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Conveyancing Terms Explained  

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There is a lot of jargon involved in the process of buying and selling properties. If you are feeling confused by any of the terminology you have encountered, you may find the following A to Z of conveyancing terms useful for clarifying meanings and removing any doubts.

You can also arrange an appointment to speak to one of our conveyancing solicitors should you require any further assistance with any aspect of the conveyancing process.  

Advance

The loan amount provided by a lender, such as a bank, to a borrower for the purchase of a property.

Auction

A public sale process where a property is sold to the highest bidder, usually conducted by an auctioneer, and often used to achieve a quick and competitive sale of the property.

Annuity Mortgage

A type of loan for property purchase where the borrower makes regular, fixed payments covering both interest and principal, gradually reducing the debt over the loan’s term until it is fully repaid.

Booking Deposit

A preliminary payment made by a buyer to the seller or their agent, indicating commitment to purchase the property, and is usually refundable until the formal contracts are exchanged.

Bridging Loan

A short-term loan used to finance the purchase of a property before the sale of an existing property, providing temporary financial cover during this interim period.

Capital Gains Tax

The tax on profit from selling a property other than your main home, calculated on the difference between its purchase price and sale price, subject to certain exemptions and reliefs.

Chain

A sequence of linked property transactions, where each sale and purchase are dependent on another, often leading to delays and complexities as each transaction relies on the completion of others.

Completion

The final stage where the property ownership is officially transferred, the balance of payment is made, and the keys are handed over to the buyer, concluding the property transaction process.

Contents Insurance

A policy that covers the cost of replacing or repairing personal possessions and furnishings inside a property in case of damage, theft, or loss, but does not cover the property’s structure.

Closing

The day when the legal transfer of property is completed, final documents are signed, financial transactions are settled, and the property’s ownership officially changes hands from the seller to the buyer.

Collateral

This is an asset, often the property being purchased, pledged as security for the repayment of a loan. If the borrower fails to repay, the lender has the right to seize the collateral to recover their funds.

Contract

A legally binding agreement between the buyer and seller detailing the terms of the property sale, including price and conditions. Once signed by both parties, it commits them to complete the transaction under the agreed terms.

Conveyancing

This is the legal process of transferring property ownership from one person to another, involving the preparation, execution, and lodgement of various legal documents to ensure the transfer is valid, legal, and in accordance with the terms of the transaction.

Covenants

Legally binding promises or conditions written into a property’s deeds or contract. They can impose restrictions or obligations regarding the use or maintenance of the property and are enforceable on the property owner, often affecting future transfers or changes to the property.

Deeds

The legal documents that prove ownership of a property. They contain important details about the property and its history, including past ownerships, rights, and obligations. The transfer of these deeds from seller to buyer is key in the conveyancing process.

Deposit

The sum of money paid by the buyer to the seller as a commitment to complete the property purchase. It’s typically a percentage of the purchase price and is paid upon exchange of contracts, acting as security against the buyer withdrawing from the deal.

Early Redemption Fee

A charge levied by a lender if a borrower pays off their mortgage before the end of the agreed term, typically occurring if the property is sold or the mortgage is refinanced with another lender.

Easement

A legal right allowing someone to use another person’s land for a specific purpose, such as access or utilities. It grants a non-owner limited rights over the property and is usually documented in the property’s deeds, binding successive owners.

Endowment Mortgage

A type of loan where the borrower pays only the interest monthly, while also contributing to an endowment policy. The policy matures over the mortgage term, aiming to pay off the principal at the end of the term, though payout is not guaranteed.

Equity

The portion of a property’s value that the owner truly owns, calculated as the property’s market value minus any outstanding mortgage or other debts secured against it. It represents the homeowner’s financial stake in the property.

Exchange of Contracts

A crucial step where the buyer and seller formally swap signed contracts, legally committing to the sale. From this point, the transaction is binding, and withdrawal can result in serious financial penalties, especially the loss of the deposit.

Fixed Rate Mortgage

A type of home loan where the interest rate remains constant for a specified period, ensuring predictable monthly payments. This provides stability against interest rate fluctuations but might result in higher or lower costs compared to variable rate mortgages over time.

Freehold

The outright ownership of a property and the land on which it stands. The owner has complete control over the property, subject to legal regulations, and is responsible for its maintenance and any changes made to it.

Ground Rent

A fee paid by the leaseholder to the freeholder for the land on which a leased property is built. It’s typically a feature of leasehold properties, paid annually, and is separate from service charges or mortgage payments.

Indemnity Bond

A legal agreement where a third party promises to cover any losses or damages that may arise under certain conditions, often used to protect against potential financial liabilities or defects in a property’s title.

Property Registration Authority Fee

A charge for registering a property transaction with the Property Registration Authority of Ireland. This fee is for recording the change in property ownership or any interest in the property, ensuring the details are updated on the public register. The fee varies depending on the property’s value and the type of transaction, such as first-time registration or transfer of ownership.

Listed Building

A property officially designated as being of special architectural or historic interest, which is protected by law. Alterations, extensions, or demolitions on these buildings require specific permission to preserve their character and significance.

Leasehold

A property tenure where the buyer owns the property, usually a building or part of a building, for a set period but not the land it stands on. The land is owned by the freeholder, to whom the leaseholder typically pays ground rent.

Liens

Legal claims or charges against a property by a creditor who has not been paid for services rendered or debts owed. These liens give the creditor the right to force the sale of the property to recover the unpaid debt.

