First Time Buyer Jargon Buster

Contract

You will hear the word Contract many times during the property transaction. In England and Wales all property transactions have to be in writing or evidenced in writing. The Contract is the document which will describe the property, the names of the parties, the price and the date that the property becomes yours. It is prepared in duplicate, one part is signed by the Vendor, ie the person selling the property and one part is signed by the Purchaser. You may also hear the words "Seller" and "Buyer" which are synonymous with Vendor and Purchaser.

Deposit

When you sign the Contract you will normally be required to pay a 10% deposit but sometimes you can negotiate a smaller deposit and in some cases when you are obtaining a 100% mortgage, Contracts can be exchanged without a deposit at all. Please note once the deposit is paid and the Contract has been signed and exchanged, then if you decide to back out of the deal, you will forfeit your deposit.

Exchange of Contracts

This is a term which will you will hear frequently. As stated above, the Contract is prepared in duplicate and the deal only becomes binding when the Contracts are exchanged. In the olden days, this meant that the parties actually walked round to the office of the Seller and handed over the Contract and deposit and received the Contract from the person selling the property. In this day and age it is done by telephone.

When the Contract is exchanged, the completion date is written into the document so that all parties know the date of completion. Your Solicitor may ask you to sign the Contract by calling at the office but do not regard that as an exchange. A Contract may be signed and left with the Solicitor because the other party are not ready to exchange and it is only when the Contract is exchanged that the deal becomes legally binding.

Transfer

Your Solicitor may ask you to call and sign the Transfer. This is not the same document as the Contract. The Transfer is a Land Registry document and its purpose is simply to replace the name of the present owner of the property with your own name. It also contains other details such as how you will hold the property if you are purchasing jointly. That is to say, you may want to hold the property in uneven shares where one party is putting more money into the property than the other. This is something your Solicitor can discuss with you.

Completion

The term Completion means the date that you pay for the house and it becomes yours. When you complete, you can expect to receive vacant possession on completion which means that there will be no-one living in the property when you come to open the door with the keys and move in.

Land Registry

The best way to describe the Land Registry to a lay person is effectively by using the simile of a log book for a car with the DVLA. The Land Registry keep a register of all properties which sell in England and Wales and are the people responsible for removing the name of the Seller and replacing it with your name. The Land Registry charge a fee for this which your Solicitor will place on the completion statement. You may also wish to visit the Land Registry website which can be found at www.landreg.gov.uk.

Fixtures & Fittings List

These days, most Contracts contain a list of fixtures and fittings which the Seller will leave such as carpets, curtains, etc. The list is normally fixed to the Contract.

Property Information Form

The Property Information Form is a list of questions which the Seller of the property has to answer truthfully. Your Solicitor should pass this to you so that you can have a good chance to look at it. It details such things as to whether there have been any disputes at the property, who owns the boundaries and lots of other questions. It has been designed to be user friendly and you should be able to read the Property Information Form and at the end of that, have more information about the property you are buying. This does not mean that you should forego having a survey of the property and at Ratcliffe & Bibby we always believe that there is no substitute for having anything other than a full survey done on the property.

Freehold/Leasehold

You will come across these terms. Effectively, most houses are Freehold, which means that you own all of the land. If you are purchasing a flat, it would be sold Leasehold. There are technical reasons why flats are sold Leasehold, and some houses are also sold as Leasehold. Some Leases are 999 years which if one stops to think about it, is a very long period of time. The main reason for a property being sold Leasehold is so that there can be a rent charge or charge to a Management Company and that Management Company can enforce the covenants for the benefit of all neighbours.