If you intend to buy a property, you may come across many jargons used within the industry. Sometimes, you may know what they mean but other times, you may be unfamiliar with these phrases. Here are some common property jargons used within the industry and what they mean.
Missive/ Contract
A legal document that states the main terms of the agreement, including address, price and names of the parties involved. Each party will receive a copy of the contract where they have to sign it.
Deposit
This refers to a part of the purchase price being paid up front when the exchange of contract occurs.
Reservation Fee
A part of the purchase price paid to secure the property and to confirm the purchase. The property should have been taken off the market by this point. Subsequently, the amount paid in the reservation fee will be deducted from the rest of the payment.
Authority to Proceed
The buyer will receive an authority to proceed (ATP) when checks are done and completed. Subsequently, the authority to proceed will be sent to the mortgage broker and the solicitor. They will then explain to you the legal documents included within the ATP.
Subject to Contract
A subject to contract means that an agreement has yet to bind the parties involved legally.
Exchange of Contracts
Once the solicitor confirms your interest in the property and ensures that your interest is protected, the exchange of contracts will commence, and this is equivalent to the legal commitment to the purchase of the property. Following the exchange of contracts, you will be required to pay a part of the purchase price (with the reservation fee subtracted from this portion).
Conclusion/Exchange Timeline
This is normally about three to four weeks from receiving draft contracts. However, the timeline may differ and could be up to six weeks.
Longstop Date
Usually, there are two dates, including a short stop date and a long stop date. The short stop date is given as a predicted or estimated date in which the developer of the building is expected to have finish all works. The long stop date is the deadline in which the developer must have completed the building.
Defect Liability Period
After the building has been completed, the builder or the contractor will be liable for any defects that may occur or arise during this period.
Survey
A survey is done by a qualified surveyor, who will inspect the property. There are several types of survey, such as a homebuyer’s report for the general condition of the house, a valuation report for mortgage purposes and a full structural survey, which will examine and analyze details of the property’s structure.
Freehold
A freehold property essentially means that you will have ownership of both the land and the building that occupies the land space. If you have registered your name in the land registry, you will not be required to pay annual ground rent.
Leasehold
If you own a leasehold property, it means that you will own the property, but you do not have ownership over the land it is built on. Usually, you will need to pay ground rent to the landlord.
These are just some of the jargon you may hear of when you are trying to purchase a property. To make things easier, you can find a trusted agent who can take care of everything and explain things to you. If you are looking to purchase a property, feel free to contact NJLux today to help you find your dream home in New Jersey.
