Conveyancing Flashcards
What happens during the pre-contract stage
Take instructions
S gives B contract and evidence of title
B looks into title and encumbrances
B does searched and enquiries
report results of searches to B and lender
does S have to answer enquiries from B
no but an incorrrect answer may be misrepresenation
what happens in the pre-completion stage
if acting for lender - Bs solvency check
if acting for lender - draft mortgage deed
get client’s executed mortgage deed
submit title report to lender and ask for mortgage advance
ensure all docs and money are avaliable
do pre-completion searched
what to do on completion
pay remaining money
undertake to discharge mortgage
what happens after completion
pay tax
register
discharge mortgage and remove from title
which conveyances does the law society conveyancing protocol apply to
only residential conveyancing
can you act for buyer and seller
no - substantially common interest exeption doesn’t apply here
what to do if seller refuses to disclose contract race to potential Bs
refuse to act for seller
can you advise on or arrange a regulated mortgage contract
this is a regulated activity so would need to rely on s327 exemption
giving generic advice or arranging execution of an independently chosen mortgage is not regulated so can do this
what is a regulated mortgage contract
borrower is individual, it is the first legal charge of property in the UK and at least 40% is for occupation of borrower or immediate family
is CGT payable on conveyance
not if principle private residence relief applies - main residence throughout ownership
if garden of more than 0.5 hectars may pay CGT on excess unless extra was necessary for reasonable enjoyment of house
relief may be lost of part of house used only for business
is SDLT payable on residential or commercial transactions
both
is VAT payable on conveyance
if commercial building rented out and owned by company
if commercial B
how much SDLT for a first time buyer
nothing up to 300K
300-500K 5%
how much SDLT paid (if not first time buyer)
up to 125K - 0% 125 - 250k - 2% 250 - 925K - 5% 925k - 1.5m - 10% 1.5m upwards - 12% on each portion
what is SDLT payable on
land but not chattels so can allocate fair amount to chattels to save on SDLT
which form is used to pay SDLT
SLDT1
how long to pay SDLT
14 days from completion or fine, interest and not registered
which transactions incidental to covenyance attract CGT
release of easements
gifts
can you register for VAT if you only sell exempt goods
no
VAT rate on sale of new residential freehold
zero-rated
VAT rate on subsequent sales of residential freehold (not first sale)
not in course of business so not VAT
VAT payable on sale of greenfield site (commercial)
exempt/option
VAT payable on supply of construction services (commercial)
standard rate
VAT payable on supply of professional services (commercial)
standard rate
VAT payable on sale of new commercial freehold
standard rate
VAT payable on sale of old commercial freehold
exempt / option
VAT payable on grant of commercial lease
exempt/option
what is a new/old commercial building
new commercial property is within 3 years from completion of building
How soon should S provide EPC
at earliest opportunity. Preferably within 7 days but in any event within 28 days
How to investigate title for registered land
S provide Official copies of registered title
B get copy of title plan from land reg
B check if there are any overriding interests by using searches and enquiries
what do the official copies of registered title show
entries on property, proprietorship and charges register
when must title deduction be done by
must done before exchange. Cannot object to it afterwards
what is investigation of title
to establish who owns the property and any incumberances
what does a typical sale contract say about incumberances
S sells property free of all incumberances unless it states otherwise so must identify incumberances and specify them in the contract
what are incumberances
third party rights that bind the property
how to investigate title for unregistered land
check if reg, pending reg or caution against reg
if unreg prove with deeds
S gives B copy of deed and originals on completion (or certified copies if selling part)
find good root of title
prepare epitome
search against estate owners in epitome using k15
who gives B the deed for unreg land
seller or if a mortgage then lender
what happens on first reg if there is a caution against reg
land reg notifies cautioner
they must prove their right within specified time or they lose it
how to check if unreg land is registered, pending registration or has a caution against registration
index map search at land reg on form SIM with a plan of the property
what is vertification of title
on completion when B’s solicitor examines original deed to check they are the same as the copies
how to mark original deed in a sale of part
a memorandum of the sale of part is marked on the original deed
how to find root of title
find it in deeds
what is root of title
the doc from which the title investigation begins. usually the most recent doc that meets the requirements
requirements for good root of title
shows who owns legal and equitable interest
describes the land
do nothing to cast doubt on title
be at least 15 years old
need unbroken chain of ownership from root up to seller. Need documentary evidence of all changes of ownership
which documents are most likely to give good root of title
conveyance
mortgage
deed of gift
assent
when can B call for docs that pre-date the root of title
when the root doc refers back to a third party right
who prepares epitome of title
seller
what is the epitome of title
schedule of docs from and including root of title to present day.
