contract and exchange (week 4)

Question 1

is there a conflict of interest if the buyer’s solicitor in a residential transaction acts for the lender as well?

Answer 1

no there is not, this is common for this to happen

Question 2

what is a mortgage offer?

Answer 2

formal offer by a residential lender to lend. subject to the lender being satisfied with the transaction and the security (property)

Question 3

what is a certificate of title?

Answer 3

document in which a solicitor certifies that the title to the property is satisfactory for lending purposes

Question 4

what is a facility letter?

Answer 4

it is the commercial equivalent of a mortgage offer

Question 5

what is a legal charge (or mortgage deed)?

Answer 5

the deed that creates the security interest and is registered at the land registry

Question 6

what are the formalities of a property contract?

Answer 6

must be in writing, signed by or on behalf of the parties and incorporate all the agreed terms

Question 7

what is a specified incumbrance?

Answer 7

rights adversely affecting the property such as easements, covenants, public rights of way ect

Question 8

what is a defect in title?

Answer 8

issues that cast doubt on the seller’s ownership of the property or the rights that affect it eg, if a deed containing covenants has been lost

Question 9

who has the onus for residential (SCS) on incumbrances?

Answer 9

onus is on the seller to disclose incumbrances

Question 10

what has the onus for commercial (SCPC) on incumbrances?

Answer 10

onus is on the buyer to carry out all relevant searches and enquiries

Question 11

what is full title guarantee?

Answer 11

seller has full right to give the property and property is free of all incumbrances other than those disclosed in the contract

Question 12

what is limited title guarantee?

Answer 12

seller has little knowledge of the property (often inherited from a deceased’s estate) and there is no incumbrances that have occurred since they have been the owner

Question 13

what is no title guarantee?

Answer 13

unsure if the seller has the right to sell or unsure on any incumbrances on the land

Question 14

what is time for completion?

Answer 14

2pm

Question 15

what does time of the essence mean?

Answer 15

until a notice to complete served meaning the party who fails to complete an have the other party claim damages against them for the breach, but cannot walk away from the transaction.

Question 16

what does holding the deposit as a stakeholder mean?

Answer 16

seller’s solicitor holds deposit as a stakeholder meaning the seller’s solicitor must keep the deposit safe and not pay it to the seller until completion

Question 17

what does holding deposit as an agent mean?

Answer 17

seller’s solicitor holds the deposit as agent for the seller, the seller may demand the deposit immediately after exchange.

Question 18

what is vacant possession?

Answer 18

means property is sold without occupiers

Question 19

what property is exempt from tax? (residential)

Answer 19

residential property, except for newly constructed property.

Question 20

what property is exempt from tax? (commercial)

Answer 20

commercial property over 3 years old, and owner has not opted to tax

Question 21

what property is standard-rated supplies for tax? (20%)

Answer 21

newly constructed commercial properties (less than 3 yeards old) is standard rated. Older commercial property is standard rated if the seller has opted to tax.