1.2 Freehold Estates - Pre-Contract Search & Inquiry

Question 1

What is required for taking initial instructions from clients?

Answer 1

Client’s needs

• Completion date
• Buyer’s capacity
• Use of property
• Otherwise potential negligence claim

Real estate agent > Indirect instructions

Money laundering > New clients

Signed retained letter
- Otherwise TP liability (breach of warranty)

Verify instructions

Question 2

What searches should Buyer’s solicitor conduct?

Answer 2

Additional property info

Statutory searches > Public registers

Local authority search

• Necessary consents issued by Authority
• Changed plans
• Drainage and water search
• Coalmining search
• Environmental search
• Chancel repair search

Question 3

What pre-contract enquiries should be made?

Answer 3

Commercial property standard enquiries (CPSE)

• Raised in all cases
• Standard form => S’s solicitor

Further pre-contract enquiries

• Analysed CPSE replies (after B’s solicitor reviewed search results)
• Further info > Clarify responses
• Rectify property issues

Question 4

What information should be reported to the Client?

Answer 4

Replies to further enquiries

CPSE results

Search results

Question 5

How is the contract made?

Answer 5

1) S’s solicitor sends draft contract to B’s solicitor
2) B’s solicitor reviews draft
3) B’s solicitor approves/sends markup to S’s solicitor
4) S’s solicitor approves/sends markup to B’s solicitor
5) Contract agreed

Question 6

What is the structure of a contract?

Answer 6

Particulars

• Transaction details (parties, price, address, deposit)
• Plan
• Signed by parties

Standard conditions

• Main T&Cs
• Standard form
• Standard conditions of sale/commercial property conditions

Special conditions (NOT dealt with in standard conditions)

• Tailored to deal
• Amended

Question 7

What are the rules for Buyer’s deposit to Seller as security for Buyer’s performance?

Answer 7

If B does NOT perform + S suffers loss => S must prove loss + steps proven to mitigate loss

10% purchase price

Held by S’s solicitor as;

• Stakeholder > Must NOT release deposit to S (unless other party consents) + Use deposit in related purchase only
• Agent > Can release deposit to S + Use deposit in any way

Question 8

What are the rules for insurance?

Answer 8

B should insure

Can amend

Double insurance

• Standard conditions
• Purchase price is reduced by payout
• S can claim reduction from own policy

Question 9

What issues may arise?

Answer 9

Adverse search results

Structural issues

Neighbour disputes

Planned public works

Flood risks

Mining works