Glossary

A · B · C · D · E · F · H · I · L · M · N · O · P · R · S · T · U · V

A

Actual occupation

Being physically on the land and using it. A person in actual occupation can have rights that bind a buyer even though the register does not show them. So the buyer inspects the building and buys with vacant possession. Chapter 3 · see Overriding interest, Vacant possession

AP1

HM Land Registry's form of application to change the register. Harland Weir lodged Fellgate's inside the priority period, with the transfer, Wharfedale's charge and the tax certificate. The registration took effect from the day the application arrived. Chapter 10 · see Priority period, Registration gap

Asbestos Records

Holmfield's asbestos register, which shows where the asbestos is, and its plan for managing it. Holmfield hands them over on completion but gives no warranty that they are complete. So Fellgate's own plan starts from its own evidence, including the survey. Definition: Asbestos Records · Chapter 5 · see Duty to manage asbestos

B

Balance

The rest of the price once the deposit is paid: £3,600,000 at Beckside Works. It must reach the seller's solicitors' client account by 1 pm on the completion date. Money that arrives later counts as a day late for interest and for a notice to complete. Definition: Balance · Chapter 7 · Chapter 9

C

Caveat emptor

Latin for “let the buyer beware”. A seller need not point out physical defects, even ones it knows about, but must disclose title defects the buyer could not find by inspection. So the buyer asks in writing, surveys and searches before exchange. Chapter 5 · see Enquiries, Misrepresentation

Certificate of title

The buyer's solicitors' signed statement to the lender of what their investigation found. The lender relies on it instead of investigating again, and the firm answers to the lender for it, so a partner signs it. It does not make the firm the lender's solicitors. Chapter 8 · see Report on title

Charges register

Register C of a register of title: the rights and promises that someone other than the owner can enforce. At Beckside Works, entries 1 and 2, the 1962 covenant, stay with the land. Entry 3, Northfold's charge, is paid off at completion. Contract, Annex 2 · Chapter 3 · see Incumbrances

Closure report

Moorland's report on removing the old oil tank and testing the soil around it, which found no contamination. It was addressed to Holmfield, so Fellgate and its bank rely on it through the reliance letter. Fellgate keeps the original for as long as it owns the building. Definition: Closure Report · Chapter 6 · see Reliance letter

Completion

The step at which the buyer pays the rest of the price and the building becomes its own. Under the contract it happens when the seller's solicitors confirm that the balance has reached their client account. The register still names the seller until registration. Definition: Completion · Chapter 1 · Chapter 9

Completion statement

The seller's solicitors' account of what the buyer must pay on completion. At Beckside Works it showed the price less the deposit, a balance of £3,600,000, with nothing to apportion. Check every line against the contract, and add what it leaves out, such as the covenant insurance premium. Chapter 9

Contaminated land

Land the council decides is causing, or seriously risks, significant harm or water pollution. The council can then require a clean-up under Part 2A of the Environmental Protection Act 1990. Whoever caused or knowingly permitted it pays first, and the owner only if nobody of that kind can be found. Chapter 6 · see Closure report

Contract Rate

The interest rate the contract sets for late completion: 4% a year above the Bank of England base rate. A party that completes late pays it on the balance until the money arrives. It makes up for lateness, but it does not end the contract. Particulars: Contract Rate · Chapter 7

Covenant indemnity policy

Insurance that pays the owner's loss if someone enforces a restrictive covenant. It leaves the covenant on the register. Fellgate's cover holds only while nobody approaches the neighbours or applies to the tribunal, and it names Fellgate, its successors in title and its bank. Chapter 4 · see Upper Tribunal (Lands Chamber)

D

Deed

A formal document that must be signed in the way the law sets. A transfer of land must be a deed. A company signs one by two directors, by a director and the company secretary, or by one director before a witness who signs too. Chapter 9 · see Transfer (TR1)

Deposit

The part of the price the buyer pays at exchange, as security that it will complete. Fellgate's was £400,000, a tenth of the price, and had to arrive by 4 pm on the day of exchange. The seller's solicitors held it as stakeholder until completion. Particulars: Deposit · Chapter 7 · see Stakeholder

DS1

HM Land Registry's form by which a lender confirms that its charge is discharged. A lender signs it only once paid, so at completion the seller's solicitors usually give an undertaking to send it. A paid-off charge stays on the register until the DS1 is lodged. Contract 11.2 · Chapter 9 · Chapter 10 · see Undertaking

Duty to manage asbestos

The duty, on whoever maintains a non-domestic building, to find any asbestos, assess the risk, keep a written plan and warn anyone who may disturb it. For a company that owns and occupies its building, that is the owner. Fellgate takes the duty on at completion. Chapter 5 · see Asbestos Records

E

Enquiries (the standard commercial enquiries)

