1. Taking Instructions & Title Investigation

Question 1

Freehold

Answer 1

A right of absolute ownership of land, for life.

Question 2

Leasehold

Answer 2

A right to own land for a fixed period of time e.g. 999 years

Question 3

Registered land

Answer 3

The land has been registered with HM Land Registry and details of the property will appear on the Land Register and are available for public inspection

Question 4

Easements

Answer 4

An easement is a right that one landowner has to do something, or prevent something from happening, on land belonging to someone else

Question 5

In what 3 ways may easements be created?

Answer 5

Expressly (in writing), Impliedly (by virtue of necessity) or by Long User (prescription - which requires 20 years uninterrupted use)

Question 6

Easement Example: A right of way - what does this mean?

Answer 6

This allows the person with the benefit of the easement to travel over another person’s land, which is burdened by the easement. The person with the burden of the right of way will be unable to build on this land for example.

Question 7

Easement Example: A right of light - what does this mean?

Answer 7

This entitles the person with the benefit of the easement to receive light through defined doors and windows, across land which is burdened by the easement. The existence of an easement can limit what the person with the burden can do with their land. E.g., building high structures if these block light.

Question 8

Covenants

Answer 8

A covenant is an enforceable promise to either do something or to avoid doing something.

Question 9

A positive covenant

Answer 9

Requires a person to do something e.g., keep a fence in good repair

Question 10

A restrictive covenant

Answer 10

Prevents a person from doing something e.g., the land must not be used for offices

Question 11

Does the burden of the covenant run with the land?

Answer 11

The burden of a positive covenant DOES NOT RUN WITH THE LAND.
The burden of a restrictive covenant will always run with the land IF THE RESTRICTIVE COVENANT APPEARS ON TITLE.

Question 12

Joint Tenancy

Answer 12

Both tenants own 100% of the property jointly and do not hold distinct shares. In the event of sale, the joint tenants will split the proceeds equally. When one tenant dies, the remaining tenant will automatically inherit the deceased share (right of survivorship)

Question 13

Tenancy in Common

Answer 13

Both tenants own distinct shares in the property. When a tenant in common dies, their share of the property will pass under their will or intestacy rules (if no will)

Question 14

What is a Form A restriction? What does it show?

Answer 14

“No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court”

That land is being held as tenants in common.
This alerts third parties dealing with the land that a trust in land is in existence, meaning that the sale of the legal estate will need to be effected by two trustees.

Question 15

What happens where one tenant in common dies and the surviving co-owner wishes to sell the property?

Answer 15

They will need to appoint a second trustee before completion of the transaction (because the sale must be effected by two trustees)

Question 16

Caveat Emptor

Answer 16

“Buyer Beware”

It falls to the buyer to satisfy themselves that the property is free from any defects and / or issues.

A buyer will have no redress against a seller if they discover, subsequent to the purchase, issues with the property which they could have discovered prior to completion (even if the seller knew and stayed silent). The buyer has responsibility to find out all of the information which they need about the property before committing to the purchase.

Question 17

What is an undertaking?

Answer 17

An enforceable promise

Question 18

Any statement made by a solicitor to do or not do something, whether given to a client or other third party (such as another solicitor) may be a what?

Answer 18

An undertaking

Question 19

How does the SRA define an undertaking?

Answer 19

A statement given orally or in writing…
Whether or not it includes the word “undertake” or “undertaking”….
To someone who reasonably places reliance on it…
That you or a their party will do something or cause something to be done, or refrain from doing something…

Question 20

A solicitor must perform all undertakings within…

Answer 20

an agreed timescale or a reasonable amount of time (reasonable depends on the facts of the case)
Para 1.3 of the Code for Firms

Question 21

What are the consequences when an undertaking is breached?

Answer 21

1. Personal liability
2. Disciplinary action against the solicitor
3. Disciplinary action against the firm

Question 22

When is VAT charged?
(commercial property transactions)

Answer 22

Sales of “new” freeholds are charged at the “standard rate” for VAT = 20%
VAT must be charged if the sale occurs within 3 years of the property’s construction
If the property was constructed MORE than 3 years ago the seller HAS DISCRETION to charge VAT

Question 23

What is overreaching?

Answer 23

The process of transferring the beneficial interests under a trust from land itself to the capital money received from the purchaser of the legal estate

Question 24

How does a buyer overreach the beneficial interests?

Answer 24

The interests of the beneficiaries under the trust will be overreached only if the trustees convey the legal estate to a purchaser in good faith for valuable consideration and give a receipt for any capital money

Question 25

How does a buyer overreach the beneficial interests?

Answer 25

The interests of the beneficiaries under the trust will be overreached only if the trustees convey the legal estate to a purchaser in good faith for valuable consideration and give a receipt for any capital money

Question 26

Can a sole proving Personal Representative overreach the beneficial interests?

Answer 26

No; a second trustee would need to be appointed to act with the sole proving PR to overreach the beneficial interests and receive the proceeds of dale.

Question 27

What happens if there is more than one surviving tenant in common?

Answer 27

If there is more than one, there are enough survivors to overreach the deceased’s equitable interest on a sale of the property, so there is no need to appoint an additional trustee.