Property Transactions and SRA Accounts Rules

Vocabulary-style flashcards covering core principles of double-entry bookkeeping, SRA Accounts Rules, and property-specific legal transactions including stakeholder money, mortgages, and bridging finance.

Stakeholder money

Client money received (typically a deposit) held jointly for the buyer and the seller which does not become the property of the seller until completion takes place.

Inter-client transfer

The accounting entry required when a firm ceases to hold money for one client and starts to hold it for another, such as when stakeholder money becomes the seller's money upon completion.

Rule $8.1$ (SRA Accounts Rules)

Requires all receipts and payments of client money to be recorded in client ledgers identified by the client’s name and an appropriate description of the matter to which they relate.

Bridging loan

A personal loan to a borrower used to cover the period from exchange of contracts on a purchase to completion of a sale; it is held to the order of the borrower and credited to the borrower’s ledger account.

Mortgage advance

Money received from a lender for a property purchase which is normally held for the lender until the day of completion.

Mortgage redemption

The process of repaying (redeeming) the outstanding balance on a property's mortgage from the proceeds of sale after completion.

Standard Conditions of Sale (5th edn), SC $2.2.5$

A condition providing that sellers buying a residence in England and Wales may use all or part of a deposit to fund the deposit on the property they are purchasing.

Method $1$ (Mortgage Advance Treatment)

An accounting method where a mortgage advance is credited directly to the borrower's ledger account upon receipt, including the lender's name and 'mortgage advance' in the details column.

Method $2$ (Mortgage Advance Treatment)

An accounting method where a mortgage advance is credited to a separate ledger account for the lender on receipt, with an inter-client transfer to the borrower's ledger on completion.

Agent for the seller

A capacity in which a solicitor receives a deposit that belongs to the seller alone and is credited directly to the seller's ledger account upon receipt.

Audit trail

A clear record showing the movement of money that must be maintained even as firms manage client accounts in ways that suit them, provided client money remains protected.

Professional charges (Indemnity)

The process where costs and VAT are debited to the ledger of the person supplied services (Person A), but the debt is then transferred to another person (Person B) who is discharging it by way of indemnity.

Stakeholder Ledger Entry (Joint Names)

An alternative method of recording stakeholder money by debiting Cash (Client section) and crediting a 'Joint stakeholder ledger account' in the names of the client and the buyer.

Mortgage Redemption Accounting (Clearest Audit Trail)

Crediting the whole amount of sale proceeds to the seller's ledger account initially, followed by an immediate inter-client transfer of the redemption amount to the lender's ledger account.