A printed list of questions about a commercial building, sent to the seller: boundaries, disputes, services, notices and more. The seller's solicitors reply on its instructions, so each reply is the seller's statement. Fellgate may rely only on the contract and these written replies (clause 12.2). Definition: Replies · Chapter 5 · see Misrepresentation

Environmental desktop search

A report on the risk that land is contaminated, compiled from old maps and records without a site visit. The result for Beckside Works said “further action recommended”. So Fellgate sent its environmental consultant, who found an old underground oil tank. Chapter 6 · see Closure report

Exchange of contracts

The step that binds both sides. Each side signs its own identical part of the agreed contract, and the two firms swap them, usually by telephone. From then neither side can walk away without paying for it. Contract, Execution · Chapter 1 · Chapter 2 · Chapter 9

F

Freehold

Outright ownership of land and the buildings on it, with no end date. A business that owns the freehold can alter its building without asking a landlord, and stay as long as it likes. Holmfield sold the freehold of Beckside Works to Fellgate with vacant possession. Chapter 1 · see Vacant possession

Full title guarantee

Three words that bring the seller's standard promises into the sale: that it has the right to sell, and that the land is free of charges and other people's rights. The promises never cover what the buyer already knows, and clause 2.2 says so. Contract 2.2 · Chapter 3

H

Heads of terms

A short paper, usually from the agents, recording the price and main terms before the contract is drafted. It is marked “subject to contract”, so it binds nobody except the paragraphs it names, such as a lock-out. Chapter 1 · Chapter 2 · see Lock-out agreement

I

Incumbrances

Burdens on land that someone other than the owner can enforce. In the contract, the Incumbrances are the 1962 covenant in entries 1 and 2 of the charges register, and the land is sold subject to them. Northfold's charge is not one, because it is paid off. Definition: Incumbrances · Chapter 3 · see Charges register

Indemnity covenant

A buyer's promise to its seller to keep a covenant and to repay the seller's loss if it is broken. It binds only the company that gave it, so each seller takes a fresh one from its buyer. Fellgate gives Holmfield one in panel 11 of the transfer. Contract, Annex 1, panel 11 · Chapter 4 · see Positive covenant

L

Legal charge

A mortgage of land that lets the lender sell if the loan is not repaid. The register records the charge, not the debt. Northfold's charge, for Holmfield's loan, was paid off at completion, and Wharfedale's charge now stands on the register instead. Definition: Seller's Mortgage · Chapter 3 · Chapter 8 · see DS1

Legal estate

The legal title to land, as opposed to ownership in equity. On registered land it passes to the buyer only when the buyer is registered, with effect from the day the application arrived. Chapter 10 · see Owner in equity

Local land charges search

A search of the register of burdens that public bodies place on land, such as an enforcement notice. For Leeds, HM Land Registry now holds that register. It is separate from the council's answers to the standard enquiries, so order both. Chapter 6

Lock-out agreement

A seller's promise not to deal with anyone else for a fixed period. It can bind inside heads that are subject to contract, because it is not a contract to sell land, is negative and is given for something. Paragraph 9 of the heads bound Holmfield until 30 April. Chapter 2 · see Heads of terms

M

Misrepresentation

A false statement of fact that led the buyer into the contract, such as a wrong written reply. The buyer may rescind the contract or claim damages. Silence is not a statement, and a clause limiting liability must be reasonable and can never cover fraud. Chapter 5 · see Enquiries, Rescission

N

Notice to complete

A notice that a party ready to complete may serve once the completion deadline has passed. The other side must then complete within ten working days, and time is of the essence. A buyer that still does not complete can lose its deposit. Contract 10.1 · Chapter 7 · see Time of the essence

O

Official copies

Copies of the register of title and the title plan, issued by HM Land Registry. They show the register on one date only, so write that date at the head of your title table. Clause 4.3 counts from it. Definition: Official Copies · Chapter 3

Official search with priority (OS1)

A search that asks the Land Registry what is new on the register and holds the searcher's place for the priority period. Harland Weir made Fellgate's in the bank's name, so one search protected both the purchase and the loan. Chapter 10 · see Priority period

Option to tax

A seller's choice to charge VAT on the sale of its building. Without it, the sale of a commercial building more than three years old is exempt. Holmfield warrants that it has not opted, and clause 7.4 puts any VAT that proves due inside the price. Contract 7.2 · Chapter 7

Overriding interest

A right that binds a buyer of registered land even though the register does not mention it. On this purchase the one that matters is the right of a person in actual occupation. So Fellgate buys with vacant possession and inspects. Chapter 3 · see Actual occupation

Owner in equity

The buyer's position between completion and registration. The building is the buyer's, and a court would protect that, but the register still names the seller. Chapter 10 · see Registration gap

P

Positive covenant

A promise to do something, such as to pay money. It binds only the person who gave it, not later owners of the land. That is why an indemnity covenant has to be given again at every sale. Chapter 4 · see Indemnity covenant, Restrictive covenant

