Auction360
Auction Glossary
Auction packs, bridging term sheets and valuation reports are written in their own language. Here is that language in plain English — 93 terms you will meet before, during and after the fall of the hammer.
93 terms, A to Z
A
6 terms- Absent landlord
- Freeholder or superior landlord cannot be located; complicates consents and lease extensions.
- Adverse credit
- CCJs, defaults, arrears, bankruptcies affecting lender appetite.
- AML (Anti-Money Laundering)
- Mandatory checks on identity, funds, and risk.
- Arrangement fee
- Lender fee charged at the start of a bridging loan.
- Auction legal pack
- Full set of legal documents provided before auction (title, searches, special conditions).
- Auction resale
- Using an auction as the exit route to sell quickly.
B
10 terms- Beneficial owner
- Person with ultimate ownership/control of an SPV or asset.
- Bidder Security
- A payment authorisation on your debit card required for each auction lot you wish to bid for.
- Boundary dispute
- Conflict over property lines; affects lending and resale.
- Building regulations approval
- Compliance with construction and safety standards.
- Build cost plan
- Detailed breakdown of materials, labour, and professional fees.
- Build timeline
- Planned schedule for refurbishment or development works.
- Buyer Details
- If you are buying in auction, you must provide details of the buyer and upload proof of identity and proof of address documents (these cannot be the same document)
- Bridge-to-let
- Bridging loan used to acquire/refurbish before refinancing onto a buy-to-let mortgage.
- Bridge-to-sell
- Bridging loan used to acquire/refurbish before selling.
- Bridging loan
- Short-term, asset-backed finance for fast acquisition or works.
C
8 terms- Certificate of Title (COT)
- Solicitor’s formal report to lender confirming title status.
- Comparables
- Recent similar sales used to support valuation.
- Completion deadline
- Auction requirement to complete within 14–28 days.
- Conditions precedent
- Requirements that must be met before drawdown.
- Conditions subsequent
- Obligations to complete after drawdown.
- Contingency budget
- Extra allowance (10–20%) for unexpected costs.
- Covenant (restrictive)
- Legal restriction on property use or development.
- Credit underwriting
- Lender’s assessment of borrower risk and affordability.
D
5 terms- Debt Service Cover Ratio (DSCR)
- Ratio of rental income to debt payments for refinance.
- Deposit (auction)
- Typically 10% payable immediately upon winning the bid.
- Down-valuation
- Valuer reports a lower figure than expected or purchase price.
- Drawdown
- Release of loan funds, often in stages for refurb projects.
- Dual representation
- One solicitor acting for both borrower and lender.
E
4 terms- Easement / right of way
- Legal right for others to use part of the land.
- Enforcement
- Lender actions on default (receivers, administrators, sale).
- Exit fee
- Fee charged by lender when loan is repaid.
- Exit strategy
- Planned route to repay bridging loan (refinance or sale).
F
4 terms- Flying freehold
- Part of a property overhangs another owner’s land; lending risk.
- Forced Sale Value (FSV)
- Lower valuation reflecting quick/distressed sale.
- Freehold
- Ownership of land and property outright.
- Funding line
- Capital source behind a lender (institutional, private, family office).
G
3 terms- GDV (Gross Development Value)
- Estimated value of completed project.
- Guide price
- Indicative marketing price; not a reflection of true value.
- Gross loan
- Total facility including interest and fees before deductions.
H
2 terms- HMO licensing
- Mandatory licensing for certain multi-occupancy properties.
- ILA (Independent Legal Advice)
- Required for PGs; confirms guarantor understands risks.
I
4 terms- Indemnity insurance
- Covers specific legal risks (missing consents, defects).
- Interest retained
- Interest deducted upfront and held by lender.
- Interest rolled-up
- Interest added to loan balance and repaid at exit.
- Interest serviced
- Monthly interest paid by borrower from cashflow.
L
6 terms- Land Registry
- Official record of property ownership and charges.
- Lease length / unexpired term
- Remaining years on lease; impacts value and lending.
- Legal undertaking
- Solicitor’s binding promise to lender.
- Letter Before Action (LBA)
- Final notice before legal proceedings.
- Loan-to-Value (LTV)
- Loan amount as a percentage of property value.
- Loan-to-GDV (LTGDV)
- Loan amount as a percentage of GDV.
M
4 terms- Market Value (MV)
- Estimated open-market sale price.
- Monitoring surveyor
- Surveyor overseeing works and approving stage releases.
- Monitoring report
- Written update on build progress and risks.
- Mortgageability
- Suitability of property for long-term mortgage refinance.
N
2 terms- Net loan
- Actual amount released after fees and retained interest.
- Notice to complete
- Legal notice enforcing completion deadline.
P
5 terms- Personal Guarantee (PG)
- Individual’s promise to repay loan if SPV cannot.
- Planning permission
- Formal consent for development or change of use.
- Planning uplift
- Increase in value due to planning approval.
- Property searches
- Local authority, drainage, environmental checks.
- Purchase price
- Amount paid for property; not always aligned with valuation.
R
8 terms- Receiver
- Professional appointed by lender to take control of asset on default.
- Redemption statement
- Amount required to fully repay loan on a given date.
- Refinance
- Moving from bridging to long-term finance.
- Rent arrears
- Unpaid rent owed by tenants.
- Rental evidence
- ASTs, rent schedules, agent letters proving income.
- Reserve price
- Minimum price seller will accept at auction.
- Restrictive covenant
- Legal limitation on property use.
- Right of way
- Legal access right across land.
S
11 terms- Scope of works
- Detailed plan of refurbishment or development tasks.
- Searches (legal)
- Mandatory checks on property risks and restrictions.
- Separate representation
- Different solicitors for borrower and lender.
- Serviced interest
- Monthly interest payments by borrower.
- Short-term finance
- Loans typically 3–24 months for speed and flexibility.
- SIC code
- Classification code for SPV business activity.
- Source of funds
- Evidence of where transaction money originates.
- Source of wealth
- Explanation of how borrower accumulated overall wealth.
- SPV (Special Purpose Vehicle)
- Company created solely for property projects.
- Special conditions of sale
- Extra contractual terms in auction legal pack.
- Stage release
- Phased loan advances linked to build progress.
T
5 terms- Tenancy agreement
- Contract governing tenant occupation and rent.
- Title defect
- Legal issue affecting ownership or rights.
- Title documents
- Records proving ownership and rights.
- Title insurance
- Policy covering title-related risks.
- Title plan
- Land Registry map showing boundaries.
U
2 terms- Unregistered land
- Property not recorded at Land Registry; relies on historic deeds.
- Undertaking (legal)
- Solicitor’s binding promise to lender.
V
3 terms- Vacant possession
- Property must be empty at completion.
- Valuation uplift
- Increase in value due to works or planning.
- Valuation report
- Formal assessment of MV, FSV, and risks.
W
1 term- Worst-case scenario planning
- Preparing for delays, cost overruns, exit failure.
Know the words. Now run the numbers.
Work out exactly what you need to complete an auction purchase inside the 28 days — deposit, stamp duty, bridging interest and fees.