C13: Conveyancing 2 Flashcards

1
Q

What does it mean to “deduce” title?

A

Deducing title means that the seller produces documentation to the buyer, which demonstrates that they have good title to the property they are selling.

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2
Q

What does investigating title mean?

A

Investigating title means that the buyer examines the title and raises any queries, called requisitions on title or pre-contract enquiries on title.

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3
Q

When is title deduced by the seller?

A

In modern practice, the title is deduced prior to exchange of contracts/pre-contract stage, so at the beginning of the process. This is determined by the Standard Conditions of Sale (SCS) and the Law Conveyancing Protocol (if being used).

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4
Q

How is title deduced in unregistered conveyancing?

A

The seller’s conveyancer will produce an epitome of title for the buyer’s conveyancer. This is a chronological list of the documents of title which will demonstrate the seller’s ownership together with a photocopy of those documents attached.

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5
Q

For registered land, what do the SCS say about when title should be deduced by the seller?

A

The Standard Conditions of Sale (SCS) says that the title should be deduced prior to exchange of contracts and also investigated prior to exchange.

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6
Q

What does the Land Registration Act 2002 stipulate how title must be deduced? What documents must be included?

A

It does not stipulate how title must be deduced and therefore it is open for parties to make their own arrangements. However, the SCS govern proof of the registered title.

The effect of SCS 4.1.2 is that the proof must include:

  1. official copies of register
  2. official copy of the title plan
  3. copies of documents referred to on the register

The official copies are obtained from the Land Registry at an early stage and will be sent out with the contract.

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7
Q

When investigating the title, which documents (and consequent items) must be checked by the buyer’s conveyancer?

A

The property register:
Property description (e.g. 45 Mews or 45A Mews)
Title plan (boundaries as expected?)
Title number (same as in contract?)
Estate (freehold or leasehold)
Easements (right of way on foot/car, costs for buyers? E.g. maintenance of driveway)
Boundaries (e.g. neighbour fenced garden that isn’t theirs)

The proprietorship register:
Class of title
Names of proprietors (death/marriage certificate)
Restrictions (Form A)

The charges register:
Incumbrances (matter that burden the property, e.g. restrictive covenants and easements)
Past breaches of restrictive covenants (e.g. extension built two years ago on a covenant prohibiting building work)
Anticipated breach (e.g. client wants to set up business, but covenant not allowing business purposes)

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8
Q

What is the difference between a “latent” and “patent” defect? How does this relate to the seller’s duty of disclosure?

A

A latent defect is one that is not apparent from an inspection of the property. E.g. a dispute with a neighbour or a restrictive covenant period. A seller must disclose these.

A patent defect is one which is discoverable from inspection of the property. E.g. a right of way if it can be seen in the form of a path or driveway over the land. A seller does not need to disclose these. This is why a buyer is expected to do a survey for physical defects.

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9
Q

Why does a seller need to be careful in what they disclose to the buyer?

A

As what they are legally under a duty to disclose is very limited, there is a much greater risk for the seller when completing the property information form and answering the buyer’s pre-contract enquiries. If the seller misrepresents the situation, they buyer could sue them in misrepresentation.

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10
Q

Which forms does the seller’s conveyancer send the seller to fill out at the beginning of the transaction?

A

The TA6 property information form and TA10 Fittings and Contents form.

They must also remind them that they have to fill out the form honestly, even if the responses may be adverse to a buyer. The buyer can withdraw and sue the seller if they are dishonest.

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11
Q

What form does the contract for sale take?

A

It has a front page with all the details of the specific purchase:
Date
Details of seller and buyer
Property details (freehold/leasehold, incl address of property)
Title details (title number/root of title)
Specified incumbrances (restrictive covenants or easements)
Title guarantee (full or limited)
Completion date (put in on exchange)
Contract rate (usually 4% above base rate)
Purchase price
Deposit
Contents price (in the case of extra furnishings)
Balance (balance minus deposit and plus contents price)
Space for signature

Then the middle pages which contain the standard conditions of sale.

Finally, the back page with Special conditions, pre-printed and fillable:
Condition 3, regarding fixtures and fittings
Condition 4, regarding vacant possession
Condition 5, pre-printed, relating to time of completion (usually 2pm)
Condition 6, pre-printed, relating to misrepresentation
Condition 7, pre-printed, regarding standard occupiers’ consent.

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12
Q

What does s2 Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989) state in reference to the contract of sale?

A

S2 LP (MP) A 1989 outlines the way in which contracts of sale should be made and executed. It provides that a contract for the sale of land must be:
- in writing
- incorporate all terms agreed between parties and
- be signed by, or on behalf of, each party.

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13
Q

What are the “standard conditions of sale”?

A

Standard conditions of sale appear on the contract of sale, in the middle section. Any amendments to these appear in the special conditions on the final page, which override the standard conditions.

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14
Q

Make notes on SCS 1–7 from the standard conditions – what do they cover?

A

The - Terms
FreeDom - Formation/Deposit
Disguises - Disclosure
The - Title
Ringing - Responsibility/Insurance
Chain - Completion
Rattles - Remedies

SCS 1: Defines Terms - defines the terms used in the general conditions
SCS 2: Formation/Deposit - deals with the formation of the contract and deposit conditions
SCS 3: Seller’s duty to disclose - deals with the disclosure of incumbrances from the seller
SCS 4: Deducing/investigating Title - deals with lime limits for deducing/investigating the title and provisions about the requirements of proof of title and about title guarantees.
SCS 5: Pending completion/insurance - deals with responsibility of the property pending completion and insurance
SCS 6: Completion - deals with timing and mechanics of completion
SCS 7: Remedies - deals with available remedies of breach of contract

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15
Q

What happens if a buyer or a seller delays completion?

