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SQE1 - Property Practice > Different Types of Transactions, Preliminary Matters (Stage 1); and Starting a Conveyancing Transaction (Stages 1 and 2) > Flashcards

Different Types of Transactions, Preliminary Matters (Stage 1); and Starting a Conveyancing Transaction (Stages 1 and 2) Flashcards

1
Q

What is a head lease?

A

Lease granted by a freehold owner to a tenant

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2
Q

What is an sublease/underlease?

A

Lease granted by a tenant to a subtenant

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3
Q

What limits the length of time a sublease can be granted for?

A

It cannot exceed the length of the head lease.

If it does, it is deemed that the tenant had assigned their entire lease to the subtenant.

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4
Q

In a leasehold situation, a remaining term of less than what length is usually unacceptable to a mortgage lender, and why?

A

80 years. Lifespan of a mortgagor.

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5
Q

Is an absolute prohibition on assignment of a residential lease acceptable?

A

No

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6
Q

In a commercial situation, what will be a considered a reasonable reason for a landlord to refuse consent to assign?

A

If the landlord has reason to believe the assignee will not be able to pay through the lease term

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7
Q

What is required for rent review to be available?

A

Express provision must be made for it in the lease

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8
Q

Within what time after completion must capital gains taxed be reported and paid?

A

60 days

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9
Q

What are the three requirements for a solicitor to represent their buyer and the lender?

A

Lender is an institutional lender

Standard certificate of title is provided

Confidentiality as to both parties is maintained

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10
Q

What is required for the buyer’s solicitor to disclose information to the lender (who may become their client), and what must happen if this does not occur?

A

The buyer’s consent. If the buyer wishes for the solicitor to keep something from the lender, the solicitor must cease acting for the both parties

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11
Q

What situation on the exam will suggest a conflict of interest?

A

Solicitor acting for parties on different sides of a transaction

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12
Q

Where there is more than one buyer or seller, what must a solicitor acting for both ensure?

A

That they are instructed by both clients

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13
Q

However, in a joint instruction situation, after what two steps can the clients agree for one to take the lead?

A

After:

Initial instructions

Identification requirements are satisfied

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14
Q

What is a declaration of a trust, and when is it recommended to enter one?

A

A document which sets out the circumstances of the purchase, the contributions, and ownership shares, recommended when buyers hold the beneficial interest as tenants in common

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15
Q

What is a declaration of a trust, and when is it recommended to enter one?

A

A document which sets out the circumstances of the purchase, the contributions, and ownership shares, recommended when buyers hold the beneficial interest as tenants in common

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16
Q

In the pre-contract stage in the unregistered system, what must the seller’s solicitor do regarding the title deeds if they are held by a lender?

A

Write the the lender to obtain the deeds and give an undertaking not to part with the deeds until such time as the mortgage is paid off

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17
Q

Who does the Law Society Conveyancing Protocol require to remedy pre-contract title defects?

A

The seller’s solicitor, rather than waiting for buyer to raise an inquiry

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18
Q

What type of defects (1) must the seller disclose and (2) need not be disclosed?

A

Must disclose latent defect/encumbrance
Need not disclose patent defect/encumbrance

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19
Q

What is a latent defect?

A

Non-physical burden that would not be apparent from an inspection of the property, e.g. underground easement or restrictive covenant

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20
Q

What is a patent defect?

A

One that would be revealed by an inspection e.g. visible right of way

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21
Q

What two remedies are available to the buyer where the seller breaches a duty to disclose?

A

Withdraw from contract after exchange or claim damages

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22
Q

What two remedies are available to the buyer where the seller breaches a duty to disclose?

A

Withdraw from contract after exchange or claim damages

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23
Q

What two remedies are available to the buyer where the seller breaches a duty to disclose?

A

Withdraw from contract after exchange or claim damages

24
Q

What is the limitation of the duty to disclose latent defects and to which the principle of caveat emptor applies?

A

Physical defects, e.g. rotting wood in the walls

25
Q

In what one situation will a seller actually be held liable where there is a defect which is both latent and physical?

A

Where the seller has willfully tried to obscure the defect

26
Q

What are the three sections in the Contract Incorporating the Standard Conditions of Sale?

A

Particulars of sale

Standard conditions of sale

Special conditions of sale

27
Q

What is required of something agreed between buyer and seller to be legally binding?

