Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

PLP > Drafting > Flashcards

Drafting Flashcards

1
Q

What section of what act states that a contract for sale of land must be in writing and contain all the terms which the parties have expressly agreed to?

A

s.2 LP(MP)A 1989

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How are the Standard Commerical Property Conditions incorporated into a contract?

A

A contract is composed of the SCPC with a Special Conditions page that at Para 1 incorporates the SCPCs and also allows for the drafter to incorporate other terms/ vary the standard ones.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What needs to be remembered about filling in the front page of the contract?

A

Date - in exam just write ‘write in at exchange’

Seller - MUST have a legal personality, so if the seller is a partnership (unless LLP), enter first FOUR partners’ FULL names AND address of partnership

Buyer - full names of all buyers - good practice to set out full name, company number AND REGISTERED ADDRESS (not of property being sold)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What mistakes must you avoid re names?

A

Seller - ensure you check name matches that on the registered title, or root of title!

Seller/ buyer - is the name abbreviated or if a company a trading name? Check LEGAL name!

Seller/Buyer - if partnership make sure put up to FOUR names in!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

If company’s name in Heads of Terms is different to that in the Proprietorship register which should you insert in the contract and what else should you do to ensure correct name?

A
  • USE HEADS OF TERMS’ NAME

- Discuss need to check by way of company search this co has changed its name

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What must you do in the ‘Property(freehold/leasehold)’ section?

A
  • Delete as appropriate!
  • And provide (or if buyer’s seller ENSURE) CLEAR DESCRIPTION of property b/c buyer will have remedy against seller!

Registered property: Entry 1 in property register provides the address and ref to title plan.

Unregistered: need to check the conveyance to the current seller!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the remedies for misrep and breach of contract?

A

SCPC

  1. 1(a) provides that damages are available for MATERIAL DIFFERENCE concealed by error or omission
  2. 1(b) provides that rescission is only available where there has been fraud, recklessness and where the buyer would be obliged to its prejudice to accept property differing substantially from what it has been led to expect
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What might constitute ‘substantial’ difference that amounts to right to rescind?

A
  • Size of property
  • Leasehold not freehold
  • Reckless or fraudulent!
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What must you do to ensure no errors re Property entry of contract? CHECK FOR IN EXAM - READ DOCUMENTS PROVIDED CAREFULLY!

A

Check that the address is the same as that in the Property register, or Root of Title!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What needs doing re ‘Title Number/ Root of Title’?

A
  • Delete as appropriate!
  • If registered - title number - CHECK
  • If unreg’d - will be the Root of Title conveyance - and will be set out like the following:

‘A conveyance of the Property dated ? and made between ? (1) and ? (2)

Where (1) and (2) are the parties, so (2) for example could be a couple, thus both their names must be inserted.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What must you remember re defined terms?

A

These must be capitalised!!!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the common law position on latent incumbrances and defects in title?

A

Obligation by seller to disclose is very minimal, the following must be disclosed h/e.

A latent incumbrance (i.e. not obvious upon inspection of property) includes:

  • Restrictive covenants.
  • Underground pipes not apparent on physical inspection.

Defects in title - e.g. only with possessory title not title absolute.

To contrast - subsidence is not something a seller has a duty to disclose.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Which part of the SCPCs deals with specified incumbrances?

Discuss further.

A

Part 4 defines what will and wont burden the buyer upon purchase.

4.1.2(a) states that the buyer will take subject to SIs specified in the contract - these will be entered on the front page next to ‘Specified Incumbrances’ n.b. ONLY NEED TO CROSS REFER TO THESE not copy them out…(re p9 chap 3)

As 4.1.2(d) states the buyer will take free of the mortgage NO SPECIAL CONDITION is necessary to be drafted to ensure seller has discharged their mortgage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Draft the correct wording for cross referring to latent incumbrances.

A

Specified incumbrances: the matters set out at item 1 of the charges register of title xxxxx

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What must you be aware of re specified incumbrances?

A

These will ONLY appear in the CHARGES REGISTER!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What standard condition deals with the Completion date? Which condition does it cross refer to?

A

SCPC 9.1.1

9.8 which provides for notice to complete to render time of the essence.

However - never needed in practice!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the difference between exchange and completion?

When are these dates written in?

A

Exchange is when the contracts are signed by each party and when the contracts become legally binding.

Completion is the date when balance of final purchase monies are agreed to be transferred.

Both these dates are written in at exchange (i.e. even the date for exchange is left blank until actual exchange is taking place).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How do you draft the contract rate?

A

For a buyer: 3%
For a seller: 5%

In practice parties often choose 4% [above the base rate of a named lending bank.]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the effect of leaving the Contract Rate entry empty?

A

SCPC 1.1(e) kicks in which provides that the Law Society’s interest rate will be the figure used to calculate contract rate. This is published in the Law Gazette.

20
Q

Keep an eye out in assessment for very high Contract rate.

A

Client needs to be advised NOT to complete late!

21
Q

Discuss VAT. Why would a seller opt to tax?

A

Law says supplies of property are exempt from VAT h/e NOT where:

Property is less than 3 years old from practical completion.

OR

The seller has opted to tax. - to offset VAT they’ve paid in updating an old commercial property.

The SCPCs anticipate seller will want to recover VAT from buyer. SCPC 2 is a warrant that seller will pay VAT, but buyer will meet cost and receive VAT invoice.

