Definitions Flashcards
conveyancing
process of transfer of title of property between the seller (transferor) and the buyer (transferee)
exchange of contracts
- deposit is paid (typically 10%) and through the exchange of contracts both parties become bound to complete the transaction on the agreed completion date. [the buyer gains equitable interest in the property under a constructive trust]
completion
- balance purchase price is paid, keys handed over and the transfer deed is completed. Buyer becomes entitled to apply to become registered as proprietor and gains legal title only once registered at HM Land Registry ownership (for registered land). Unregistered land the legal transfer does take place on completion but will become void if the title is not registered within 2 months
pre-contract stage
- S’s Solicitor
- carries out investigation of title and undertakes deduction of title
- draft contract, supporting documents
- replies to pre-contract enquiries both standard and additional and requisition on title raised by buyer’s solicitor
- proposal to amend draft,, produce clean copies for signature, request redemption statement from any mortgagee
- B’s solicitor
- carries out an investigation of title under the principle of caveat emptor
- check approve and amend draft contract and carry out and review the results of standard pre-contract searches and enquiries of both the seller and third parties
- Both S arrange for contract to be signed
- B’s sol reports to the client and maybe mortgagee snd obtains the deposit in readiness for exchange of contracts
investigation of title
- process where title to property is checked and examined to ensure that the seller has the right to sell and that the title is good and marketable with all necessary rights and with no materially adverse incumbrances. S’s sol will complete to deduce title and pre-empt requisitions on title that may be raised by the buyer’s solicitor (also undertakes the process as part of caveat emptor)
deduction of title
- process where S’s solicitor provides b’s sol proof/evidence of s’s title/ownership (copy of title deeds for unregistered and official copies of the registers of title for registered) and must not be any older than 6 months old
pre-contract searches and enquiries
- standard pre-contract enquiries are made of s’s sol to ascertain further info about the property that should be known by the seller. standard pre-contract searches are made of third parties (local authority and local water authority)
requisitions of title
- additional enquiries of s’s sol as part of investigation of title and the results of pre-contract searches and enquiries. They are specific qs about an issue that require a solution and the buyer is generally not entitled to raise further requisitions on title after contracts have been exchanged*DIFFERENT → Completion information and undertakings
caveat emptor
seller has limited duty of disclosure as part of conveyancing process
pre-completion stage
- b’s sol prepares the draft transfer deed for approval by the seller’s solicitor and the mortgage deed for execution by the buyer. Carry out pre-completion searches and enquiries of S’s sol and 3rd parties, submit their certificate of title/report on title to the lender and request the mortgage advance and request balance from client to complete and deal with transfer deed requested by S’s sol and produce clean copy. S’s sol approves transfer deed and arranges for it to be executed by seller and responsible to the buyer’s completion information an undertakings form (which includes an undertaking to discharge any pre-existing mortgage)
post-completion stage
S’s sol discharges any existing mortgage and provides with b’s sol proof of discharge and pay estate’s agent’s costs if authorised to do so by s and account to their client. B’s sol deal with submission of Stamp Duty Land Tax (SDLT) or Land Transaction Tax (LTT) return and payment of the tax and then they deal with registration at HM Land Registry and sometimes Companies House
synchronisation
imperative where a client has a related sale and purchase. Involves making sure that contracts on the sale are exchanged at the same time as contracts on the purchase with the same completion date. [residential - ensures that the client does not end up without somewhere to live or being committed to buy another property without someone committed to buy theirs]
Energy performance certificate
produced by accredited energy assessor which details the property’s energy use, costs and efficiency. valid for 10 years and must be made available by seller without charge before or within 7 days of marketing and in any event within 28 days
survey
- following inspection of property it is a report. 3 types
- basic valuation
- full structural
- homebuyer’s valuation and report/survey
structural defects insurance policy
- covers defects in design and construction for 10 years. First 2 (initial liability) → builder is responsible for remedying defects. Last 8 (structural liability) → NHBC is responsible for structural defects
- cover includes resolution processes and protection in the case of developer’s insolvency
Law Society Conveyancing Protocol
standardise residential coveyancing process to make it more transparent and efficient
Law Society’s Conveyancing Quality Scheme
recognised quality standard for members accredited as part of the scheme for residential conveyancing and aims to improve customer confidence by including a client service charter and mandatory training and enforcement procedures
registered title
title registered at HM Land Registry. Title deduced by seller’s solicitor providing to the buyer’s solicitor official copies of the registers of title as well a title plan and official copies of any documents referred to and filed under the title
unregistered title
