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Residential property solicitors use many legal terms throughout a conveyancing transaction which can be difficult to understand when you are looking to sell your home or purchase a new home.
During what has been described as one of the most stressful experiences of a person's life, we have set out below some of the common terms used to help you navigate any legal jargon that you might see in documents you are signing and which may be used by your solicitors:
Covenant
This is an enforceable obligation affecting a homeowner. These can be revealed on the title register held at the Land Registry. Covenants usually consist of a legal promise to do or provide something, e.g., to pay towards the cost of maintaining a fence (known as a "positive covenant") and to refrain from doing something, e.g., to not use your home as a place of business (known as a "restrictive covenant").
Your solicitor will advise you on which covenants must comply.
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Easements
An easement is a person's right over another person's property or land. This is most commonly seen in the form of a right of way. An easement can also be the right to use services which may run through your land.
Encumbrances
This adversely affects the use of or the ability to transfer property. It can be any burden, interest, right or claim, for example, a covenant, mortgage or lease of the property.
Title Guarantee
There are two main types of title guarantee that you will see in a Contract:
- Full Title Guarantee – This implies certain covenants (i.e., promises) by a seller, including that:
- The seller has a right to sell the property;
- The whole of the property contained in the title register at the Land Registry is being sold;
- The seller, at its own cost, will do all that it reasonably can to ensure the buyer has a good title; and
- The sale is free from all charges (e.g., mortgages) and encumbrances (e.g., covenants) other than those the seller does not and could not reasonably be expected to know about.
- Limited Title Guarantee is often used when the property owner dies and an executor sells the property.
- This implies the first three covenants above but not the fourth, as they need more knowledge of the property as it is not their property. Here, it is only implied that the seller has not, and as far as it is aware, no one else has, since the last disposition of the property for value, e.g. since the deceased acquired the property, charged or encumbered it.
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Vacant Possession
Vacant Possession means the property is handed over on the completion date free from any occupiers or possessions belonging to the previous owner.
Freehold Property
If a property is a freehold, the owner owns it outright, along with the land within its boundaries.
Leasehold Property
If a property is a leasehold, the owner owns the property for a stated number of years, for example, 999 years. The owner will usually have to pay an annual ground rent, and once the lease ends, the property will return to the ownership of the freehold owner.
Completion Date
This is the date on which the transaction of buying or selling a property is legally completed, and the property passes to the buyer. A completion date is not legally binding until a contract exchange occurs.
Deposit
A deposit is a sum the buyers will pay to the property sellers in exchange for contracts, usually 10% of the purchase price.
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Class of Title
When a title to a legal estate is registered with the Land Registry, different kinds of title may be granted.
The most common classes of titles are as follows:
- Absolute Freehold/ Leasehold Title – This is where there is no way that the ownership of a person's property can be contested. This is the highest class of title available and the most common class of title.
- Possessory Title – An owner will be said to have a possessory title where the owner cannot provide documentary evidence that they own the property. This is usually the case where land is claimed by adverse possession.
- Good Leasehold – This only applies to leasehold properties. A property will have a good leasehold title where the Land Registry is satisfied regarding the leaseholder's title to the property but not satisfied regarding the freehold title. This will occur in most cases where the freeholder cannot be identified.