1. Different Types of Transactions, Preliminary Matters (Stage 1); and Starting a Conveyancing Transaction (Stages 1 and 2)

Question 1

In a joint instruction situation, after what two steps can the clients agree for one to take the lead?

Answer 1

After:

1. Initial instructions
2. Identification requirements are satisfied

Question 2

What is a declaration of a trust, and when is it recommended to enter one?

Answer 2

A document which sets out the circumstances of the purchase, the contributions, and ownership shares, recommended when buyers hold the beneficial interest as tenants in common

Question 3

In the pre-contract stage in the unregistered system, what must the seller’s solicitor do regarding the title deeds if they are held by a lender?

Answer 3

Write the the lender to obtain the deeds and give an undertaking not to part with the deeds until such time as the mortgage is paid off

Question 4

Who does the Law Society Conveyancing Protocol require to remedy pre-contract title defects?

Answer 4

The seller’s solicitor, rather than waiting for buyer to raise an inquiry

Question 5

Where there is more than one buyer or seller, what must a solicitor acting for both ensure?

Answer 5

That they are instructed by both clients

Question 6

What is required for the buyer’s solicitor to disclose information to the lender (who also becomes their client), and what must happen if this does not occur?

Answer 6

The buyer’s consent.

If the buyer wishes for the solicitor to keep something from the lender, the solicitor must cease acting for the both parties

Question 7

What are the seller’s disclosure obligations?

Answer 7

Duty to disclose latent defects and title defects.

Question 8

What is a latent defect?

Answer 8

Non-physical burden that would not be apparent from reasonable inspection of the property, (e.g. underground easement or restrictive covenant).

Question 9

What two remedies are available to the buyer where the seller breaches a duty to disclose?

Answer 9

Withdraw from contract after exchange or claim damages

Question 10

What is the limitation of the duty to disclose latent defects and to which the principle of caveat emptor applies?

Answer 10

Physical defects, e.g. rotting wood in the walls

Question 11

What is the default deposit under the Standard Conditions?

Answer 11

10% of the purchase price, although the parties can agree lower

Question 12

Even where the parties negotiate a lower deposit, what is the buyer liable for if the fail to complete on time?

Answer 12

The full 10% deposit.

• Obligation to top-up is only triggered once notice to complete is served.

Question 13

In what situation, will the deposit be held by the seller’s solicitors as agent?

Answer 13

Where the seller is buying a new residence in England & Wales.

Question 14

What does full title guarantee mean?

Answer 14

Seller:

1. Is entitled to sell the property
2. Will, at their own cost, transfer this title to the buyer, and
3. Is selling the property free from all charges or encumbrances other than those disclosed in the contract

Question 15

What is a limited title guarantee, and in what context does it commonly arise?

Answer 15

Where the seller merely warrants they have not created any charges or encumbrances during their period of ownership other than those disclosed in the contract.

Arises where sellers have minimal knowledge about the property (ie. PR/trustee)

Question 16

When is no title guarantee commonly provided?

Answer 16

Arises where the seller cannot provide any guarantee that property is not burdened by unknown rights in some way.

Where seller has zero knowledge about the property and is simply disposing of it in their professional capacity
* ie. trustee in bankruptcy or mortgagee in possession).

Question 17

When does risk pass to the buyer and why?

Answer 17

On exchange, because that is when the equitable interest passes.

Question 18

When does completion occur if the contract is silent?

Answer 18

20 working days after exchange

Question 19

What is the consequence of late completion for a buyer?

Answer 19

Liable to pay interest at the rate specified in the contract.

Question 20

What five things should the buyer’s solicitor do if they discover a defect in title?

Answer 20

1. Raise it with seller’s solicitor
2. Request seller’s solicitor provide a draft insurance policy
3. Confirm the seller will pay for this policy
4. Include this agreement as a special condition in the contract
5. Notify the buyer’s lender

Question 21

When will a property be sold subject to VAT, and at what rate?

Answer 21

Standard rated (20%) - VAT is due on
purchase price
- New commercial property (less than 3 years old)
- Old commercial property opting to tax.

Question 22

What property transactions are exempt from VAT?

Answer 22

• Residential property
• Old commercial property (more than 3 years old) - unless option to tax is exercised by the seller.

Question 23

What property transactions are zero VAT rated ?

Answer 23

sale or lease of residential property (new builds)

Question 24

What are the standard CPSE forms and what transactions do they each relate to?

Answer 24

CPSE 1 - general enquiries for all commercial property transactions.
* if more straightforward - can use shortened version via CPSE 7.

CPSE 2 - property subject to commercial tenancies.
CPSE 3 - on the grant of new lease
CPSE 4 - on the assignement of a lease

Question 25

Describe the process of removing a notice unilaterally from the charges register

Answer 25

Form UN4 is sent to Land Registry, who serves notice on beneficiary. If no objection within 15 business days, notice is removed. If objection persists, referral to land registry adjudicator may occur.