not registered at HMLR and title deduced by s’s solicitor providing to the b’s solicitor an epitome of title (copy paper title deeds and documents)
registers of title
- property register
- proprietorship register
- charges register
official copies
must be less than 6 months old
carries unique title number
search from date
property register
describes the property, its extent and rights benefitting the property (includes: freehold/leasehold; description with reference to title plan like full postal address for residential; exclusions/limitations on title; rights benefitting; sometimes rights burdening; declarations to light/air)
proprietorship register
contains details to ownership of the property, class of title, restrictions on dealings (includes: name and addresses of proprietors; dispositions registered after 1 April 2000, price paid by current owner, id indemnity covenant was given by the owner on purchase
charges register
contains adverse matter (includes: mortgages + charges; covenants burdening the property; easements over the property; leases; notices)
search from date
- specific date and time on which the copies were issued by HM LR. The buyer not permitted under the contract to raise requisitions on title after exchange of contract other than in respect of matters appearing on the title after this date. Also date crucial for pre-completion searches
class of title
- absolute
- possessory
- qualified
- good leasehold title (only leasehold)
absolute title
best and most widespread → guarantees title except entries on registers of titles and overriding interest. absolute leasehold titles HMLR also approved landlord’s title
possessory title
title deeds lost prior to 1st registration or title based on adverse possession and subject to adverse matters at date of first reg
qualified title
where there is a specific defect in title referred to in the registers of title so absolute cannot be given
good leasehold title
ONLY LEASEHOLD
given where HMLR approves the leasehold title but not the landlord’s title
Restrictions
Form A (arising in co-ownership) and restriction to protect mortgagee’s interest
Overriding interest
bind purchaser and usually registrable → interests of actual occupation; legal leases of 7 years or less; easements arising through long user. obtained through pre-contract searches and enquiries §
epitome of title
copy paper title deeds and documents and which must evidence good root of title (material title deeds and docs set out in date order starting with root of title and including other docs cross-referred to it
title deeds
comprised of conveyances, deeds of gifts, assents, mortgages, Land Charges searches and sometimes ancillary documents like pre-contract searches and copy planning documents
good root of title
- defined under s44 LPA 1925 as
- 15 years old at least
- deals with the whole legal and equitable/beneficial interest in the property
- provides adequate and identifiable description of the property (may deal with easements/covenants
- does not cast doubt on the title
s36 statement
a statement int he conveyance to the buyer under s36 AEA confirming that there have been no previous dispositions of the same land made by the PRs
indemnity insurance
- insurance policy provided at the seller’s expense to cover the risk of enforcement/legal action in respect of defect in title. Important to ensure that the policy has a suitable limit of indemnity (often the market value) and provides for increases in line with inflation and cover mortgagees and successors in title and comply with the relevant lender’s requirements
- NOTE: indemnity covenants and indemnity insurance DIFFERENT
development
‘means the carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in the use of any buildings or other land’
Article 4 direction
revokes GDPO in some areas and planning permission will always be required for development
planning contravention notice
request for info about any operations or activities on the property and potential breaches of planning control. OFFENCE to fail to respond within 21 days of notice or to provide false or misleading info
completion notice
planning permission for operational development will usually have a date by which it should be implemented if it is stalling then the local authority may serve a completion notice requiring it to be completed within a specified time
enforcement notice
breach of planning control and that it is expedient for it to be issued. Notice should specify the breach and what steps are required to remedy it/what activities must cease and must be served on owner, occupier and anyone else with an interest in property and takes effect 28 days after notice and criminal offence to fail to comply and can lead to fines though appeal is a possibility
stop notice
following service of an enforcement notice. effective for 28 days and can be issued to make activities stop immediately. Contravention also criminal offence and fine payable but can be challenged by JR
breach of condition notice
breach of conditions attached to the planning permission and requires compliance with the conditions within specified period. Fien payable and no right of appeal but can be challenged by judicial review
injunction
when it is expedient to do so for an actual/apprehended breach of planning control (discretionary, equitable remedy)
building regulations approval
required for works of construction or significant alterations or extensions to buildings in order to ensure that they meet standards as to health and safety etc
Standard Conditions of Sale
sale so commonplace not necessary for bespoke conditions so Standard Conditions of Sale for residential and straightforward commercial properties like sale of small property with vacant possession
Standard Commercial Property Conditions (SCPCs)
- used in most commercial transactions.
