate ( if there is a Will) or Letters of Administration (if there is no Will) The application must be submitted to the correct office, depending on where the deceased lived.
Only the Executors named in the Will can apply for a Grant of Probate. If the deceased did not leave a valid Will then they are said to have died intestate and only a strict list of persons can apply to administer the Estate. They are granted ‘ Letters of Administration’ . This list must also be followed where the Executors named in the Will are no longer alive or where Executors may simply not have been named. The Grant in this case is called ‘Letters of Administration with Will annexed’ since there was a Will.
Probate applications can take several weeks to deal with depending on whether there are any queries to be raised by the Probate Registry or whether there are any complicated matters.. If the application is straightforward it can take as little as a week or two to process.
Once the Grant of Probate/ Letters of Administration is received it should be sent to all the relevant companies with whom the deceased held assets in order for the assets to be released.
The Probate Service is made up of the Principal Registry in London, 11 District Probate Registries and 18 Probate Sub-Registries situated throughout England and Wales.
There are also a number of Probate offices (these are usually a room in a court or local authority building) intended for interviews of personal applicants.
The Probate Registry deal with applications for Probate, Letters of Administration and queries relating to probate procedure. If you are submitting your application in person, i.e. without legal representation then you will be asked to attend for interview.
Qualified Energy Assessors
A person, who has undergone CIBSE (Chartered Institution of Building Services Engineers) Low Carbon Energy Assessor training, to enable them to prepare Energy Performance Certificates.
Radon Affected Area
A Radon Affected Area is a geographical area in which the levels of the naturally occurring gas radon are above a set level. When a search reveals a Radon Affected Area the purchasers property solicitors will raise relevant enquiries with the Seller’s property solicitors.
Repayment in full of a mortgage or loan.
The person whose name appears registered on the Official Copies of title as owner of land
This term is used to describe grandchildren, great grandchildren and so on, of the deceased
A rentcharge is an annual sum payable for land in perpetuity or for a term of years which gives the owner of the rentcharge (the ‘rentowner’) specific rights if the sum is not paid.
After the 21st of August 1977 only certain rentcharges may be created. These are mainly ‘estate rentcharges’ created for the purpose of making a landowners personal covenants (for example a promise to maintain a fence) enforceable by the rentowner, or to secure payment for the provision of services or the carrying out of maintenance, repairs and the like by the rentowner. Any other rentcharges created before the 22nd of August 1977 will (if not already extinguished) be extinguished on the 22nd of July 2037. You can make an application to have the rentcharge removed prior to that date in certain circumstances.
For Inheritance Tax purposes, resident has the same meaning as it does for Income Tax purposes. To be considered resident in the UK you must be physically present at some time during the tax year. You will always be considered to be resident if you are in the UK 183 days or more during the tax year
This is the part of the deceased’s Estate that is left over after payment of legacies, debts, funeral expenses and Inheritance Tax It is referred to as the ‘Residuary Estate’
A restrictive covenant is an Encumbrance within the Title that is attached to the land. It may have an expiry date or it may state that some of the covenants are not to expire and consequently, you should be aware of the effect it may have on your use (including future development plans) of the property
The return of an estate or interest to a landlord or freeholder after the grant or lease has expired. Or, the interest retained by a fee simple owner of the estate after granting a determinable estate or interest in such property to another. For example, when a freehold owner gives a lease to a tenant, the interest which the owner has left is known as the reversion.
Right Of Way
A right which gives a person access across certain property. (Usually land owned by someone else)
Section 106 Agreement
Local planning authorities have powers under Section 106 of the Town and Country Planning Act 1990 to enter into agreements – known as ‘planning obligations’ – for the purpose of restricting the development or use of land, or securing certain necessary benefits related to the development, such as the provision of a new road, public open space or other facilities.
Sellers Property Information Form
The Property Information Form ( PIF) is part of the Law Society’s Transaction Scheme to be completed by a seller in a conveyancing transaction.. property information form gives details about the property such as neighbour disputes and boundaries and the replies given by the Seller are legally binding.
An amount payable by each lessee towards the maintenance and repair of the common parts of a block of flats (sometimes referred to as a maintenance charge )
Shared ownership is a “half-way house” between buying and renting. It is where a purchaser buys a proportion of the property – say 50% – with a normal mortgage from a lender. The purchaser then pays rent on the other half to a social landlord such as a housing association and you have the facility to buy another portion at a later date – for example, when your earnings have risen thereby allowing you to qualify for a larger mortgage.
A pool or sum of money saved up over a period of time to replace a major item or to cover some major works, mainly in blocks of flats. Also see Reserve Fund
Small gifts of £250 or less made in a tax year to any number of people are exempt from Inheritance Tax. Note that this exemption cannot be combined with another other exemption such as the annual exemption. Also, if a larger gift is made, the small gift exemption cannot be claimed for the first £250 part of that gift.
Spouse or Civil Partner Exemption
Gifts which are made between husband or wife or civil partners are exempt from inheritance Tax provided both are domiciled in the UK.
