C4: Formalities and Documents

Question 1

How is a “contract” different from a “deed”? Define each one.

Answer 1

A contract is written or oral agreement between two parties with valid agreement, consideration and intent to create legal relations. A contract for the sale and purchase of land must be in writing.

A deed is a written document that has to be signed in the presence of witnesses where an interest, right or property passes, is confirmed or creates a binding obligation. It does not need sufficient consideration.

Question 2

What are the requirements for a valid deed under s1 Law of Property (Miscellaneous Provisions) Act 1989?

Answer 2

Must be in writing
Must be clearly on its face intended to be a deed
Must be validly executed as a deed by the parties to it

Question 3

What is “valid execution” for deeds?

Answer 3

The deed must be:
Signed by the individual in the presence of a witness who attests the signature, by also signing the document. Or if unable to sign, the individual can be signed at the direction and in the presence of the individual by two witnesses who are present.

Delivered by the individual (or someone authorised by them) to the other party, the individual must have acted in a way that shows intention to be bound by it. (By s1(5), if a lawyer/their agent/employee delivers the document, they are presumed to be acting on behalf of the individual.

Question 4

What does s1 Law of Property (Miscellaneous Provisions) Act 1989 state that deeds must be?

Answer 4

S1 Law of Property (Miscellaneous Provisions) Act 1989 - Deeds

• In writing
• Clear on its face that it is intended to be a deed
• Validly executed, meaning:
  a) Signed
  b) Witnessed
  c) Delivered

Question 5

What are the signature and witnessing requirements for contracts and deeds?

Answer 5

Contracts: Just signed by both parties
Deed: Signed by individual and witness

Question 6

How do electronic signatures work?

Answer 6

Signatures for online contracts - accepted for registration deeds that have been signed using a ‘witnessed electronic signature’ process.

Simple electronic signatures: tick boxes and signatures
Advanced electronic signatures: linked to signatory
Qualified electronic signatures: created by a qualified electronic signature creation device

Question 7

What are the three main elements which all contracts must have? Define each one.

Answer 7

Agreement: an offer is accepted
Consideration: both parties exchange a promise or an act.
Intent to create legal relations: needs to be in a capacity where the parties believe their contract will be legally binding

Question 8

What is “privity of contract”?

Answer 8

Where only the parties to a contract are bound by it, see Tweddle v Atkinson [1861]

Question 9

How is an “offer” different to an “invitation to treat”?

Answer 9

Invitation to treat is an invitation to get an offer from someone. An offer is offering something for a price/act/other.

Question 10

What is “acceptance” and does this need to be communicated?

Answer 10

Acceptance is the final agreement to all terms of the offer. Must be communicated, otherwise it is not valid. Silence does not amount to acceptance.

Question 11

What is “consideration” and how does this relate to the requirements for deeds?

Answer 11

Where the promisor obtains a benefit or the promisee suffers a detriment.

Question 12

Distinguish between “executed” and “executory” consideration

Answer 12

Executed: happening at the time of the contract
Executory: happening in the future

Question 13

What are the four “rules of consideration”? Define each one, giving an example of each one.

Answer 13

1 - Consideration must come from the promisee
2 - Consideration must not be past
3- Consideration need not be adequate
4 - Consideration must be sufficient

Question 14

What is “intention” in relation to contracts?

Answer 14

Intention to create a legal relationship.

Question 15

What is the presumption of intention in family and social situations?

Answer 15

Presumption to not create legal relationships in family or social situations.

Question 16

What is the presumption of intention in commercial situations?

Answer 16

Presumption to create a legal relationship in commercial situations.

Question 17

How can the presumptions be rebutted?

Answer 17

If there is proof/evidence to the contrary.

OR

Mere puffs
Letter of comfort
Subject to contract

Question 18

What are the requirements for contracts for the sale of land under s2 Law of Property (Miscellaneous Provisions) Act 1989?

Answer 18

As we have seen, contracts in relation to the creation or transfer of an interest in land are governed by s2 LP(MP)A 1989. This provides that a contract for the sale or other disposition of an interest in land will be void unless the contract:

• is made in writing;
• incorporates all the terms which the parties have expressly agreed in one document or, where documents are exchanged, all the express terms are contained in each; and
• the document incorporating these terms or, where contracts are exchanged, at least one of the documents, must be signed by or on behalf of both the buyer and the seller.