numbered and in chronological order
attached to epitome are copies of each doc
what document is needed for the title investigation if the owner of the property has died
grant of probate
what should buyers solicitor do once they receive the epitome of title
make searches against all estate owners revealed in epitome and attached docs for period of ownership (or since 1926) even if period of ownership pre-date root of title
how to search against estate owners revealed on epitome
use form k15
does the buyer need to search against the lender when searching against estate owners revealed on epitome
not - only if they are in possession
what else should buyer’s solicitor check when doing searches to prove title
check title deed to see if description of property is consistent throughout
check each title for incumberances
check each doc was properly executed as a deed
can you rely on searched done previously by others in previous sales
yes
when do restrictive covenants bind unreg land
only if registered properly
where do easements appear
reg land - charges and property register
unreg land - conveyance
property reg shows financial contributions to easements
where is info regarding mines and minerals found
reg land - property register
unreg land - conveyance. do index map search to see if they have seperate title on form SIM
how to tell if the equitable interest is held as JT or TinC
assume JT unless restriction appears in proporietorship register or conveyance
does the seller have a duty to disclose problems with the property
no but cannot give misleading answers to questions
what are the essential pre-contract searches
sellers enquiries environmental search survey flooding water and drainage local land charges search and standard enquiries of local authority (local search)
what are the non-essential pre-contract searches
chanel and repair commons mining railway canal and river trust highways unregistered land searches company search bankruptcy / insolvency search
pre-contract enquiries of seller
essential
disputes, occupying parties, convenant compliance, planning permission, boundaries, VAT status
envronmental searches
essential
desktop search to check for contamination
if risk of contamination do physical survey
consider insurance
flood search
essential
re flood
insurance
professional survey
essential
lender will want valuation
full structural survey or homebuyers valuation and survey
local land charges search and standard enquiries of local authority (aka local searches)
essential
LLC1 and CON29
planning permission, contaminated land, road repair liability, financial charges, restrictions on land, tree preservation order, conservation area, smoke control order
optional enquiries to local authority
CON29O
environmental pollution and common land attached to property
water and drainage search
essential raise with water company using CON29DW are they adopted connected to public water supply connection to public sewer for foul and surface water
chancel and repair search
in reg land - overriding status lost in 2013 but if last transfer for value was before this date it will bind buyer
in unreg land - only binding if referred to in titled deed or protected by caution
consider insurance
mining search
CON29M
confirm if mining took place
canal and river trust search
liability for repair or maintenance
any previous floods
railways search
network rail don’t answer these. Use CON29
obligation to repair and restrictions on building works
highways
CON29
doesn’t include info on verges and pavements
send plan to highway authority asking for publically maintainable highway to be marked on it
unregistered searches
index map search with form SIM and land charges department search against previous estate owners
company search
when seller is company at companies house
look for fixed or floating charges to discharge on completion
check for insolvancy
also do company search against any corporate estate owners revealed in epitome
bankruptcy / insolvency search
solicitor acting for lender should search against borrower
use K16 to land charges department if it is an individual
if it is a company do a company search instead
what is the rule in Halsall v Brizell
cannot take benefit of positive covenant without taking burden of it too
exception to the rule that positive covenants don’t run with the land
benefit and burden must be conferred by same transaction
need correlative relationship between benefit and burden
must have choice to disclaim benefit to free themselves of burden
where are mortgages found
charges reg (and maybe proprietorship reg) and title deeds on epitome
where are details of the restrictive covenants found
charges reg or conveyance
in unregistered land when is a post - 1925 restrictive covenant binding on buyer
only if registered as a D(ii) charge against name of original covenantor
check with land charges search
where are details of the positive covenants found
charges reg or conveyance if un reg land
how to tell if seller gave indemnity covenant when they bought property
check proprietorship reg
what should you assume about a covenant that you know exists but for which the details are lost
