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MORTGAGE FINDER ~ GLOSSARY OF LEGAL TERMS

This page is designed to explain some of the terms used on this site

Agreement

This is the document that contains all the main terms of what has been agreed between the Seller and the Buyer in respect of the property. The agreement includes the description of the property, title number, the full names and addresses of all the parties, the purchase price, what deposit will be payable on exchange and whether any monies are being paid in respect of additional items which the Seller is selling to the Buyer. This document is generally prepared by the Seller's Solicitors and sent to the Buyer's Solicitors for approval. Once the Agreement has been approved then each solicitor arranges for their client's to sign their own copies. Once all the enquiries have been dealt with and searches and mortgage offer (if applicable) have been received then Contracts are exchanged.

Completion Date

The completion date is the date when the property becomes the Buyer's and the Buyer can arrange to move into the property. This date is normally agreed between both Seller and Buyer prior to exchange of Contracts. Once a date has been agreed both parties should notify their solicitors once this date is known. It is only when Contracts are exchanged that a fixed completion date is known and therefore you should not make any commitments in respect of arranging removals etc. Please note that if you are proposing to buy a new built property most developers insist that completion is on Notice which means that once the Developer's Solicitors have received notice that the property is completed from the site office, their solicitors will issue a Notice to the Buyer's solicitors stating that they have a certain number of days in which to arrange for completion to take place. Please note that most developers insist on completion taking place within 7/14 working days of notice being served

Deposit

It is normal when exchanging Contracts on a purchase that a deposit of 10% of the purchase price is paid. Sometimes a reduced deposit can be agreed with the Seller's solicitors, this is normally the case when the purchaser is borrowing 100% on a mortgage or are dependent on a related sale and their Buyer has no deposit or a reduced deposit to offer. Please note that in the event of the Seller agreeing a reduced deposit and then the purchase falling through then you will be liable to pay the remainder of the 10% deposit under the terms of the Contract.

Early Redemption Fee

Most lenders charge the borrower in respect of paying off the mortgage early. If you are selling or even just re-mortgaging a property you must ensure that you check with your current lender to confirm whether they will be charging you any additional fees in respect of this.

Exchange of Contracts

Once Contracts are exchanged it becomes legally binding. This is where each solicitor uses each parties signed copy and exchanges Contracts by telephone. Once exchange of Contracts has taken place the deposit is sent to the Seller's solicitors by cheque.

Fixtures Fittings and Contents Form

This document which is to be completed by the Seller and lists all the items which are included, excluded or not at the property from the agreed price. This document is enclosed with the Contract documentation that is sent to the Buyer's Solicitors and is attached to the Contract.

Land Registry

The Land Registry is a Government body that retains all the records of ownership of land. When the land was purchased, the price which was paid and anything that may be adversely registered in the title.

Leasehold Property

The owner of a leasehold property owns the property for a term of years, for example 99 years or 999 years. The purchase does not own the land where the property is built and once the term of the Lease expires then the property will revert back to the ownership of the freeholder (Landlord).

Local Authority Search

All Buyer's solicitors when acting for a Buyer will make an application for a local authority search to the local authority for information regarding the property that is being purchased. The result deals with a list of questions about the property and includes information regarding whether the roads by the property are maintained by the Council, information regarding planning applications, whether the property is in a conservation area, information regarding Radon and contamination etc.

Management Company

An independent Management Company is normally appointed by the Landlord (Freeholder) to deal with all of the services charges and ground rent collection in respect of Leasehold property and the development/block of flats. The Management Company normally makes a charge in respect of their fee for doing this work and this is passed onto each Leaseholder in the service charges.

Mortgage

Most people purchase properties with the aid of a mortgage and this means that the lender has an interest in the property that is registered at the Land Registry. This in effect means that for you to be able to sell a property you will have to redeem the mortgage with your current lender and start afresh. The Buyer's Solicitors are in charge of checking the mortgage offer to ensure that all of the mortgage conditions can be complied with prior to proceeding to exchange of Contracts.

Mortgage Deed

This is the Legal Charge over the property which your lender has and which you will have to have witnessed in the presence of an independent witness. This document is then registered at the Land Registry.

Notice of Mortgage / Notice of Transfer

On completion of a purchase we will have to serve as your solicitor onto the Management Company/Landlord to let them know that you are the new Buyer/owner of the property in order that they may arrange for you to pay the service charges and ground rent correctly.

Pre-Contract Enquiries

These are enquiries that we will raise with the Seller's solicitors upon receipt of Contract documentation. We normally recommend our Buyers prepare a list of questions that they may have in respect of the property in order that we may raise these together with our additional enquiries at the same time.

Redemption of Mortgage

This is the final payment that you make when you either sell/re-mortgage the property or finalise the mortgage payments of your mortgage loan.

Seller's Property Information Form

This is a list of questions that the Seller's have to complete and which forms part of the Contract papers that are sent to the Buyer's solicitors. They include information as to who is responsible for the boundaries, whether there have been any alterations to the property, whether there are any guarantees which will be transferred on the sale of the property, whether there have been any neighbours disputes.

Stamp Duty

This is a Government tax that will affect you if the purchase price for the property is over £120,000. Please note that if you are a Buyer of property which ranges between £120,001 to £250,000 then Stamp Duty will be payable on your purchase of 1% of the purchase price. If you are buying a property that ranges between £250,001 to £500,000 then Stamp Duty is charged at 3% of the purchase price. Anything above £500,000 is charged at 4%. There are a number of properties now which come under the Disadvantaged Areas Exemptions created by the Government and in order to be advised whether your property is exempt from Stamp Duty your full postcode is required. (Changes to stamp duty rates were made at the time of the 2005 Budget)

Survey Report

The Survey is a report that can be requisitioned by you and carried out by a surveyor on the physical state of the property you are purchasing. It is for the surveyor and you as the Buyer to ascertain any physical defects at the property by further inspections and surveys.

Title Deeds / Official Copy Entries

These documents indicate the ownership of the property. These can be obtained from your lender or from the Land Registry. If you are selling the property we will have to obtain up to date Official Copy Entries and your Buyers will rely on the information provided in the Official Copy Entries.

Transfer Deed

This is the document that will transfer the property that you own onto your Buyers. Once a completion date has been fixed and completion has taken place then this date will be added onto the Transfer Deed and then the Buyer's solicitors will deal with the Registration of the property in the Buyers name at the Land Registry.

Valuation Report

This is a report carried out by the lenders surveyor. This is the most basic report carried out on the property that is commissioned by the lender and for their benefit only. It only advises them whether the basic structure of the property is of sufficient value to protect the lenders interest in the property.

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Please complete the brief enquiry form, to receive an online quote for your conveyancing whether buying, selling or re-mortgaging your property. There is no obligation whatsoever to take matters further if that were your wish.

Stamp duty

Stamp duty was invented by the Dutch in 1624 and first levied in the UK in 1694. It was so successful that it remained, even when its imposition caused riots in the American colonies during 1765. Stamp duty is payable on documents which transfer ownership of an asset (e.g. on the sale of a house or disposal of shares). It is also payable on the grant of a lease. For 1999/2000 stamp duty paid came to a total of £3.7 billion. It is the oldest tax administered by the Inland Revenue. (Source: UK Inland Revenue)


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