1. Freehold Transactions Flashcards
Buyer’s Sol Aims
Ensure:
- Seller has right to sell
- Conditions of land and building adequate
- Identify all rights affecting property
- Identify any 3rd party rights
- Property free from security interests
- Sufficient funds to fund purchase
Lender’s Sol Aims
Ensure:
- Seller has right to sell
- Conditions of land and building adequate
- Property is worth enough to cover any losses
- Identify all rights affecting property
- Identify any 3rd party rights
- Property free from security interests
- Sufficient funds to fund purchase
- No discrepancies in lender’s understanding of transaction or buyers circs.
- Security doc - Mortgage is valid and enforceable
Seller’s Sol Aims
Ensure that:
- Contract review
- Provide buyer’s Sol with what they need to proceed w/ purchase
- Tie timings
-Transfer legal ownership of property to buyer - Collect money from sale, repay mortgage and account to seller for balance
Pre Exchange
- Buyer agrees price
- Property Survey
- Buyers Sol Investigates & report on title
Exchange
- Seller & Buyer enter into contract on completion date
- Buyer pays deposit
Pre-Completion
- Buyer’s Sol orders mortgage funds
- Seller’s Sol ensures all paperwork to transfer property on completion
Completion
- Buyer’s Sol send purchase price to Seller’s Sol
- Seller’s Sol sends paperwork to transfer property
Post-Completion
- Seller’s Sol pays off mortgage and pays balance to seller
- Buyers Sol pays SDLT and registers buyer as new owner on LandReg
Caveat Emptor
Buyer Beware
CE: Buyer’s Sol job to….?
Investigate and report to buyer.
Where does info about property come from?
- Title to the property (LandReg)
- Seller’s replies to enquiries
- Searches (LA, LR, Statutory Undertakers-water and drainage companies)
- Surveys
Exceptions to Caveat Emptor
- Misrepresentation
- Latent encumbrances and defect of title
Misrepresentation
- False statement which induces buyer to enter into a contract
- Estate agents/ Auction particulars of sale
- Remarks made while viewing
- Any communication from seller or their Sol
- Concealing physical defects
Remedies for Misrep
- Common Law remedies
- Rely on sale contract - Standard conditions do not require the buyer to prove they were induced to rely on conduct or statement
- Sufficient to prove there was error or omission
Latent Encumbrances
Something which is not apparent or cannot be discovered while inspecting property.
- Seller is under duty to disclose LI of which they are aware/ has the means to know acting reasonably/diligently.
Defect in title
Something that brings into question the Seller’s ownership of the property, or the rights and burdens that affect the property (typically missing title deeds)
Co-Ownership Legal Title
- Legal owners names on LandReg title
- max 4
- 18+
- Legal ownership only be sole or joint tenancy
- Legal owners hold property on trust for the benefit of the beneficial owners
Co-Ownership Beneficial Title
- Beneficial owners don’t have to be same as legal owners
- Not registered at LandReg unless legalowner
- no max no.
- Any age
- Beneficial ownership can be sol, joint tenancy or tenancy in common
Beneficial Ownership Joint Tenancy
- Cannot pass on share of property via will/intestacy
- Beneficial JT collectively own the whole of the beneficial estate.
- Seen as single entity
- Right of survivorship applies if co-owner dies, surviving co-owners hold property between them
Type of Survey
- Basic Valuation - Cheapest- Identify any major obvious defects
- Homebuyer Report - Suitable for most properties in reasonable condition younger that 150yrs
- Full Structural Survey - Listed properties/extensive renovation/planned
Beneficial ownership - Tenants in Common
- Purchasers own their undivided share in the property and can share property in any proportions.
- Right of survivorship does not apply. Shares will pass via will or intestacy.
Tax Considerations
- SDLT
- CGT
- VAT
