Find out what the terms mean in plain English
What is an agency agreement?
An agency agreement is a document detailing the terms under which an estate agent is to act for a seller. The document usually states the fee or commission payable to the agent and the circumstances under which it (and any other costs) are payable.
An applicant is the term used by estate agents when referring to someone looking for a property to buy.
An appraisal is carried out by an estate agent to establish, in their opinion, the potential sale price of a property.
An asking price is the price at which a property is marketed and on which buyers make an offer.
An auction is where a property is sold ‘on the fall of the hammer’ to the highest bidder in an auction room on a given day.
Sometimes a buyer may want to complete on a purchase prior to their own property being sold. This short-term loan ‘bridges’ the time gap.
What is a charge (on a property)?
A charge (on the property) is the legal document held by Land Registry that records who has a claim on your property, e.g. your lender.
In lending agreements, collateral is the property pledged as a guarantee for the repayment of a loan.
What is commission or a fee?
Commission or a fee is the sum of money to be paid by the seller to the estate agent for their services.
What does completion mean?
Completion means the finalising of a sale when all the money changes hand and the purchaser acquires the legal right to the property. The property is now 'sold'.
A contract race is when two or more purchasers want to buy the same property and the seller agrees to issue a contract to each of them. The successful buyer will be the first one to exchange contracts.
What does conveyancing mean?
Conveyancing is the legal process of transferring the ownership of a property from seller to buyer.
Covenant is a legal requirement of the owner to do, or not to do, something in relation to the property.
Deeds are the legal documents relating to the property.
What is a delayed completion?
A delayed completion happens if completion of the property takes longer than 28 days after exchange of contracts.
An easement is a legal right over or under land granted to someone who is not the owner, e.g. drainage.
What is an Energy Performance Certificate (EPC)?
An EPC is required by law to be ordered when a property is first put up for sale. The EPC is prepared after inspection by a domestic energy assessor and rates the property according to its energy efficiency, from Grade A (highest) to Grade G (lowest), and includes carbon emissions. The EPC also suggests improvements that could be made to increase energy efficiency. We can arrange the EPC, which is valid for 10 years or until the property changes ownership.
What is an exchange of contracts?
An exchange of contracts is the point at which the buyer and seller exchange the signed, legally-binding contracts for the purchase and sale of a property. The seller and buyer become committed to complete the transaction.
What are fixtures and fittings?
Fixtures and fittings are the items that are to be included in the sale, e.g. curtains and carpets.
What is a flying freehold?
A flying freehold is formed when part of a property overhangs and is supported by a different freehold property or land.
Freehold means the absolute ownership of land or property without time limit.
Gazumping is when the seller has accepted an offer but before exchange of contracts accepts a higher offer from another buyer.
Gazundering means a purchaser lowers their agreed offer just before exchange of contracts.
Ground rent is an annual payment made by the leaseholder to a freeholder. This may be a substantial sum of money or ‘peppercorn’. A peppercorn ground rent is a tiny amount of money.
The term instruction is used when an estate agency is formally instructed by the seller to market a property in order to find a buyer. An agency agreement confirms the terms under which the instruction is accepted.
A joint agency is where two estate agents act together as joint agents on behalf of the seller and divide the agreed commission between them. Subject to terms of the agency agreement, the seller may also instruct other agents at the same time.
What is a joint sole agency?
A joint sole agency is where two estate agents act together as joint sole agents on behalf of the seller. The seller must not instruct any other estate agent during the term of the joint sole agency.
What does joint tenants mean?
Joint tenants means a legal form of home ownership where two (or more) people share common ownership of the whole of the property. Joint tenants do not have separate shares of the property. When one owner dies the survivor automatically takes over ownership. See also – tenants in common.
Land Registry is the Government department where details of properties with a registered title are recorded, along with any charges, e.g. mortgages. Also records details of every property sale transaction.
What does leasehold mean?
Leasehold means the ownership of land or property for a fixed period of time. Sometimes subject to payment of a ‘ground rent’ to the freeholder.
What is a market appraisal?
A market appraisal is carried out by an estate agent to establish, in their opinion, the potential sale price of a property.
A mortgage is a loan, usually for house purchases, for which property is the security.
What is a mortgage acceptance?
A mortgage acceptance is the document you will need to sign and return to a mortgage lender if you wish to accept the lender’s mortgage offer.
