Comptons Solicitors – Conveyancing, Landlord & Tenant, Litigation, Employment, Company & Commercial Law, Wills & Probate

Jargon Buster

Solicitors just love a bit of jargon. We are trying to cut it out altogether but inevitably during the course of your transaction it might be hard to avoid and so we have set out the main culprits. If we have missed jargon that you would like explained, please email us at info@comptons.co.uk and we will add it to the definitions below

Additional Enquiries

These are questions that the buyer’s solicitor will ask us about the property and even the area your property is in. We will try to answer them without you, but inevitably will need to have your input in answering them.

Articles of Association

The constitution of a company which is a matter public record and can be obtained from Companies House. It details such matters as how director and shareholder meetings are to be conducted and any restrictions on transferring shares or appointing directors. The Articles of a general commercial company are usually based upon, but with variations, the standard form known as “Table A”. The Articles form a binding contract between each company its shareholders. Every company must have Articles of Association and a Memorandum of Association

Bankruptcy Search

A search carried out by us on behalf of your lender to ensure you are not and never have been bankrupt.

Certified Copy

This is a copy of a document or identification taken by a solicitor and stamped as a true copy of the original.

Chattels

These are fixtures and fittings the purchaser may have agreed to buy from the seller upon completion for example washing machine, fridge freezer etc.

Contract

The formal document containing details such as the price, parties involved, the property etc, which when signed and exchanged (see Exchange of Contracts) legally binds the seller and the buyer to complete on the date set out therein.

Conveyancing

The process used to describe the purchase and/or sale of residential property.

Completion

The moving date. The purchase funds are sent to the seller’s solicitors by same day telegraphic transfer and the seller will then hand over the keys (usually via the Estate Agents) to the buyer. Any documentation will then be passed from the seller’s solicitors to the buyer’s solicitors in order to register the new owner at HM Land Registry (see Registration).

Covenant

A promise to do something. Commonly used with reference to landlord and tenants promises contained in leases. Restrictive covenants are those which restrict the person making the promise from doing something. Restrictive covenants can be found in a variety of legal documents such as employment contracts and shareholders agreements.

Declaration of Trust

This is a deed which we can draw up between the buyers of a property which sets out which proportion of the property you each own or reflecting anything else the buyers have agreed between then, e.g. how you will buy each other out or sell the property is case of dispute.

Deposit

The amount of money handed over upon exchange of Contracts (usually 5% or 10% of the purchase price). This is usually then held by the seller’s solicitors until completion (unless the deposit is paid as agents in which case it can be released immediately to the seller – this is rare and usually when buying from a developer).

Disbursements

These are payments we have to make on your behalf i.e. office copy entries, searches etc.

Enfranchisement

The name of the process when residential flat owners in the same building join together to compel the landlord to sell them the freehold of their building. Not only can owning the freehold increase the value of the flats but after they have bought the freehold the leaseholders can grant themselves new longer leases on better terms and take over the management of the building.

Exchange of Contracts

This is when both parties become legally bound to complete on the completion date as set out in the Contract. If either party withdraws from the transaction after this point, they are likely to have to pay costs and compensation to the other party which is likely to be several thousands of pounds.

Fixtures Fittings and Contents Form

This is a list completed by the Seller setting out all the items included/excluded in the sale of the property i.e. curtain rails, light switches etc. The seller may also list any items they may wish to sell to the buyer upon completion.

Home Information Pack (HIP)

Since 14 December 2007 every home put on the market, no matter what size, must have a Home Information Pack, including a sale statement, local searches and evidence of title. The Pack also includes an Energy Performance Certificate that contains advice on how to cut CO2 emissions and fuel bills.

Joint Tenants

This is one way of owning a property jointly. Both parties are deemed to own all of the property jointly so that on the death of one joint owner the survivor automatically inherits the entire property. This is regardless of what the Will of the deceased says or (where there is no Will) the laws of intestacy.

Land Registry

The Government Department where copies of all the registered titles in England and Wales are kept. These are also available for public inspection.

