THE TERMS YOU NEED TO KNOW WHEN BUY­ING A HOUSE

The Oban Times - - PROPERTY - BY EL­LIOT CAS­TLE

Buy­ing and sell­ing a prop­erty can be a con­fus­ing and stress­ful process. Prop­erty is, for most of us, the high­est value as­set we will ever own, so when it comes to buy­ing or sell­ing, the pres­sure is on us to make the right de­ci­sions.

Ne­go­ti­at­ing and com­mu­ni­cat­ing with es­tate agents and so­lic­i­tors, who use con­fus­ing prop­erty trans­ac­tion lan­guage and jar­gon, can make the al­ready stress­ful process more daunt­ing and over­whelm­ing – es­pe­cially for first­time buy­ers or sell­ers.

As a prop­erty ex­pert and CEO of UK home buy­ing ser­vice, We Buy Any Home (www.we­buyany­home.com), I like to keep things sim­ple, and help my clients sell a prop­erty quickly, ef­fi­ciently and stress-free. There­fore, to help others go­ing through the stress­ful time, I have cre­ated a guide that de­codes some of the most con­fus­ing lingo used in the in­dus­try.

• AMOR­TI­SA­TION: the process of pay­ing off debt with a fixed re­pay­ment sched­ule in reg­u­lar in­stal­ments over an agreed pe­riod of time, with a mort­gage for ex­am­ple.

• AN­NUAL PER­CENT­AGE RATE (APR): a com­pound in­ter­est rate fig­ure used to com­pare dif­fer­ent mort­gages. APR shows the true cost of bor­row­ing over the en­tire term and should ap­pear on all mort­gage il­lus­tra­tions.

• AP­PRAISAL VALUE: value of the prop­erty, as es­ti­mated by a sur­veyor.

• BREAK CLAUSE: a clause in a con­tract that al­lows a per­son to end the con­tract early. This can be in­cluded in a lease al­low­ing ei­ther the land­lord or ten­ant to end the lease early.

• BRIDG­ING LOAN: a short-term loan taken out to cover the in­ter­val be­tween two trans­ac­tions, typ­i­cally the buy­ing of one house and sell­ing of an­other.

• COL­LEC­TIVE ENFRANCHISEMENT: the right of own­ers of flats in parts, or the whole, of the build­ing to join to­gether and buy the free­hold of that build­ing – this re­quires the co­or­di­na­tion of at least 50 per cent of the build­ings ten­ants.

• COM­PLE­TION: the fi­nal step in the le­gal process of trans­fer­ring own­er­ship of prop­erty. Com­ple­tion is usu­ally the point at which the pur­chase price for the prop­erty is paid and the trans­fer doc­u­ments are dated.

• COVENANT: an agree­ment or writ­ten prom­ise be­tween two in­di­vid­u­als that con­sti­tutes a pledge to do or re­frain from do­ing some­thing.

• CON­VEYANC­ING: in law, con­veyanc­ing is the trans­fer of le­gal ti­tle of real prop­erty from one per­son to an­other, or the grant­ing of an en­cum­brance such as a mort­gage or a lien.

• DI­LAP­I­DA­TION: this refers to any breaches of lease agree­ments which re­late to the con­di­tion of prop­erty, dam­age and up­keep in par­tic­u­lar, dur­ing the term of ten­ancy or when the lease ends.

• DIS­BURSE­MENTS: fees paid by the so­lic­i­tor on buyer’s be­half, such as stamp duty, land registry and search fees, AKA le­gal fees.

• DIS­CHARGE FEE: paid to some lenders for re­leas­ing their hold over a prop­erty once you’ve paid off your loan. Of­ten ap­plies if you’ve paid it off early.

• EASE­MENT: is a non-pos­ses­sory right to use and/or en­ter the prop­erty of an­other with­out pos­sess­ing it, used to de­scribe the right of way be­tween landown­ers.

• EN­CUM­BRANCE: is a claim against, lim­i­ta­tion on or li­a­bil­ity against real es­tate. This in­cludes liens, deed re­stric­tion, ease­ments, en­croach­ments and li­cences. An en­cum­brance may re­strict the owner’s abil­ity to trans­fer ti­tle to the prop­erty, or lessen its value.

• EX­CHANGE: the ex­change of con­tracts, when the agreed terms be­come bind­ing on the buyer and seller.

• FLY­ING FREE­HOLD: a fly­ing free­hold ex­ists when one part of a prop­erty ex­tends over or un­der a neigh­bour­ing prop­erty.

• FREE­HOLD: when the owner of the prop­erty also owns the land.

• GAZUMP­ING: when a seller ac­cepts a higher of­fer from a third party on a prop­erty that they have al­ready agreed to sell to some­one else prior to ex­chang­ing con­tracts.

• GAZUNDERING: when a buyer re­duces their of­fer at the eleventh hour.

• GROUND RENT: the an­nual charge levied by free­holder to lease­holder.

• HOLD­ING DE­POSIT: money paid to a land­lord or let­ting agent to re­serve a rental prop­erty be­fore the sign­ing of a ten­ancy agree­ment. This is nor­mally non-re­fund­able in the case of with­draw­ing an ap­pli­ca­tion for ten­ancy.

• INI­TIAL MONIES: the monies paid by a ten­ant be­fore the ten­ancy starts. This will cover the de­posit, rent for the first month or quar­ter, ten­ancy agree­ment fee and check in charge.

• LAND REGISTRY: the gov­ern­ment de­part­ment re­spon­si­ble for reg­is­ter­ing own­er­ship of land.

• LEASE­HOLD: this means to own a prop­erty for a num­ber of years, but not the land un­der it

• NEG­A­TIVE EQ­UITY: is when the value of an as­set falls be­low the out­stand­ing bal­ance on the loan used to pur­chase that as­set.

• PRO­BATE: the le­gal process wherein the es­tate of a dece­dent is ad­min­is­tered and a will is proved valid or in­valid.

• PEP­PER­CORN GROUND RENT: nom­i­nal pe­ri­odic rent usu­ally paid an­nu­ally.

• RE­DEMP­TION: when a mort­gage is fully re­paid.

• RING FENCED: refers to money held in such a way that it can only be used for a spec­i­fied pur­pose. For ex­am­ple, in the case of a ten­ancy de­posit, it can be used only for the pur­poses set out in the ten­ancy agree­ment.

• SHARE OF FREE­HOLD: free­hold on which prop­erty stands is owned by a lim­ited com­pany and the share­hold­ers of that lim­ited com­pany are the own­ers of the prop­erty.

• TEN­DER: a ten­der is a way of mar­ket­ing and sell­ing a prop­erty whereby of­fers (ten­ders) for the prop­erty are made to a set date and time (set by the ven­dor), the ven­dor then pri­vately con­sid­ers each of­fer. Ten­ders can be con­di­tional of­fers.

• TI­TLE DEEDS: pa­per doc­u­ments show­ing the chain of own­er­ship for land and prop­erty. They can in­clude: con­veyances, con­tracts for sale, wills, mort­gages and leases.

• TI­TLE SEARCH: in­ves­ti­ga­tion car­ried out by a con­veyancer or so­lic­i­tor into the his­tory of own­er­ship of a prop­erty. Will check for liens, un­paid claims, re­stric­tions or any other prob­lems that may af­fect own­er­ship.

• UN­EN­CUM­BERED: a prop­erty that is free and clear of any en­cum­brances, such as cred­i­tor claims or liens.

• VOID PE­RIOD: the pe­riod of time when the prop­erty is empty/ un­oc­cu­pied by the ten­ant.

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