Loan Offer

A formal proposal from a lender, such as a bank, outlining the terms under which they agree to lend money for a property purchase. It includes details like the loan amount, interest rate, repayment terms, and any conditions that must be met.

Local Authority Search

An inquiry into the local council’s records for specific information about a property, such as planning permissions, road schemes, or other factors that might affect the property’s value or future use, ensuring there are no adverse entries affecting the property.

Mortgage

A loan specifically for buying property or land. The loan is secured against the value of the property until it’s paid off. If the borrower fails to repay, the lender can take possession of the property to recover their funds.

Mortgagee

The financial institution or lender that provides the mortgage loan. This entity holds an interest in the property as security for the loan, with the right to take possession if the borrower, known as the mortgagor, fails to repay the loan.

Mortgage Rate

The interest rate charged on a mortgage loan. It determines the cost of borrowing and influences the monthly repayments. This rate can be fixed, variable, or a combination of both, and varies based on lender policies and market conditions.

Mortgage Term

The length of time agreed upon to repay the mortgage loan in full. It’s a fixed period, typically ranging from 15 to 30 years, over which regular payments are made to cover both the principal amount and the interest.

Offer

A proposal made by a potential buyer to purchase a property at a specified price. It’s usually subject to certain conditions, such as obtaining a mortgage or a satisfactory survey. If accepted by the seller, it can lead to the formation of a contract.

Party Wall

A shared wall or structure between two adjoining properties, typically situated on the boundary line. It is owned jointly by the property owners on either side, and any alterations or repairs to the wall may require mutual agreement and adherence to legal regulations.

Redemption

The process of paying off the outstanding balance of a mortgage loan, thereby releasing the property from the mortgage lender’s charge. This can occur at the end of the mortgage term or earlier if the borrower chooses to repay the loan prematurely.

Reserve

The minimum price set by the seller in an auction sale of a property. This is the lowest price the seller is willing to accept, and if bids do not meet or exceed this reserve, the property may not be sold.

Sale Agreed

This means that the seller has accepted the buyer’s offer on a property, but the legal process of transferring ownership (conveyancing) is not yet complete. This stage precedes the exchange of contracts and is not legally binding, allowing either party to withdraw without penalty.

Search

This involves examining various legal records to ensure there are no issues with a property’s title, planning permissions, or local area that could affect its value or use. It’s an essential step in the property-buying process to uncover any potential legal or financial problems.

Stamp Duty

A tax paid on the transfer of property, calculated as a percentage of the property’s purchase price or market value. The rate varies depending on the type of property (residential or commercial) and its value. Payment of Stamp Duty is required for the legal recognition of the change in property ownership in the government’s records. It’s a key cost in the property-buying process.

Subject to Contract

Typically, when an offer or acceptance is made ‘subject to contract’, it implies that the parties will not be legally bound until a formal contract is executed. However, under certain circumstances, a court may determine a binding contract exists if it concludes that all the terms of the agreement have been fully agreed upon and documented in writing. This approach ensures clarity and commitment, pending the completion of the formal contract.

Survey

A detailed inspection of a property’s condition, carried out by a professional surveyor. It identifies any structural problems, repairs needed, or other issues, providing the buyer with essential information about the property’s state before proceeding with the purchase.

Title

The legal right to own, use, and dispose of property. It signifies ownership and is evidenced by title deeds or registration. Ensuring clear and undisputed title is crucial in property transactions to confirm the seller’s right to sell and transfer ownership.

Transfer

The legal process of passing the ownership of a property from the seller to the buyer. It involves the preparation and signing of a transfer deed, which is then registered, legally effectuating the change of ownership in the property’s official records.

Valuation

The assessment of a property’s market value, typically conducted by a professional valuer or surveyor. It determines the worth of the property based on its condition, location, and other factors, and is often required by lenders to ensure the property’s value covers the mortgage loan.

Value Added Tax (VAT)

VAT is a tax on consumer spending. It is charged and collected by businesses registered for VAT on their provision of goods and services. Presently, VAT is applied to new homes, whereas second-hand residential homes are exempt from this tax.

Vendor

The person or entity selling a property. They are responsible for ensuring all legal aspects of the property sale are correctly handled and providing necessary documentation to transfer ownership to the buyer. The term is synonymous with ‘seller’ in property transactions.

Need clarification regarding other conveyancing terms not documented here?

If you are in the early stages of buying or selling a property and you are feeling confused by any of the terminology you have encountered, the conveyancing team at McCarthy + Co Solicitors will be glad to assist you. Call us on 1800 390 555 and we will connect you to a conveyancing professional within our team. You can also email info@mccarthy.ie and we will get back to you as soon as we can.

Joseph McCarthy

Joseph has been an integral member of our team since 2013, bringing a unique blend of expertise and dedication to his role. His specialisation lies in private client work, with a focus on conveyancing and probate. In simpler terms, Joseph’s role involves assisting homeowners and prospective homeowners in their property buying or selling journeys. He also offers support in managing the affairs of deceased individuals, guiding next of kin and executors through every stage of the process from the moment of a person’s death. Additionally, Joseph provides assistance in will drafting, ensuring his clients have peace of mind for the future. Joseph also regularly assists clients in creating Enduring Powers of Attorney and advises clients and their families on how to manage circumstances where a person’s mental capacities may be impaired.

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