Priority period

The time an official search with priority holds the searcher's place: thirty working days after the day of the search. An application lodged within it ranks ahead of anything someone else applies for meanwhile. Diarise its end, with a reminder a week before. Chapter 10 · see AP1

Property register

Register A of a register of title: what the land is. At Beckside Works it describes the freehold land edged red on the title plan. A right of way over a neighbour's land would also be recorded here. Chapter 3 · see Title plan

Proprietorship register

Register B of a register of title: who owns the land, and with what class of title. Check that the seller in the draft contract has the same name and company number. After registration it names the buyer and the price paid. Chapter 3 · Chapter 10

R

Registered land

Land whose owner, and the burdens on it, are recorded at HM Land Registry. Each registered title has its own title number. Every search, form and application on the file quotes that number, so copy it from the official copies and check it character by character. Chapter 1 · see Title absolute

Registration gap

The time between completion and registration, when the register still names the seller. A completed registration takes effect from the day the application arrived. So the real risk is an application that arrives late or incomplete. Chapter 10 · see Owner in equity

Reliance letter

A letter that lets someone rely on a report as if it were addressed to them. Moorland's closure report was addressed to Holmfield, so its reliance letter let Fellgate and its bank rely on it too. Holmfield may not agree to change or withdraw either document. Definition: Reliance Letter · Chapter 6 · see Closure report

Report on title

The buyer's solicitors' written report to their client on what it is buying. Each finding says what it means for the client and what the client must do. Good news goes in too. Chapter 8 · see Certificate of title

Requisition

A written question that must be answered before a matter goes on. Before exchange it is the buyer's question to the seller about the title. After completion it is the Land Registry's query on an application, and an answer in time keeps the application's place. Contract 4.3 · Chapter 3 · Chapter 10

Rescission

Ending a contract so that neither side must go on with it. A buyer misled by a misrepresentation may rescind. Under the contract either side may rescind after serious damage before completion, and the seller may rescind once a notice to complete runs out, keeping the deposit. Contract 10.3 · Chapter 5 · Chapter 7

Restrictive covenant

A promise not to do something on land, made to protect neighbouring land. If it is on the register, it binds every later owner. The 1962 covenant allows Beckside Works to be used only as a printing works, so Fellgate's use breaks it. Contract, Annex 2, entry 2 · Chapter 4 · see Covenant indemnity policy

S

SDLT (stamp duty land tax)

The tax a buyer pays on buying land in England. The return must be filed and the tax paid within 14 calendar days, beginning with the day after completion. The Land Registry will not register the transfer without HMRC's certificate that it was paid. Chapter 10

Stakeholder

Someone who holds money for neither side until the contract says who is entitled to it. The seller's solicitors held Fellgate's deposit as stakeholder and released it to Holmfield on completion. Held as Holmfield's agent instead, the money would have been Holmfield's to use at once. Contract 3.2 · Chapter 7 · see Deposit

Subject to contract

A label saying the writer does not mean to be bound until contracts are exchanged. It goes on every letter and email about the deal until exchange. Without it, a chain of emails holding every term could, rarely, become a binding contract. Chapter 2 · see Exchange of contracts

T

Time of the essence

Words that make a deadline strict, so being late at all lets the other side end the contract. Under this contract time is not of the essence of the completion date, but it is of the essence of a notice to complete. Contract 10.2 · Chapter 7 · see Notice to complete

Title absolute

The best class of title HM Land Registry gives. Holmfield's title was absolute, and Fellgate takes the same title. Contract 4.1 · Chapter 3

Title plan

HM Land Registry's map of the land in a title, issued with the official copies. Red edging marks the land the title covers. It shows general boundaries only, so ask the seller in writing if an exact line matters. Chapter 3 · see Property register

Transfer (TR1)

The deed that passes the land from seller to buyer, on HM Land Registry's form TR1. Its words are agreed in Annex 1 of the contract. Fellgate signs too, because panel 11 holds its indemnity covenant, and the seller's solicitors date it at completion. Definition: Transfer · Chapter 9 · see Deed

U

Undertaking

A formal promise by a firm of solicitors in its own name, binding the firm whatever its client later does. At completion the seller's solicitors undertook to pay off Northfold and send the DS1. Fellgate accepted it only with Northfold's written figure five working days ahead. Contract 11.2 · Chapter 9 · Chapter 10 · see DS1

Upper Tribunal (Lands Chamber)

The tribunal that can discharge or modify a restrictive covenant. For the 1962 covenant the route would take months, with an uncertain result, and the application would alert every neighbour. Fellgate's insurance was offered only if nobody applied. Chapter 4 · see Covenant indemnity policy

V

Vacant possession

A sale of a building empty, with nobody inside and nobody holding a right from the seller to occupy it. Clause 2.3 tests the promise on completion. It protects the buyer against occupiers' rights, which the register does not show. Contract 2.3 · Chapter 1 · Chapter 3