Question 19

What are “property” rights as distinguished from land?

Answer 19

Property rights: The rights a person has over that item, can be transferred from one person to another, via contract (for money) or gift.

Land rights: Does not use the same process as property/goods rights, it has a three-stage process - subject to contract, exchange and completion.

Question 20

Explain “subject to contract”, “exchange of contract” and “completion”.

Answer 20

Subject to contract: unenforceable agreement, where the buyer and seller have agreed the terms of sale.

Exchange of contracts: enforceable agreement, when the contracts have been signed and received by the opposite party, completion date and price are fixed. Buyer does not have full property rights in the land, but they do hold an interest in it.

Completion: transferring the property, when the property is transferred to the buyer and they become the legal owner via deed (s52 LPA 1925), purchase price is paid and buyer takes possession of property.

Question 21

How is registered land different to unregistered land?

Answer 21

Unregistered land relies on the production of documents to prove ownership.

Registered land is kept track of via the HMLR thanks to the Land Registration Act 2002 (was 1925). 87% of England and Wales is registered.

Question 22

Which documents will you find in the following area of work: Conveyance.

Answer 22

Unregistered system - a document which transfers the legal title of the land from the seller to the buyer for money. Can be referred to as ‘conveyance on sale’, vendor is seller, purchaser is buyer. A deed of gift would be used to transfer the legal title of the land from the ‘donor’ to the ‘donee’, without any money changing hands.

Question 23

Which documents will you find in the following area of work: Transfer/Transfer of Part.

Answer 23

Registered system - registered equivalent to a conveyance, transferring the title of the land from the ‘transferor’ to the ‘transferee’. Can be used to gift the title of a piece of registered land to someone else, and when someone is selling land with unregistered title (as it is compulsory to first register the land). TR1 form is a Transfer of a whole title of land.

Transfer of Part can be used to sell a part of the land which falls within their ownership. TP1 form for transfer of part, either registered or unregistered land. You will still need to register unregistered land.

Question 24

Which documents will you find in the following area of work: Declarations of Trust.

Answer 24

In a ‘tenants in common’ purchase - a document that sets out how the sale proceeds should be divided between the parties when it is sold. Not compulsory, but advised.

Question 25

Which documents will you find in the following area of work: Mortgage Deed

Answer 25

A document between the borrower (buyer) and the lender, which sets out the obligations to pay the monthly mortgage payments in exchange for a loan (mortgage). Borrower must sign and date on the day of completion, then it gets sent to HMLR with the application registering the buyer’s title to ensure the lender’s security is protected by the creation of a first legal charge of the charges register.

Question 26

Which documents will you find in the following area of work: Assent.

Answer 26

A document from HMLR where the personal representative (PR) transfers the ownership of a property of a person who has died to the person who is entitled to that property under the terms of the deceased’s will or the intestacy rules, known as the ‘beneficiary’.

Question 27

What is a statutory declaration?

Answer 27

A Statutory Declaration is a written statement of fact that is signed in the presence of a witness, e.g. commissioner for oaths (incl CLEs), solicitor, notary public, Justice of the Peace.

Question 28

What is the difference between a statutory declaration and a statement of truth?

Answer 28

Statutory declaration: Witnessed, wording as above, old way of doing this.

Statement of truth: Need not be witnessed, but must be signed in wet ink (not electronically) must contain ‘I believe that the facts and matters contained in this statement are true’. Form ST3 (lost/destroyed deeds) or ST4 (registration and/or noting of a prescriptive easement).

Question 29

What is the significance of requiring original copies of documents?

Answer 29

If land is unregistered, these are the only evidence of the seller’s ownership of the land in question. If originals are lost and you make an application for title to the land to HMLR, the likely outcome is award of possessory title rather than title absolute.

Question 30

When should you release original deeds to a lender?

Answer 30

When a mortgage is created over land with an unregistered title. Lender holds deeds to ensure the legal owner cannot sell the property without the lender’s knowledge or consent. (As opposed to registered system where lender’s mortgage is registered on the charges register of title)

Question 31

What is the status of photocopied documents – are they acceptable?