A mortgagee is the lender of the mortgage e.g. Nottingham Building Society
A mortgagor is the borrower of the loan – whose property is secured for the loan.
What is a mortgage offer?
A mortgage offer is the letter from the lender offering you the loan setting out the terms and conditions upon which it is offered.
What is a multiple agency?
A multiple agency is where two or more estate agents are in competition with one another and independently acting for the seller. The agent who introduces the eventual purchaser is the only one paid.
What is a new instruction?
A new instruction is a property that has recently been added to the estate agent’s list of properties for sale.
An offer is the amount a buyer offers for the property.
What is a Power of Attorney?
A Power of Attorney is the legal authority for a representative to act and sign legal documents on your behalf should you not be in a position to do so yourself, e.g. living abroad or incapacitated.
What are preliminary enquiries?
Preliminary enquirers are questions raised by a buyer’s solicitor prior to exchange of contracts, asking for confirmation of specific points about the property which is being sold and the seller’s ownership of it.
What is a price reduction?
A price reduction is where the asking price of a property has been reduced after an initial period of marketing and advertising.
What is a private treaty (for sale by)?
A private treaty is the sale of a property by private treaty is the most common method used by estate agents, preparing descriptive details of the property and quoting an asking price. Details are circulated and potential buyers may view the property and either agree to buy at the asking price or submit an offer. Agreement to buy at this stage is subject to formal contracts being prepared and agreed by the seller’s and buyer’s solicitors and those contracts being signed and exchanged between seller and buyer.
Probate is the official process of proving a Will is valid. The sale of the property of a deceased person cannot proceed to exchange of contracts until probate has been granted by HM Revenue and Customs.
Registered land is the land and its buildings, the title to which is registered at the land registry and legal ownership is guaranteed.
What does retention mean?
Retention is a proportion of a loan that is held back by the lender until certain repairs/improvements have been carried out on the property, or in some cases to cover possible road charges on a new estate.
What does right of way mean?
A right of way is an individual’s legal right to use any particular part of an adjoining property in order to gain access to any particular part of their own property.
The term searches is used to describe documents showing any adverse factors affecting a property (e.g. new roads, nearby developments, etc.) whether already in effect or planned to take place. Obtaining the searches is part of the conveyancing procedure conducted by the solicitor.
What is a security of a loan?
A security of a loan allows lenders to ensure that their money is always safe by making borrowers agree that if they fail to repay the mortgage loan then the lender can repossess the property and sell it to recover their money. The loan is said to be ‘secured’ against the property.
What does sold subject to contract mean?
Sold subject to contract means an offer for a property that has been accepted but the details of the contracts have not been finalised and they have not yet been exchanged. Buyer or seller may still withdraw from the transaction.
A sole agency means only one agent has the authority to sell the property. The seller must not instruct any other agents during the term of sole agency. If they did, they might risk having to pay two sets of estate agency fees.
What are sole-selling rights?
Sole-selling rights is where one agent has the right to a fee or commission however the property is sold and whoever sells it – including a private sale by the owner.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax is a tax normally paid to the Government by the buyer of a property. The latest rates can be found on the Government website.
What is a structural survey?
A structural 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 defects requiring a repair.
What is a valuation survey?
A valuation survey is also called a valuation inspection. It's a report paid for by the buyer, but 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.
A tenant is the person who is in possession of a property, usually by way of a lease.
What does tenants in common mean?
Tenants in common means a legal form of property ownership where each person owns a separate share of a property and may sell or transfer that share as a separate entity. Usually split 50/50 between husband and wife or partners. See also – joint tenants.
A tenure is whether a property is freehold, leasehold, or commonhold.
A title is the proof of ownership of a property.
What is an abstract of title?
An abstract of title are the documents used in the conveyancing of unregistered properties to prove that the seller has the right to sell.
What is a report on title?
A report on title is a solicitor's certificate confirming that the title to the property is acceptable. A lender will usually insist on having this before releasing the loan to the buyer.
Title deeds are the legal documents describing the rights and liabilities of ownership and occupation of a property.
What does under offer mean?
The phrase under offer means 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.
What does vacant possession mean?
Vacant possession means the present occupants will vacate the property before completion of the sale.
A valuation is carried out by a potential selling agent the valuation is, in their opinion, the current potential sale price of the property. For any other valuation purposes - for example insurance, probate, or capital gains tax - appropriate professional advice should be sought.
A vendor is the seller of a property.
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