The Solicitors Regulation Authority (SRA) regulates more than 100,000 solicitors in England and Wales.It’s purpose is to protect the public by ensuring that solicitors meet high standards, and by acting when risks are identified.
Staircasing is the procedure of buying further shares in your Shared Ownership property
Stamp Duty Land Tax
Usually referred to as Stamp Duty. This is a Government tax on property transactions. The rate varies depending on the value of your purchase and whether the property is commercial or residential.
Standard Conditions of Sale
Standard Conditions of Sale (SCS) (the 5th Edition is being used) are a set of conditions that apply to the sale and purchase of properties. They can be varied by adding special conditions to the contract, e.g., to change the time by which completion should take place (it is 2.00 pm under the SCS), or by passing the risk of the property to the buyer at exchange of contracts rather than the risk passing on completion.
Subject to Contract
Before Exchange of Contracts all negotiations relating to the property are subject to contract, which means they are not legally binding.
The rule of survivorship applies where property is owned jointly under a joint tenancy and where one co-owner dies. Upon death the deceased’s share of the property passes automatically to the surviving joint tenants. The property therefore cannot pass under their Will or under the rules of intestacy. If the joint owners want their share to pass under their Will, they must sever the joint tenancy to create a tenancy in common.
Where the total chargeable value of all gifts made by the deceased between three and seven years of death and they come to more than the Inheritance Tax threshold at the time of death, taper relief is due. Taper relief effectively reduces the amount of IHT payable on the gift.
Tenants in common
If you own a property as tenants in common, this means that it belongs to you and the other owner(s) jointly, but that you all also own a specific share of its value. It is up to you to decide how much each share will be.
You can give away, sell or mortgage your share. If you die, your share of the property does not pass automatically to the other owner(s). You can leave your share to whomsoever you like in your Will.
There are 3 types of property tenure: freehold, leasehold and commonhold
Someone who has made a will. (The female version of this word is ‘Testatrix.’)
When a property is registered Land Registry gives it a unique reference number, called a ‘title number’.
A scale plan based on the Ordinance Survey (scale of 1:1250) and often contains coloured markings referenced in the Title Register to Rights of Way, Rights of Access etc.
The register of title at the Land Registry detailing the property.
Each title register for a registered property in England and Wales is in three parts:
- Property register – a description of the property and any rights that may benefit the property
- Proprietorship register – who owns the property and any restrictions upon their power to deal with the property
- Charges register – further information such as mortgages or rights that may adversely affect the property.
- An Official copy of the title register is admissible in evidence in a court to the same extent as the original
The Transfer, is the document that transfers the legal ownership of a property from the seller to the buyer. It is drawn up in a specific way, in accordance with Land Registry rules. The seller must always sign the Transfer and the buyer should also sign it but is not always required to. The Transfer is sent to Land Registry after completion, when the buyer applies to register the property in their name. The Transfer will contain basic information such as the purchase price, the property address, address of the new owner (if different from the property address) and any additional provisions.
Transfer at Undervalue
The transfer of property or an interest in it (for example a transfer by the owner into the joint names of himself and another), by way of gift, or for a price less than the current market value of the property.
Transfer of Equity
A transfer of equity happens when the owner of a property wants to add one or more people to the legal register alongside themselves. Or they may want to remove one or more people other than themselves from the legal title.
This is an obligation which is binding on the person who holds the legal title, ‘the Trustee’, to deal with the property for the benefit of another, ’the Beneficiary.’
Unadopted or private roads do not belong to any Local Authority and they have no duty to maintain them. However, they may be rights of way – and/or highways for specific classes of vehicle. An unadopted road may be adopted by the Local Authority and the cost of this will be shared between the house frontage.
A binding promise,to carry out an action. . Conveyancers and solicitors often give undertakings in the course of a conveyancing transaction and can be called to account for any failure to comply with them
A part of the Sales Contract is the requirement to give ‘vacant possession’. This means that all possessions and people must have left the property.
The general contract sets out a time of 2pm for formal vacant possession of the property to be handed over to the new purchasers. However, it is not unusual for contract time to be amended (particularly when you have both a sale and purchase transaction completing on the same day).
On the day of completion, vacant possession means giving full possession of the property to the purchasers by the allotted time and all items not included in the sale property price should be completely removed from the property by this time.
All items in sheds, garages, loft spaces and cellars are included in this. If you fail to give vacant possession in accordance with the terms of the contract you may find yourself in breach of contract and involved in further legal action and legal costs regarding this
Water and Drainage Search
The water and drainage search is a conveyancing search which confirms whether or not the property has a mains drainage connection and a mains water supply and provides plans showing the location of these services. The vast majority of residential properties have mains drainage and water connections, so in a lot of situations it does not provide any information that would make a difference to a decision about buying a property, but in certain cases it can be important. The search is a compulsory part of a Home Information Pack.
This is a legal document in which you set out your intentions for the dealing with your Estate after you die. The Will must be properly drawn up and witnessed in order for it to be valid.