assume it is restrictive and binding on buyer
get insurance
when do leases bind
if registered - binding
if not registered binding if overriding
overriding - if legal lease for 7 years or less or equitable lease plus actual occupation
where to find a lease
title deed for unreg land (unless parol lease which is binding but not made by deed)
what is a notice
entry on charges register indicating burden
do you need consent of owner to place a notice on register
no
what is the effect of a notice
it doesn’t guarantee interest is valid or exists. Doesn’t give them any rights over property. it ensures priority of interest in notice is protected against subsequent interests
what to do if searches reveal a notice
ask S to ascertain what is relates to and refuse to proceed until S has it cancelled at land reg before contract exchange
Do home rights bind buyer
yes if protected by notice or class F charge by date of transfer of property to buyer
what to do if searches disclose a home right
buyer should obtain from non-owning occupier a release of all rights in the property and agreement to vacate. Usually in the contract
When do the standard conditions of sale apply (SC)
residential and simple commercial sales
when do the standard commercial property conditions apply (SCPC)
high value commercial property transactions
what are the three parts of the SC and SCPC
particular of sales - burdens on property, title number and class or root title, full or limited guarantee, financial terms of transaction
standard conditions - terms that govern transaction unless parties specifically agree something else
special conditions to meet requirements of specific transaction
what are the two parts of the SCPC
part 1 applies unless excluded and part 2 applies if specifically included
full guarantee or limited guarantee
sell with full if they own whole legal and equitable title
sell with limited if they have limited knowledge of the property eg executor or trustee
when does the legal interest in the property pass from seller to buyer
on completion
with both full and limited guarantee seller impliedly covenants that…
they have the right to dispose of the land
they will do all they reasonably can to transfer the land
if leasehold, the lease is subsisting at the time of disposal and there is no breach of covenant making the lease liable to forefiture.
for full guarantee only - the land is free from incumberances other than those S doesn’t know of and couldn’t reasonably know of
what is the contract rate
interest charged if party is late in completing. interest is charged on purchase price less deposit
2-4% is normal
what if B fails to complete
S can forefit and keep the deposit
how to pay the deposit
cheque or electronic transfer - SC
electronic transfer only - SCPC
must be paid into bank in name of seller’s solicitor or coneyancer nominated by seller’s solicitor (if SC2.2.5 is used)
what is SC 2.2.5
Seller can use deposit to fund next property
how is a despoit held and what difference does it make
held by seller’s solicitor as stakeholder - cannot give it to seller until completion
held by seller’s solicitor as agent - it can be released to seller immedately after exchange
when is a despoit held as agent instead of stakeholder
when buyer agrees
when does risk of damage to property pass to buyer
on exchange of contracts so buyer must complete even if property is damaged between exchange and completion
does seller need to insure freehold
no - not unless required by special condition
what are the 3 VAT options in the SC and SCPC
purchase price is exclusive of VAT and VAT will be added on top (SCPC2)
purchase price is inclusive of VAT so VAT cannot be added on top (SC1.4 or special condition for SCPC)
purchase price is exclusive of VAT so VAT can be added on top if law changes between exchange and completion but won’t opt to tax (SCPC part 2 condition A1)
where are the mortgage terms and conditions found
in the mortgage offer for residential and simple commercial loans
or
a commitment letter with terms sheet attached followed by facility agreement containing terms of lending arrangements if complex loan
can the lender withdraw the mortgage offer after exchange
yes mortgage offer may allow this
when are mortgages legal
when made by deed and completed by registration
do all mortgage deeds contain a power of sale
this is implied into all mortgage deeds but often they include an express power too
what must the buyer’s solicitor explain to the buyer regarding the mortgage
the obligations under the mortgage deed, consequences of defaulting, and powers of lender in the event of default
can solicitor act for borrower and lender even if there is a conflict
yes as long as there is a substantially common interest and safeguards are in place
what to do if a conflict arises between lender and borrower where you act for both
cannot proceed with purchase using lender’s funds until resolved to lender’s satisfaction
what must the lender be provided with to show that the property has good and marketable title
certificate - won’t exchange until they have this.
