The process of buying your first home can be daunting at times, especially when there are several legal terms to understand before signing on the dotted line. This guide should help to ease the process.
To ensure important information is understood, it is really important that as a first-time buyer, you are familiar with some of the legal terms used throughout the process.
Conveyancing
The term refers to the legal process of transferring ownership of a property from the seller to the buyer.
Leasehold and freehold
These terms refer to the different types of property you can buy. With a freehold you are buying the property and the land it is built on. Leasehold means you buy the property but only a share of the land it is built on. Houses are almost always freehold and flats are normally leasehold. Maintenance charges will be paid to a management company for the upkeep of communal areas on leasehold properties.
Contract
The legal agreement entered into by the seller and buyer of a property.
Surveys and searches
A survey is an inspection commissioned by a buyer and carried out by a surveyor, to report on the physical condition of a property and to highlight any repairs that are required.
A survey for valuation (also called a ‘valuation inspection’) is a report paid for by the buyer but is carried out on behalf of a lender to ensure that the value of the property is sufficient to cover a loan (mortgage). Buyers should not rely on this type of inspection to confirm the physical condition of the property.
Search is a term used to describe documents showing any adverse factors affecting a property (e.g. new developments being planned close by or environmental issues in the vicinity). Obtaining searches is part of the conveyancing procedure conducted by the solicitor.
Disbursements and legal fees
Disbursements are the costs which your solicitor pays on your behalf – such as stamp duty – and legal fees are what you pay for the solicitor’s time.
Title deeds
A legal document that sets out the rights and liabilities of the ownership of a property.
Under offer (or sometimes known as Sold Subject to Contract)
The point at which the seller has accepted an offer on their property but contracts have not yet been exchanged. The buyer or seller may still withdraw from the transaction before contracts have exchanged.
Exchange of contracts
The point at which the buyer and seller exchange the signed, legally binding, contracts for the purchase and sale of a property. At this point they buyer will pay the deposit and both the seller and buyer become committed to complete the transaction.
Completion
The finalising of the sale when all the money changes hands and the purchaser acquires the legal right to the property. The property is now ‘sold’ and the buyer can collect the keys to their new home.
Flying freehold
A flying freehold is formed when part of a property overhangs and is supported by a different freehold property or land.
This blog was written by Head of Estate Agency at the Nottingham Building Society, Su Snaith.