A

It must be in the contract

28
Q

What is required of something agreed between buyer and seller to be legally binding?

A

It must be in the contract

29
Q

What is the default deposit under the Standard Conditions?

A

10% of the purchase price, although the parties can agree lower

30
Q

Even where the parties negotiate a lower deposit, what is the buyer liable for if they breach?

A

The full 10% deposit

31
Q

As long as the property is in England and Wales, what can the buyer do with the deposit before completion?

A

Count it towards their deposit on a new residence

32
Q

Regarding this deposit for new purchase rule, what traps should we look out for on the exam?

A

Non residential purchases, e.g. buy to let

Property outside England and Wales

33
Q

Under the Standard Conditions, how is the deposit held between exchange and completion?

A

By the seller’s solicitor as stakeholder, i.e. on behalf of buyer and seller

34
Q

Is it possible to amend the Standard Conditions to hold deposit as agent?

A

Yes, but not advisable for buyer to allow this

35
Q

What three things does it mean when the Standard Conditions provide that a seller sells a property with full title guarantee?

A

Seller:

Is entitled to sell the property

Will, at their own cost, transfer this title to the buyer, and

Is selling the property free from all charges or encumbrances other than those disclosed in the contract

36
Q

To compare, what is a limited title guarantee?

A

Where the seller merely warrants they have not created any charges or encumbrances during their period of ownership other than those disclosed in the contract

37
Q

What is the indemnity covenant in the Standard Conditions?

A

If the contract does disclose any obligations on the buyer relating to the property, the buyer agrees to carry these out and to indemnify the seller if the buyer breaches

38
Q

Under the Standard Conditions, when does risk pass to the buyer and why?

A

On exchange, because that is when the equitable interest passes

39
Q

Do the Standard Conditions require the seller to insure the property between exchange and completion?

A

No

40
Q

Under the Standard Conditions, when will completion occur if the contract is silent?

A

20 working days after exchange

41
Q

Under the Standard Conditions, what is the cut off time by which if the buyer has not sent funds, the completion is treated as taking place the next working day?

A

2PM

42
Q

What is the consequence of the buyer not sending funds by 2pm on the day of completion?

A

They are liable to pay interest at the rate specified in the contract, even if they have already moved into the property

43
Q

When does the interest penalty not apply?

A

When the reason for not sending the funds is because the seller has not vacated

44
Q

When do terms in the Contract Incorporating the Standard Conditions have legal effect, and what trap should we look out for on the exam?

A

On exchange. Look out for answer choices suggesting the applicability of contract terms pre-exchange.

45
Q

What five things should the buyer’s solicitor do if they discover a defect in title?

A

Raise it with seller’s solicitor

Request seller’s solicitor provide a draft insurance policy

Confirm the seller will pay for this policy

Include this agreement as a special condition in the contract

Notify the buyer’s lender

46
Q

On the exam, what should we look for that can usually give the green light to proceeding even in spite of defects?

A

Indemnity insurance or seller indemnifying buyer

47
Q

In a commercial situation, what will be a considered a reasonable reason for a landlord to refuse consent to assign?

A

If the landlord has reason to believe the assignee will not be able to pay through the lease term

48
Q

Within what time after completion must capital gains taxed be reported and paid?

A

60 days

49
Q

Is an absolute prohibition on assignment of a residential lease acceptable?

A

No

50
Q

What situation on the exam will suggest a conflict of interest?

A

Solicitor acting for parties on different sides of a transaction

51
Q

What is required for the buyer’s solicitor to disclose information to the lender (who may become their client), and what must happen if this does not occur?

A

The buyer’s consent. If the buyer wishes for the solicitor to keep something from the lender, the solicitor must cease acting for the both parties

52
Q

What is required for rent review to be available?

A

Express provision must be made for it in the lease

53
Q

In the pre-contract stage in the unregistered system, what must the seller’s solicitor do regarding the title deeds if they are held by a lender?

A

Write the the lender to obtain the deeds and give an undertaking not to part with the deeds until such time as the mortgage is paid off

54
Q

Where there is more than one buyer or seller, what must a solicitor acting for both ensure?

A

That they are instructed by both clients

55
Q
A

SQE1 - Property Practice (3 decks)

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