- Part 1 → standard conditions that apply in all cases
- Part 2 → provides additional conditions that may be incorporated if appropriate
specified incumbrances
adverse title matter that the property is sold subject to (opposed to covenants and rights they benefit from). They include covenants (both pos and rest) and adverse easements
title guarantee
implied covenants for title that are inserted into the transfer under LPA 1994 and relates to the guarantee that the seller can give about the title and incumbrances and assistance they will give to transfer it they will give to transfer it. It depends on:
- full title guarantee
- limited title guarantee
- no title guarantee
full title guarantee
seller owns legal and equitable interest. There are no adverse incumbrances, third party rights and charges other than those they do not and could not reasonably know of
limited title guarantee
does not own whole legal and equitable interest (sale of trustee or PR). Seller covenants that they have not since the last disposition and not aware of anyone else having done so.
no title guarantee
no knowledge at all about the property (mortgagee or trustee in bankruptcy case)
contract rate
rate of interest paid by defaulting party on purchase price if completion is late (usually 2-5%)
deposit
usually 10% of asking price and provided for in the standard conditions (lower is 5% under special conditions but if failure to fulfil then full 10% becomes payable)
indemnity covenant
inserted into transfer that the buyer will observe and perform covenants affecting the title and will indemnify the seller in respect of any future breaches. Agreement of this usually at special conditions stage
UK Finance Mortgage Lenders’ Handbook
requirements of conveyancers in secured lending for most high street lenders. Part 1 outlines general requirements applying to all lenders part of UK Finance; Part 2 deals with the specific requirements of particular lenders; Part 3 outlines requirements when acting for the lender only
transfer deed
needed to transfer the legal estate to buyer. Contract not necessary for conveyance BUT transfer deed always necessary for legal ownership transfer
pre-completion searches and enquiries
undertaken by B’s solicitor. Some are undertaken in all circumstances and the others will depend on the status of the seller and/or buyer and whether the title to the land is registered/unregistered. They serve to update info provided before exchange and to confirm the solvency of the seller and the buyer as well as arrangements for completion
lease
estate in land granted by a landlord to a tenant whereby exclusive possession of a property is given to the tenant for a certain term
full repairing and insuring lease (FRI)
lease that requires the tenant to be responsible for the costs of repairing and insuring the premises
schedule of condition
report usually prepared by surveyor detailing the state of repair and condition of the property prior to the grant of lease and designed to evidence and set the minimum benchmark for the T’s repairing obligations and Surveyor is liable in negligence if report is not prepared comprehensively
Licence to alter
formal doc providing consent tot he proposed alterations often with plans annexed
open market rent review
rent reviewed to the hypothetical market rental value of the premises at the time of review (only hypothetical as tenant is not leaving). But only really increases in price.
alienation
dealing with the T’s interest under the lease
Assignment
transfer of existing lease by the existing tenant to another tenant
Underletting/subletting
grant of a further lease carved out of an existing lease usually for short term. if long-term then it is an assignment (an assignment can arise from an underlet). You get a headlease and a under/sublease
Sharing occupation
licence where exclusive possession is NOT given (so occupant does not have exclusive possession)
parting with or sharing possession
important residuary category → includes both formal and informal assignment and underletting or other arrangement with the same effect
licence to underlet
provide the superior landlord’s approval to the proposed underlease and to provide privity of contract between the head landlord and undertenant that would otherwise not exist
deed of assignment
formal conveyance/transfer of the legal interest of the lease
business tenancies
any tenancy where the property comprised in the tenancy is or includes premises which are occupied by T and for the purposes of a business
security of tenure means…
- usual common law methods of termination of a lease do not apply
- even after the contractual expiry date a lease may continue under the Act unless and until it is terminated under one of the prescribed/specified methods under the Act (T holding over under the lease during this continuation period)
- On termination there is presumption that T will be entitled to new protected lease (on similar terms; updated to market rent; maximum term of 15 years unless L can prove one of the grounds of opposition under the Act
- if parties cannot agree the terms of the renewal lease, the court may intervene to determine them
- if renewal lease not granted due to grounds of opposition not relating to the default of the T, T may be entitled to compensation
effluxion of time
fixed-term lease may expire by effluxion of time which means that it automatically ends following the expiry of the contractual term without the need to give notice
notice to quit
- periodic tenancy may be determined by either party giving one full period’s notice expiring at the end of the relevant period
- Weekly → Residential - 4 weeks; Other - 1 week
- Monthly → 1 month
- Quarterly → 1 quarter
- Yearly → 6 months
surrender
- when the parties each agree for the lease to come to an end before the contractual expiry date. Causes the lease to be merged with the landlord’s reversionary interest. T’s yield sup the lease which is extinguished
- surrender must be made by deed
- if sublease present and headlease is surrendered then the subtenant becomes the immediate tenant of the head L
merger
- when T acquires the immediate L’s estate/reversion or both the lease and the reversion are acquired by the same party at the same time
- lease becomes merged with the reversionary interest and becomes extinguished and ceases to exist
- unless there is a declaration of deed
contracted out tenancy
fixed-term tenancy under which the parties expressly agree (using prescribed process) that the provisions of s24-28 of LTA 1954 will not apply
s25 notice
L’s notice to terminate fixed-term or periodic tenancy with or without proposals for a new tenancy