Answer 31

Only as a first step, as part of an epitome. ‘The status of the documents which the buyer’s conveyancer will receive on completion is very important. This is because a mere photo copy is not acceptable to HMLR, meaning that they will not rely on a photocopy of an original document to prove the contents of it. Thus, a photocopy is not a good link in the chain of title. In addition, a photocopy of a title document is not acceptable in civil proceedings as proof of the contents of that document.’

Question 32

What does it mean to “certify” a document, and how is it done?

Answer 32

A certified copy of a document is a photocopy of a document upon which someone has certified that it is a true copy of the original document at a given date.

Generally, a certified copy of a document is produced first by taking a complete copy of the original document (including colour copies of any plans attached to that document). The person certifying the document will then either right or use a stamp which states as follows:
‘I certify that this is a true and complete copy of the original’.
The person certifying the certified copy will then need to sign it, print their full name and write the name and full address of the law firm for which they work and add the date. Some firms will have a stamp containing the firms details but the signature and date must be in wet ink by the signatory.

A document must be certified by a professional person or someone of “good standing” for example, a chartered legal executive, a solicitor or notary, bank or building society official, accountant, teacher or lecturer, dentist or minister of religion.

Question 33

What is an “examined copy” of a document?

Answer 33

Usually with unregistered title documents, alternative to certifying a document.

A conveyancer will write the following on a photocopy of the original document:
‘Examined against the original at the offices of [insert firm name]’
The conveyancer who examined the document will then sign and print their name and will insert the date. These words are often written in the margin of the document which has been examined. This means that the solicitor has checked the copy of the document against the original. In essence, this is an older alternative to certifying a document as a true copy of the original.

It is necessary to check that an “original” certified or examined version of the document in question will be handed over. This means checking the document to ensure that you are looking at an original wet ink signature rather than simply a photocopy of the certified or examined document.

An examined copy of a document is acceptable to HMLR.

Question 34

What is an “abstract”?

Answer 34

Before photocopiers were commonplace, conveyancers acting on the sale of unregistered land had the same problem that we have today namely that original documents cannot be sent to the buyer’s conveyancer with the draft contract. The conveyancer acting for the seller would therefore prepare an abstract of the title which is a written summary of the documents of title. These used to be hand written but were typed in later years. An abstract of title is a difficult document to interpret because a strange conveyancing “shorthand” is used.
If an abstract of title is being used as a link in an unregistered chain of ownership, it is necessary to ensure that it is an “examined abstract” meaning that the abstract must be noted as having been examined against the original documents as above.

Question 35

What is an “office copy” of a grant of probate?

Answer 35

An office copy of the grant is an official copy which has the imprint of a court seal on it.

The PRs are faced with a dilemma because they need to retain the original grant but will need to produce copies to banks, building societies and in a conveyancing context to prove that they are entitled to deal with the land in the estate. It is possible for them to produce a certified copy of the grant which is acceptable.
However, in many cases, the PRs will obtain a few official copies of the grant; these are known as “office copies” of the grant.

Note that from 25 March 2019, the probate registry issues grants in a different format. The new style grant of probate contains the following:
(1) a digital signature instead of a signature in ink and the old-style version;
(2) a digital seal instead of the embossed seal and the old-style version;
(3) a validation telephone number which an interested party can call to check the authenticity of the grant if necessary; and
(4) a high security hologram.
Grants will be issued in the new format from the above date but note that a grant in the old-style format will continue to be valid.

Question 36

How does the HMLR portal deal with documents and the requirement for originals?

Answer 36

Conveyancing firms will scan the documents into PDFs and upload them on the portal. Must be scanned from originals and not photocopies.

HMLR also has a procedure whereby applications for first registration of title can be submitted using certified copies as opposed to the originals. However, note that in so doing, the conveyancer making the application has to certify that copies have been taken from the originals and further submit a certificate to HMLR confirming that the original documents are in the control of the firm making the application.

It is very important for conveyancing firms to carefully consider what documents are being sent to HMLR and to avoid sending original documents. This is because HMLR now has a policy of destroying original documents once they have been scanned and retained by HMLR.

Question 37

What is a mercury signature?

Answer 37

HMLR will now accept deeds signed using the “Mercury Signed Approach”. This means that, for HMLR purposes, a deed will be signed in ink and witnessed in person (not a video call). The picture is then captured by a scanner or camera to make a pdf, JPEG or similar method to make a suitable copy of the signature page. Each party then sends a single email to their conveyancer attaching a copy of the document and of the signature page.