Glossary

Property purchasing and sales terminology explained

Burdens (which are title conditions)

Conditions imposed on ownership of the property, such as parking of vehicles, keeping pets, altering the property without permission, construction of boundary walls etc.

Capital Gains Tax

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.  It’s the gain you make that’s taxed, not the amount of money you receive.

Common parts

Any parts of a larger building which are used by all proprietors e.g. a common stairwell, close, back court, passages etc.

Concluding missive

Once all contractual matters are agreed by both the seller and the purchaser a contractual letter will be issued concluding the missives.  At that point a legally binding contract is in place between the parties.

Conveyancing

After the missives have concluded and an agreement has been reached between the seller and the purchaser the solicitor will start the ‘conveyancing’. This means they will go through the legal process that transfers ownership of the home from the seller to the purchaser.

Date of Entry

This is the day on which ownership of the property passes to the purchaser.

Disbursements

All funds paid out during the course of the transaction such as search costs and registration dues.

Disposition

This is the legal document which transfers ownership of the property from the seller to the purchaser.

Estate agent

An estate agent is a person or business that undertakes the selling, letting, or management of property.

Factor

The managing agent that attends to the repair and maintenance of the common parts.

Funds

Any money being supplied that goes toward the purchase price.  This can be a combination of mortgage, or contributions from the purchaser or a third party.

Home report

This is a document that provides detail about the property. There are certain circumstances/types of property where it is not required e.g. new homes being sold off plan or to the first occupier and right to buy homes. It is commissioned by the seller and is split into three parts:

  • A single survey and valuation: this is a visual inspection by a chartered surveyor. It gives information on its condition, accessibility and any repairs that may need to be carried out.  The valuation is how much the home is worth and an estimated cost of any repairs that are required.
  • A property questionnaire: this is completed by the home owner and covers sixteen different areas such as details of any specialist works that may have been carried out, council tax band
  • An energy performance certificate: this is prepared by the chartered surveyor and gives some detail on the property’s energy efficiency and can give guidance on how much heating and lighting is likely to cost.

Inhibition

Inhibitions are recorded in the Register of Inhibitions and Adjudications (sometimes called the ROI or Personal Register).   If a party is inhibited they are prohibited from disposing of any interest in, or securing, finance against any property.

Instructions

Instructions require to be taken from the client on all aspects of the transaction. An instruction is the verbal or written direction given by the client to the solicitor.  In joint transactions it is not always practical to take individual instructions from each party therefore instructions can be taken from one party provided both parties agree.

Land and Building Transaction Tax (LBTT)

You have to pay Land and Buildings Transaction Tax (LBTT) if you buy a house, flat or other land or building in Scotland over a certain price. The amount you have to pay is determined by the value of the property being bought.  It is administered by Revenue Scotland.

Legal Report

A search against the property, purchasers and sellers that checks for any matters that may affect the sale/purchase.

Local Authority Consents

Documentation issued by the local authority in respect of any structural alterations undertaken to the Missives. These are a series of contractual letters between the seller’s solicitor and the purchaser’s solicitor negotiating the conditions of the sale/purchase.  These are signed by the solicitors on behalf of the purchasers/sellers

Mortgage approval in principal

An informal notification by the lender that they are willing to lend a defined sum of money. This is not a formal offer and still requires to be underwritten.

Mortgage lender

A bank or other financial institution

Mortgage offer

A written offer of finance made by the mortgage lender

Moveable items

Any items of a moveable nature that are included in the price such as curtains, items of furniture or white goods.

Note of Interest

Once you find a property that you would like to buy, you contact your solicitor and they will note your interest with the estate agent.  If there are a number of people interested then the estate agent will set a closing date when all offers will be considered at the one time.

Offer

This is a contractual letter which outlines the basis on which you wish to purchase the property, and is issued by your solicitor to the estate agent or seller for consideration.

Outlays

As well as the fees you pay to your solicitor and your contribution to the cost of the home, there are also a number of other costs, referred to as outlays. These include:

  • Fees and taxes payable to the Government, such as fees due to the Registers of Scotland and Land and Buildings Transaction Tax (formerly stamp duty land tax) search fees
  • Estate agency costs

Property Enquiry Certificate (PEC)

A property enquiry certificate brings together various pieces of information about a property and is a standard requirement. The seller’s solicitor will instruct this report during the conveyancing process.  It will include information re the roads adjacent to the property, water / drainage provisions, any planning matters or statutory notices.

Qualified acceptance

This is a contractual letter issued by the seller to the purchaser stating acceptance of the Offer, together with any amendments to the offer.

Redemption

This is when the final repayment of the amount outstanding has been completed, which may be a “natural redemption” at the end of the scheduled term or a lump sum redemption, typically when the borrower decides to sell the property. A closed mortgage account is said to be “redeemed”.

Registration

After completion of the purchase the Disposition is submitted to the Land Register of Scotland for registration. Once the registration process is complete, a Title Sheet will be issued confirming the following: –

  • the current owner (you)
  • the price of the property
  • mortgage details
  • any conditions affecting the property

Sasine Register

There is another register called the Sasine Register, which was started in 1617. This is being replaced by the land register through a process called ‘keeper-induced registration’, so when you buy a new home it won’t be listed in the Sasine Register.

Sequestration

Bankruptcy is often referred to as sequestration in Scotland and both terms mean the same thing. It is a procedure under which all the assets are transferred, including the home, to a Trustee who then administers the bankruptcy and manages the sale of the assets to generate funds for creditors.

Solicitor

A solicitor is someone who practices law, has earned a degree in law and has a license to practice law in a particular area.

Stamp Duty (SDLT)

Stamp Duty Land Tax was replaced by LBTT on 1st April 2015

Standard Security

The deed executed by the purchaser in favour of their mortgage lender, which secures the loan against the property.   This deed is submitted to the Land Register for registration.

The seller

The seller is the owner of the property being sold

The purchaser

The purchaser is the person who has submitted an offer that has been accepted.

Third party

Someone other than the purchaser who may for example be involved in financing the purchase.

Title deeds

These state who owns the property.

Trust Deeds

A trust deed is a formal but voluntary arrangement that provides a compromise between a debtor (who cannot afford to fully repay their debts) and his or her creditors (who would like to recover at least some of the money owed to them). It is an alternative to bankruptcy.

Warranties or guarantees

For any works carried out to the property such as timber treatments, rot work, new windows etc.

Useful resources:

https://www.mygov.scot/housing-local-services/buy-own-property/