Property investors are being urged to do their homework to avoid being confused by jargon used at auction.

Specialist lender, Auction Finance Limited, found 62 per cent of property investors do not know the meaning of five common terms used at auction. These are: covenant, title plan, regulated tenancy, assured shorthold tenancy and listed status. With more than £790m worth of property sold at auction between June and August, investors are being urged to do their research and avoid being caught out.

Chris Baguley, director of Auction Finance Limited said:

"We urge anyone thinking of bidding for property, to read up on the terms that will be used at auction. There have been cases where investors have bought property at what they thought was a reasonable price, but have not understood terms such as regulated tenancy. This has resulted in them buying a property with a sitting tenant who has rights to stay there for a long time.

"Although there has been an increase in the number of properties sold at auction, what has surprised me is how often buyers may misunderstand key words such as covenant or title plan. If an investor became confused with some of the terminology used at auction, it could land them in hot water.

"It's vital bidders take the time out to read the legal packs ahead of making a bid. Resolving problems after purchasing will undoubtedly be costly."

The top five terms that puzzle bidders are,

1. Covenant - A restriction on the title of a property that a buyer must adhere to, for example, council properties are sold with a compulsory order of works that must be undertaken.

2. Title Plan - A document detailing where the boundaries of a property lie. This is especially important when purchasing land, it can dictate what access rights an owner has. There have been instances where investors have found properties to have no rights to water or direct access routes due to the property's boundaries.

3. Regulated Tenancy - Regulated tenancies sell at a discount of up to 40 per cent of the market value of the property, so there are bonuses for the long-term investor. However, this type of tenancy gives the tenant rights of occupancy and it can be difficult for the owner to gain possession.

4. Assured Shorthold Tenancy - This is the most common form of tenancy in the private rented sector and has a fixed term with specified rent days. As a landlord, you need to be aware of your rights and that of your tenants.

5. Listed Status - It is common for a Grade II listed building to appear at auction. Research what modifications can and can't be made to the property by contacting a Conservation Officer.