Commercial Property Legal Jargon
Lawyers haven't always been known for using terms that are easily understandable by those without legal training. Here are a few terms used in the property sphere that are often not understood.
Alienation - a heading you frequently see in a lease to cover a tenant's right to assign, charge or sublet a lease.
Assignee - the person receiving the benefit of the thing being assigned. If you take over a lease from someone else then you are the assignee.
Assignor - someone selling or transfering the benefit of something to another. If you are selling a lease to someone then you are the assignor.
Authorised Guarantee Agreement - or AGA. A guarantee provided by an assignor of a lease guaranteeing the performance of the assignee. Most modern leases require the tenant to provide an AGA if it assigns the lease.
Charge - is a general term used to describe the document that pledges assets to a lender as security for repayment of a loan. A mortgage is a particular type of charge which pledges property as security.
Forfeiture - a landlord's power to terminate a lease, usually for non-payment of rent, but it can be for breach of any of the covenants in the lease. Going into administration even if you aren't behind on your rent can give the landlord the right to forfeit the lease.
Mortgagee - the person to whom a mortgage is given ie the lender (usually a bank or building society but can equally apply to a private individual).
Mortgagor - this is the person who grants a mortgage over a property. In other words, the owner of the property.
Official Copies - copies of the Land Registry's registers of title for a property. The electronic register held by the Land Registry is now the only evidence of ownership for registered land. An Official Copy of the Land Register is effectively your title deeds to the property.
Overage - a right to receive a share of the increased value of land. It is typically used where a developer buys land and the seller wants to share in any increase in value resulting from the developer obtaining planning permission to develop the land.
SDLT (
Stamp Duty Land Tax) - It replaced Stamp Duty for property transactions (stamp duty is still charged on the transfer of shares).
Security of Tenure - usually refers to a tenant's right to a new lease once the existing one comes to an end. A landlord can remove a tenant's security of tenure in a lease if a procedure laid down by statute is followed.
Statute - another word for an Act of Parliament.
Unregistered Land - land which hasn't been registered at the Land Registry. It is now very rare but does still exist and the only proof of ownership of unregistered land is still the original title deeds.
Warranty - a statement of fact by a party to a contract upon which the other party can rely (and sue if the statement turns out to be untrue). It is most frequently used in contracts for the sale and purchase of a business.
I'm sure there are lots more terms that I haven't mentioned whose meaning is far from clear. If you are being asked to sign a legal document which contains terms you do not understand ask your lawyer to explain them - or
contact Steve Petty of Cousins Business Law for legal advice in plain English.
Article added: 4 August 2008 © Cousins Business Law
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