A

They may have to pay interest on the purchase price and incur a claim for damages.

If a seller delays, the buyer cannot rescind the contract.

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16
Q

What is a “title guarantee”?

A

The title guarantee relates to implied covenants given from seller to buyer which give possible remedies where the buyer discovers they have been given a defective title. The “guarantee” is nothing to do with a survey or the structure of the property, but relates to the title itself.

17
Q

If giving a “full” title guarantee, what are the three things a seller is guaranteeing?

A

If stated to be selling with full title guarantee, the seller will be deemed to give the buyer implied covenants for title:

  • that the seller has a right to dispose of the property and will do everything they reasonably can to give title to the buyer;
  • that the property is sold free from undisclosed charges or adverse interests; and
  • in the case of a leasehold property, that the lease is valid and subsisting and is not liable to forfeiture (leases are not considered in this unit).
18
Q

How is a “limited” title guarantee different from a full one?

A

If stated to be selling with limited title guarantee, the seller will be deemed to give the buyer similar covenants for title but does not guarantee that the property is free from charges and adverse interests. They only covenant that no charges or interests have been created since the last sale of the property (usually when the seller bought).

19
Q

How does the title guarantee and the class of title differ?

A

Do not confuse the title guarantee with the HMLR class of title such as absolute or possessory title, which is shown in the register entries.

The HMLR class of title relates to the quality of the title awarded by HMLR on first registration and the extent of the state guarantee of title.

The title guarantee relates to implied covenants given from seller to buyer which give possible remedies where the buyer discovers they have been given a defective title. The type of title guarantee to be given from a seller to a buyer is stated on the front page of the contract and the transfer deed then contains the title guarantee which was agreed in the contract .

20
Q

How much is the deposit? Where can this be found in the SCS?

A

The deposit is usually 10% of the purchase price, but this can be reduced in certain cases. This can found in SCS 2.

21
Q

Define what it means to hold the deposit as “stakeholder” compared to as “agent”?

A

Normally, where there is no related purchase, the contract requires that the deposit is held by the seller’s conveyancer as a STAKEHOLDER. This means that the seller’s conveyancer holds it in a neutral position pending completion and must not part with it.

Alternatively, the seller’s conveyancer may hold a deposit in the capacity of AGENT for the seller. This means that the seller’s conveyancer can release the deposit money to the seller, who can use the money for any purpose they wish (e.g. for the deposit on a related purchase). This may cause problems where the seller defaults on completion, as the buyer may then have difficulty in recovering the money (e.g. if the seller is insolvent).

22
Q

What is the compromise contained in the SCS governing how the seller’s lawyer can deal with the deposit?

A

SCS 2.2.5 allows the deposit to be held by the seller’s conveyancer as agent insofar as it is needed for any related residential purchase in England and Wales.

This means that all or part of the deposit can be used by the seller for such a related purchase provided that in such a purchase the deposit will be held on the same terms. Any sums not so required must be held by the seller’s conveyancer as stakeholder in accordance with SCS 2.2.6. So even if a deposit is passed along a chain of related purchase transactions, it will ultimately be held by a conveyancer as stakeholder. Due to these provisions in the SCS, sale deposits are routinely used in practice for related purchase deposits.

23
Q

What is the significance of a non-owning occupier when it comes to the contract for sale? How does Special Condition 7 deal with this?

A

An adult who is living in a property which is being sold but who does not appear on the registered title is the non-owning occupier. Special Condition 7 asks the occupier to sign confirming that they will move out of the property on completion.

Remember, the seller’s conveyancer cannot give legal advice to the non-owning occupier, due to possible conflict of interest with their seller client. If there is doubt that they may not move out, the buyer’s occupier should not continue with exchange of contracts until it is resolved.

24
Q

What is a “pre-contract package”? What does it contain?

A

The pre-contract package is given to the buyer’s conveyancer and contains various documents. It must contain:
- Draft contract in duplicate
- Evidence of title (official copies of title and title plan, which must be less than 6 months old at the time of sending the package)
- TA6: Seller’s property information form
- TA10: Fitting and contents form

+ 4 other forms (planning, guarantees, EPC, sometimes draft transfer)

25
Q

In regards to a ‘non-routine’ specific item or fixture, how would that be dealt with in the sale?

A

Most contents will use the form TA10 contents and fittings form, but for valuable non-routine items (e.g. expensive chandelier (item) or stone fireplace (fixture)), it is best that these are dealt with by way of a Special condition in the contract.

26
Q

What are some other documents that could be included in the pre-contract package?

A

1) copies of planning permission or copies of guarantees
2) Energy Performance Certificate (EPC) if not provided already by estate agent
3) draft transfer (may save time later, more common nowadays to send now)

27
Q

How could a seller’s conveyancer send out the pre-contract package?

A

By post or email.

28
Q

What are the rules around sending pre-contract packages by email?

A

The Protocol contains specific instructions where the package is sent out by email. It provides that, where the pre-contract package is to be emailed to the buyer’s conveyancer, the seller’s conveyancer should tell the buyer’s conveyancer of this intention. Delivery by this method is acceptable under the Protocol, but each document should be a separately identifiable attachment or uploaded as a separate document.

29
Q

What is a TA10 form?

A

Fittings and Contents Form

30
Q

What is a TA6 form?

A

The Property Information Form

31
Q

What is the contract rate?

A

It is a rate of interest, inserted in the contract, usually approximately 4 per cent above base rate.

This interest rate is relevant where the contract provides for additional sums to be paid by one party to the other in the event of certain problems (e.g. where one party delays completion beyond the agreed date).

This may either be stated as a rate linked to a named bank or simply stated as “The Law Society’s interest rate”.