what does the certificate of good and marketable title include
confirms no legal problems with the property
who will own property once sale is completed
the completion date when funds are needed
also in more complex commercial version:
report about property
summary of info ascertained in title investigation and pre-contract searches
who is the certificate / report addressed to and prepared by
prepared by buyer’s solicitor
addressed to buyer or to buyer and lender
what if the info in the certificate / report to lender if wrong
lender can sue because it contains waranties about correctness of info
when is the certificate given to the lender
immediately prior to completion of the loan
drafts given earlier
do you need your client’s authority before exchanging contracts
yes must get this authority in writing with note on file or liable in negligence
can you sign the contract on behalf of your client
yes if they have given you the express authority
3 ways to exchange contracts
in person, in post or by telephone
3 protocols for exchanging contracts
Formula A, B and C
formula A for exchange of contracts
one solicitor has both parts of contract duly signed so one solicitor sends the client’s signed part already. Solicitor undertakes to send it the same day by DX or first class post once signed. Buyer undertakes to send deposit funds the same day
formula B for exchange of contracts
each side holds their own client’s signed contract and the same day sends by DX or first class post or personally to the other side duly dated. Buyer sends deposit
formula C for exchange of contracts
for residential property in a chain
how to record the exchange of contracts
record details, time and formula in top corner of front page of contract. Do this at time of phone call exchanging. also note in file the date, time and formula, deposit and identity of solicitor exchanging.
what pre-completion checks should be done
if reg - land reg search against title number on OS1 (or OS2 and plan if part sale)
if unreg - do land charges search against seller on form K15
if reg - special land charges search on K16 (bankruptcy search)
if unreg do bankruptcy search using land charges search by adding buyers name to K15 that you will already be doing against the seller
or if company do bankruptcy search at companies house
priority period conferred by pre-completion land reg search against title number (OS1/OS2)
30 working days from date of search. submit reg application by noon on day 30
priority period conferred by pre-completion land charges search on K15
15 working days from date of result
in whose name should the pre-completion land register search be done (os1/os2)
the lenders if there is a mortgage
how long is the priority period conferred by a bankruptcy search on a company at companies house
no priority period
how soon after exchange of contracts does completion take place
4 weeks / 20 working days
requirements of a deed
signed, clear on its face its a deed, delivered
witnessed if private individual
if company either seal, 2Ds/DandS or 1 D and witness
who executes the transfer deed to transfer the land (TR1)
the seller
but buyer also does this if they are entering into an obligation or making a declaration eg indemnity covenant
when is a deed delivered
when it is executed if it makes clear on its face it is a deed
so if it isn’t to take effect immediately you will have to make this clear
what deed is used to transfer the land
TR1 or if part only then TP1
or if unregistered can use TP1/TR1 or conveyance
what does the lender need to receive before they will release the mortgage advance
certificate of title
OS1 in name of lender
bankruptcy search
executed mortgage deed but not completed
what is a completion information form used for
to agree practicalities of completion. Buyer sends this to seller to complete. include an undertaking to discharge mortgage.
what is a financial statement
send from buyers solicitor to buyer to inform them of funds needed to complete
when does completion take place
once full funds are received by seller
what happens when seller receives the full funds
seller dates the TR1 and THEN the lender dates mortgage deed
how to complete in person
buyers solicitor checks title deeds match the copies. Seller hands over title docs
how to complete by post
BS sets out what S should do. S does this for free. S will check title deeds on behalf of BS. S sends docs to BS by DX or first class post S gives implied undertaking that they will comply with BS instructions
if completing by post how can the buyer be sure the the seller will comply with the instructions to check the title deeds
sellers solicitor gives an implied undertaking
what to do if first registration is triggered (form and time)
2 months
form D1 - set out overriding interests
how to pay SDLT (forms and time)
14 days from completion
send payment and tax return
get WRA certificate
how to register a mortgage if taken out pay a company and how long to do this
register at companies with 21 days of completion
what if a mortgage taken out by a company is not registered at companies house
void against liquidators and administrators of borrower and borrower’s creditors
how does the lender register a mortgage
register a charge using AP1
how to discharge a mortgage (forms etc)
once lender receives mortgage money they complete DS1 and send it to S to send to B who apply’s for mortgage to be discharged
or
do it electronically - notify B that they don’t need to do anything else because it will be discharged automatically
remedies if you don’t complete on time
SC and SCPC say time is not of the essence until notice to complete is served so you cannot rescind, only get damages
SC - B and S can pay damages
SCPC - only B liable to pay damages
when must the transaction be completed by
2pm or counts as next day
how to calculate compensation payable when completion is delayed
period between completion date and actual completion
on remainder of amount to be paid
if non-paying party at fault exclude those days
how to make time of the essence
serve notice to complete
when can you serve notice to complete
after contractual completion date
effect of serving notice to complete
10 working days to complete or can rescind (not obliged) and get damages
when can contract be rescinded so transaction is not completed
notice to complete is served and 10 working days expired
fraud / reckless misrepresentation or property will be substantially different in quality, quantity o tenure from what they were led to expect. (less serious misrep would only allow damages)
