Conveyancing Glossary: Legal Terms Explained

Whether you’re buying or selling a property, conveyancing can be a complicated process – particularly if you don’t know the lingo.

We’ve put together a glossary of some terms you might encounter on your conveyancing journey.

But don’t forget that one of the most important parts of getting your house purchase or sale completed efficiently is choosing the right legal team.

Get an instant conveyancing quote from the First4Lawyers team here.

Breach of Contract

After the point of exchanging contracts, you can’t pull out of a house purchase without it being a breach of contract. The party who did not cause the sale to fall through can then seek reparations from the one who did.

Caveat Emptor

Translated, this means ‘buyer beware’. It is used to inform home buyers that they are responsible for finding out about a property’s condition, rather than the seller having to inform them about any potential problems.

Chain

This refers to how many people are involved in your house purchase and/or sale. You are one link in the chain, while your seller is another and a buyer of your current home is another. These parties might all have buyers and sellers too, meaning that conveyancing with a chain can get complicated. A first-time buyer or a seller moving abroad or into a rented home would be considered chain-free and are typically the most attractive buyers and sellers.

Disbursements

These are fixed costs that your conveyancer will pay for, but which they will then pass onto you. They include environmental searches and bankruptcy searches. You will typically pay for these before your conveyancer carries them out so they will not be out of pocket.

Equity

Equity is the difference between your home’s value and what you owe on the mortgage. It essentially refers to the amount of the property you own outright.

Exchange of Contracts

This is when your solicitor and your buyer or seller’s solicitor make sure the contracts reflecting the property sale are the same. It is the point of no return. Once you exchange contracts on a home purchase, you can’t pull out without facing a financial penalty – and losing all the money you’ve already spent on conveyancing.

Freehold

A freehold property is one you will own completely. There is no ground rent or maintenance fee to pay and there is no limit to the number of years you can own the property, as there often is with a leasehold home.

Gazanging

This is when a seller pulls out of an agreed transaction at a late stage, assuming they can get more for the property if they put it back on the market. This is more likely to happen when the market is hot and property prices are high.

Gazumping

Gazumping happens when another buyer comes along and offers a higher price for a property that already has an agreed buyer. This can happen at any stage in the conveyancing process, so the initial buyer may have already paid out for searches and other associated costs.

Gazundering

This is the opposite of gazumping. It happens when a buyer reduces their offer at the last minute, leaving a seller stuck between accepting a lower offer than agreed or pulling out of the sale and losing the money they’ve already spent on conveyancing.

Homebuyer Report

This is a type of home survey that is more comprehensive than a basic valuation, but less so than a full structural survey. It is usually only advisable for standard houses that are in generally good condition. It can turn up issues like damp and subsidence.

Joint Tenants

One of the ways you can own a property with someone else, joint tenants will receive full ownership of the home after the death of the other owner. This happens even if there is no Will. Joint tenants can’t leave their share of the property to anyone else.

Land Registry

HM Land Registry is a government department that registers the ownership of property and land in England and Wales. When you buy a home, part of your conveyancer’s duties will be to register you as the new owner with the Land Registry.

Leasehold

A leasehold property is one where the owner is also a tenant. They have the right to live in the property for a certain period of time and are usually required to pay ground rent to the freeholder – usually the property developer.

Negative Equity

If your home is in negative equity, you have borrowed more on your mortgage than it is worth. For example, if you owe £120,000 on your home but it’s worth £110,000, you are in £10,000 negative equity. Taking out a second mortgage can also contribute to negative equity so it’s vital to think carefully when considering this.

Occupier’s Consent Form

Any adult who lives in your property but is not named on the mortgage is known as an occupier. An occupier’s consent form may be necessary to prove to your lender that the occupier will not obtain any legal interest in the property and that the lender will receive a vacant property in the event of repossession.

Off Plan

Buying a home off plan means you are buying it without it being built. You will usually just have your developer’s plan to base your decision off. It can be risky and tends to be more common in the buy to let market.

OIEO

‘Offers in excess of’ is a common term used to apply to the asking price of a property. It is used in the hopes that a buyer will make a higher offer than the number suggested – but it doesn’t force them to. Any potential buyer could make a lower offer.

Redemption Settlement

This is how much money you’ll need to transfer your mortgage provider if you want to pay your home loan back early. This will usually include an early repayment fee, which reimburses the lender for the interest they will then not receive.

Reparations

This is what the party responsible for a breach of contract will have to pay the other party. It will usually cover their conveyancing fees and any other compensation agreed.

Restrictive Covenant

A restrictive covenant is a restriction on a property that prevents an owner from doing certain things to it. This includes prohibiting any business activity in a property or on a piece of land or not allowing certain alterations or extensions to a property.

SSTC

‘Sold subject to contract’ means that the seller of a property you’re looking at has agreed to sell it to someone but is still waiting for contracts to be exchanged. Making an offer on it at this stage is allowed, but would be considered gazumping.

Stamp Duty Land Tax

Stamp Duty is based on property price and is paid to HMRC. It only applies after a certain threshold. This is currently £500,000 for residential properties and £150,000 for non-residential land and properties. From 1 April 2021, though, this reverts back to £125,000 – unless you’re a first-time buyer. In this case, the £500,000 threshold will still apply.

Subsidence

One of the most feared discoveries in a home survey, subsidence is when the foundations of a property sink. It results in a strain on the structural integrity of a home, usually causing cracks to appear in the walls.

Tenants in Common

The other option for owning together with someone else, tenants in common own separate shares of the property. This could be equal shares or it could be unequal. This is usually decided based on who contributed more towards the purchase of the property. Tenants in common can leave their share of the property to whoever they name in their Will.

Transfer of Equity

A transfer of equity adds or removes one or more people from the legal title or ownership of a property. It is most commonly carried out when a couple separates or a homeowner wants to add a partner to the title deeds. An equity transfer could be complete or partial.

For help with all your conveyancing needs, just get in touch with First4Lawyers.