Litigation

A generic term referring to legal disputes whether such a dispute is being negotiated, in the Court or in an alternative dispute resolution procedure such as mediation.

Memorandum of Association

Also referred to as the objects of the company, this document details what the company can do. If a company acts outside its objects i.e. does something that is not contained in the document, then it is deemed to have acted “ultra vires” (outside its powers). As a result the Memorandum is usually drafted extensively so as to allow the Company to virtually do anything (although this is strictly not necessary since the law is now that even if a company acts outside its powers the company is still bound).

Mortgage Deed

This is the document a borrower must sign to confirm he is willing to enter into the Loan Agreement (mortgage offer) offered by their relevant mortgage lender. This must be signed prior to completion before an independent witness. We are happy for you to come to our offices for us to be your witness if we are acting for you in the purchase or re-mortgage

Office Copy Entries

This is an up to date copy of the registered title obtained from the Land Registry setting out the extent of the property, details of the current proprietor and any mortgages they may have over the property.

Peppercorn rent

Used when speaking about ground rent payable under a long lease of a residential flat. It basically means that no ground rent is payable. The lease cannot state that nil ground rent is payable since it may invalidate the lease as something of value must pass to the landlord. Lawyers settled on a peppercorn as a symbolic object since although it has virtually nil intrinsic value it is worth something albeit very, very little.

Probate

A certificate issued by the Family Division of the High Court, on the application of Executors appointed by a Will to the effect that the Will is valid and the Executors are authorised to administer the deceased’s estate.

Redemption Statement

This is a statement produced by the lender upon a sale or re-mortgage of a property detailing how much is due upon completion to pay off the current mortgage. It also lists details of any additional fees the lender may charge for example an early redemption penalty.

Registration

This is an application made by your Solicitor to the Land Registry to officially register you as the new proprietor of the property. Registration also includes updating the title to show any current mortgages etc.

Searches

There are several searches we can carry out on your behalf (and indeed must carry out if you are obtaining a mortgage and we are acting for the lender). The main ones are:-

Local Search – this broadly sets out the planning history for the property, any enforcement notices served by the council relating to the property and confirmation that the roadway is publicly maintained. The local search can no longer be relied upon to inform you of any neighbouring development so you may require a plan search (see below).
Drainage search – this confirms that the property is served by mains drainage and sewage.
Environmental search – this gives details of the property’s past land use to try to identify if the land is likely to have been contaminated. It can also give flooding and natural subsidence details.
Chancel repairs search – this is a search to identify if the property is liable to contribute towards the repair of the local church, subject to very ancient laws
Plan search – this is an additional search that we will only do if you ask us to ascertain what planning permissions have been granted in your local area.
Ground stability and coal mining search – this is a search carried out in some circumstances (usually when the property is not urban) to ascertain how stable the ground is and any coal mining activities.

Stamp Duty

The Government Tax payable on certain property transactions over the sum of £125,000.00 (currently £175,000 until 31st December 2009) as follows:-

Transactions under the sum of £125,000.00 (currently £175,000 until 31st December 2009) – No Stamp Duty is payable

Transactions between £125,000 (currently £175,000 until 31st December 2009) and £250,000.00 – Stamp Duty is payable at a rate of 1%

Transactions between £250,000.00 and £500,000 – Stamp Duty is payable at a rate of 3%

Transaction in the sum of £500,000.00 or more – Stamp Duty is payable at a rate of 4%

Tenants In Common

This is another way of owning property jointly. The owners can specify shares in which a property is owned and to leave their share in the property to somebody else under a Will. Therefore, it is possible to own property in different shares such as 60/40 or just to leave matters as 50/50 but to leave a Will leaving your share of the property to somebody else other than a co-owner. Of course you could leave your shares to each other in a Will also. You should inform us if you are contributing to the property in different shares either by way of contribution to the deposit or in different responsibilities towards payment of the mortgage.

Transfer (TR1)

This is the legal document which transfers ownership from the seller to the buyer and is used upon registration. It states the names of the Sellers and the Buyers together with the price of the property and sets out if the buyers will own the property as tenants in common, joint tenants or subject to an additional declaration of trust (defined above)