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

Question 1

What is a head lease?

Answer 1

Lease granted by a freehold owner to a tenant

Question 2

What is an sublease/underlease?

Answer 2

Lease granted by a tenant to a subtenant

Question 3

What limits the length of time a sublease can be granted for?

Answer 3

It cannot exceed the length of the head lease.

If it does, it is deemed that the tenant had assigned their entire lease to the subtenant.

Question 4

In a leasehold situation, a remaining term of less than what length is usually unacceptable to a mortgage lender, and why?

Answer 4

80 years. Lifespan of a mortgagor.

Question 5

Is an absolute prohibition on assignment of a residential lease acceptable?

Answer 5

No

Question 6

In a commercial situation, what will be a considered a reasonable reason for a landlord to refuse consent to assign?

Answer 6

If the landlord has reason to believe the assignee will not be able to pay through the lease term

Question 7

What is required for rent review to be available?

Answer 7

Express provision must be made for it in the lease

Question 8

Within what time after completion must capital gains taxed be reported and paid?

Answer 8

60 days

Question 9

What are the three requirements for a solicitor to represent their buyer and the lender?

Answer 9

1. Lender is an institutional lender
2. Standard certificate of title is provided
3. Confidentiality as to both parties is maintained

Question 10

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

Answer 10

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 11

What situation on the exam will suggest a conflict of interest?

Answer 11

Solicitor acting for parties on different sides of a transaction

Question 12

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

Answer 12

That they are instructed by both clients

Question 13

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

Answer 13

After:

1. Initial instructions
2. Identification requirements are satisfied

Question 14

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

Answer 14

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 15

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 15

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 16

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

Answer 16

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

Question 17

What type of defects (1) must the seller disclose and (2) need not be disclosed?

Answer 17

Must disclose latent defect/encumbrance
Need not disclose patent defect/encumbrance

Question 18

What is a latent defect?

Answer 18

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

Question 19

What is a patent defect?

Answer 19

One that would be revealed by an inspection e.g. visible right of way

Question 20

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

Answer 20

Withdraw from contract after exchange or claim damages

Question 21

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

Answer 21

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

Question 22

In what one situation will a seller actually be held liable where there is a defect which is both latent and physical?

Answer 22

Where the seller has willfully tried to obscure the defect

Question 23

What are the three sections in the Contract Incorporating the Standard Conditions of Sale?

Answer 23

1. Particulars of sale
2. Standard conditions of sale
3. Special conditions of sale

Question 24

What is required of something agreed between buyer and seller to be legally binding?

Answer 24

It must be in the contract

Question 25

What is the default deposit under the Standard Conditions?

Answer 25

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

Question 26

Even where the parties negotiate a lower deposit, what is the buyer liable for if they breach?

Answer 26

The full 10% deposit

Question 27

As long as the property is in England and Wales, what can the buyer do with the deposit before completion?

Answer 27

Count it towards their deposit on a new residence

Question 28

Regarding this deposit for new purchase rule, what traps should we look out for on the exam?

Answer 28

1. Non residential purchases, e.g. buy to let
2. Property outside England and Wales

Question 29

Under the Standard Conditions, how is the deposit held between exchange and completion?

Answer 29

By the seller’s solicitor as stakeholder, i.e. on behalf of buyer and seller

Question 30

Is it possible to amend the Standard Conditions to hold deposit as agent?

Answer 30

Yes, but not advisable for buyer to allow this

Question 31

What three things does it mean when the Standard Conditions provide that a seller sells a property with full title guarantee?

Answer 31

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 32

To compare, what is a limited title guarantee?

Answer 32

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

Question 33

What is the indemnity covenant in the Standard Conditions?

Answer 33

If the contract does disclose any obligations on the buyer relating to the property, the buyer agrees to carry these out and to indemnify the seller if the buyer breaches

Question 34

Under the Standard Conditions, when does risk pass to the buyer and why?

Answer 34

On exchange, because that is when the equitable interest passes

Question 35

Do the Standard Conditions require the seller to insure the property between exchange and completion?

Answer 35

No

Question 36

Under the Standard Conditions, when will completion occur if the contract is silent?

Answer 36

20 working days after exchange

Question 37

Under the Standard Conditions, what is the cut off time by which if the buyer has not sent funds, the completion is treated as taking place the next working day?

Answer 37

2pm

Question 38

What is the consequence of the buyer not sending funds by 2pm on the day of completion?

Answer 38

They are liable to pay interest at the rate specified in the contract, even if they have already moved into the property

Question 39

When does the interest penalty not apply?

Answer 39

When the reason for not sending the funds is because the seller has not vacated

Question 40

When do terms in the Contract Incorporating the Standard Conditions have legal effect, and what trap should we look out for on the exam?

Answer 40

On exchange. Look out for answer choices suggesting the applicability of contract terms pre-exchange.

Question 41

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

Answer 41

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 42

On the exam, what should we look for that can usually give the green light to proceeding even in spite of defects?

Answer 42

Indemnity insurance or seller indemnifying buyer