Conveyancing transactions can be complex and the terms are often confusing.
At Max Engel, we aim to be clear and concise in our advice. Here are some key terms explained to assist with your move:
Contract: this is the legal document which sets out the agreed details and logistics of the purchase and the Completion date. The contract will become legally binding (and there will be serious financial penalties for not complying with its terms!) on exchange.
Exchange: this happens once most of the legal work is done (the searches enquiries and title investigation) and a completion date is agreed. “Exchange” refers to the exchange/handover of the signed documents which create the binding obligations between the buyer’s and the seller’s conveyancers.
Transfer Deed: this is the legal document which actually transfers ownership the property to the buyer, and will be sent to the Land Registry to register the property in your name.
Stamp Duty Land Tax (SDLT): this is the tax payable to HMRC upon completion of your purchase. The amount of tax will depend on multiple factors, including the price of the property or whether you are purchasing your first ever property or an additional property. There are online calculators available and we will usually work this out for you (although we do not provide detailed tax advice and cannot advise on potential reliefs and exemptions).
Indemnity Insurance: if there is an issue with the Property you are buying which cannot be resolved (for example, the installation certificate for the boiler is lost or there is a missing title document) an insurance policy may be taken out to cover you and future owners from any losses that may arise as a result of the issue.
Certificate of Title: sometimes referred to as a COT, a Certificate of Title is the document which your solicitor will prepare and send to your lender (usually before exchange) to confirm that they have properly investigated the title, are satisfied that there are no problems, to confirm any particular statements about the property, and to request the drawdown of mortgage funds on a set date.
Covenants: these are essentially the do’s and don’ts, and the obligations attached to the land. Covenants are obligations and restrictions contained in the title to the property. For example, you might be obligated to always maintain a fence or not cut down any trees. There is often a restriction in newer properties against parking caravans or boats, and sometimes you will be under an obligation not to create a nuisance for your neighbours. Sometimes covenants are a little obscure or historic, preventing keeping pigs on the land or suchlike.
Title: this refers to the record of ownership of the property and any rights/restrictions and covenants which may accompany the property.
Searches: when purchasing a property, searches will be undertaken to find out more information about the property. Usually, searches will include an Environmental Search, a Drainage & Water Search as well as the most important Local Search which will raise a series of questions with the local council about planning matters, building regulations, roadways and local schemes. Often the searches do not reveal anything of note, however it is a vital part of the conveyancing searches not least for peace of mind that there are no serious issues with the property or in the surrounding area.
Deposit: this is the sum of money paid over when contracts are exchanged and your purchase becomes legally binding. If you do not proceed your deposit will be forfeit, and additional damages may be payable. A deposit is usually 10% of the purchase price, although there are sometimes exceptions.
If you are planning to buy or sell a house, please do not hesitate to contact our conveyancing team – Lee Humphries or Jackie O’Sullivan on 01604 887455 or by email – lee.humphries@maxengel.co.uk or jackie.osullivan@maxengel.co.uk