H/e there is a Special Condition to exclude this!!

22
Q

How is SCPC 2, warranting seller will pay HMRC sum of VAT but buyer will provide sum equal to this, excluded?

A

Special conditions…..

23
Q

How is the deposit held?

What is the purpose of a deposit?

Make sure you calculate correctly….

Check calculations etc as may be error to correct for marks.

A

By the seller’s solicitor as ‘stakeholder’ - so if buyer defaults, seller will receive easily.

To secure performance by the buyer.

24
Q

What is the balance?

A

The balance is the amount of the purchase price minus the deposit.

25
Q

What is the difference between FULL TITLE GUARANTEE vs LTD TITLE GUARANTEE and in what situation must you be careful?

A

Full title guarantee is a guarantee on the part of the seller that they have the right to sell and per SCPC 4 they have disclosed all latent incumbrances.

LTD title guarantee means the seller only warrants that THEY HAVE NOT INCUMBERED since they bought prop.

As buyer’s sol you must be careful seller’s sol does not try to go for latter even though seller has been owner for many decades for e.g.

26
Q

Where is it legit for someone to only give Ltd title guarantee?

A

Where overreaching has occurred - so surviving JT would give FTG whilst Trustee would only give LTG.

27
Q

How would you draft a special condition to reflect where sellers wish to give different title guarantee?

A

In standard condition 7.6.2 the words ‘seller 1 transfers the property with FTG and seller 2 transfers the property with LTG’ shall replace the words….

28
Q

Where property sold with vacant possession how show this?

Where sold with leases?

A

Tick box 4 and delete the other box 4 option!

Tick second option and delete first!

29
Q

What needs to be included by buyer’s sol where a fixture is to be removed?

A

A special condition must be drafted where the seller agrees to make good any damage caused by removing a fixture.

30
Q

Remember to change paragraph numbers in draft contract! Any free drafted Special Conditions will be extra numbers too obviously!

A

Re SGS 3 solutions.

31
Q

What does special condition 7 allow for?

A

Vary time for completion from the SCPC 9.1.2 time of 2pm.

32
Q

What must you do re any provisions in part 2?

A

These must be expressly incorporated via part 9 of special conditions. Only need to do A1, if applicable on facts, as part of PLP.

33
Q

Give egs of additional special conditions.

A

Seller having to buy restrictive covenant insurance for a past breach.

OR

Early access to the property to carry out works before completion.

OR

Removal of fixtures to be made good.

OR

amending/ overriding standard conditions

OR

indemnity covenant

OR

non-owning occupiers

34
Q

Things to remember in exam –>

A
  • May be given special condition never seen before! But should be able to amend for client’s best interest.
  • Free drafting on facts of clients’ wishes.
  • Amending pre-drafted ones.
35
Q

Pre-exchange finance steps for buyer’s sol are?

A
  • Ensure deposit is in cleared funds.
  • Draft certificate of title has been approved by lender - in commercial transactions = v impt to obtain this approval b/c if delayed to post completion the buyer may be bound to buy w/o a mortgage.
  • Draft financial statement sent to buyer to ensure monies avail for completion.
36
Q

What is a certificate of title?

A

Is essentially a report on title required by a potential lender before they will agree to providing mortgage finance.

n.b. it also serves as a FORMAL REQUEST for finance.

37
Q

What are the mechanics of exchange?

What should you be mindful of?

A

Formula B is used. - Solicitors agree to hold their contracts to the other’s ‘order’ - i.e. their signed part is now under the ‘ownership’ of the other party.

O(11.2)
As formula B involves you making undertakings, failure to make good on the undertakings is as serious as it gets for a solicitor…?

Thus check anything in the fact pattern meaning the undertakings in the formula may need altering or you may have to organise something to ensure smooth exchange prior to.

e.g. exchanging late in the evening…

38
Q

What does outcome 11.2 state in SRA Code?

A

You must perform all undertakings you have given within a reasonable time (or agreed timescale).

Failure to do so can incur disciplinary action and payment of compensation.

39
Q

Apart from ensuring exchange conversation is smooth, what must you ensure occurs?

A

A memorandum of the conversation must be made.

40
Q

How is the deposit to be transferred?

A

Unless varied, 3.2.2 states the deposit is to be sent by electronic transfer.

41
Q

What risk is there to the buyer between exchange and completion?

What should you advise the client of as a remedy for any mishaps between exchange and completion?

A

As SCPC 8.1 states - the property is at the risk of the buyer from date of the contract - i.e. exchange.

Death or insolvency of either party….

Should advise client to obtain insurance against these risks. n.b to mention FSMA here!

42
Q

What if buyer wants to occupy pre completion?

A

Buyer should only be permitted to do so as a licensee.

43
Q

Who is the transferee? Why is this significant to drafting special conditions?

A

Is the buyer. Because you will need to draft the following:

‘The transferee covenants with the transferor’ etc

44
Q

How do you exclude 3rd party rights from benefiting from the contract?

A

‘Any person who is not a party to this contract will not have any rights under or in connection with it by virtue of the Contract(Rights of Third Parties) Act 1999.

45
Q

If seller/ buyer is a partnership, what must you do on front page of the contract?

A

Ensure first fours partners’ names are written as partnerships do not have legal personality!

PLP (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions