Formative MCQs Flashcards
You are acting for the buyer of a property. In an effort to speed up the sale, you submit searches which will involve an expense to your client. These form part of your investigation of title. At what point in the transaction would you expect to send these?
(a)
After exchange of contracts.
(b)
After completion.
(c) After receiving a draft contract and before exchange of contracts.
(d)
After you have ensured that the draft contract is in final form.
(e)
As soon as your client indicates that they have put an offer in on the property.
(c) After receiving a draft contract and before exchange of contracts.
Any issues which might arise need to be dealt with in the contract. You don’t necessarily know who the buyer is once you have received instructions from your seller client - you need the Heads of Terms. After agreeing the contract is too late - and the contract will be agreed by exchange. After completion is far too late. The best answer here is before exchange of contracts. Often it is once you have received the Heads of Terms - you will send the official copies and the standard CPSE replies if your firm has some prepared. If not, the buyer’s solicitor will send their standard set of CPSEs and enquiries.
You act for a client buying a house at a price of £200,000 with the help of an 80% mortgage. Searches and enquiries have been carried out, and you have agreed with the seller’s solicitor to aim for exchange by no later than the end of next week.
You receive a call from the seller’s solicitor to say that the seller has had an offer from a third party of £210,000 and that your client will need to match it, or the seller will sell to the third party.
Your client tells you that they were already overstretching themselves, and it will be impossible to do this.
How do you advise your client?
(a)
You should see whether your client wishes for you to refer it to a litigation colleague to issue proceedings to force the sale to proceed.
(b)
You should ask to see proof of the third party’s offer, as a seller may only withdraw from an existing sale if a genuine offer has been received.
(c)
Your client should be prepared to lose the property, but at least they can recover the costs of their searches and survey from the seller.
(d)
Your client can see if they can persuade the seller to honour the original price, but if the seller refuses, then your client will unfortunately lose the property.
(e)
You advise your client that as you are holding the contract, you can exercise a lien over it and refuse to return it to the seller’s solicitor until they honour the original price agreed.
(d) Your client can see if they can persuade the seller to honour the original price, but if the seller refuses, then your client will unfortunately lose the property.
Until exchange of contracts, either party can walk away from the deal without incurring any liability. The seller can choose to sell to another party who is offering a higher price without any liability - this is know as ‘gazumping’ in practice. There is no obligation on the seller to prove another genuine offer has been received and the buyer would not be able to recover the costs of their searches and survey from the seller.
You act for a client buying a house near an industrial plant. When viewing the house, your client was concerned by offensive chemical smells coming from the plant. The seller reassured your client both verbally and in a written reply to enquiries that it only happens once or twice a year when the plant carry out a particular process.
The contract incorporated the Standard Conditions of Sale (Fifth Edition).
Following completion, your client calls to say that the plant emits the smell every weekend. Correspondence with the plant operator confirms that they carry out the process weekly, and have done for the last few years. Your client’s surveyor gives the opinion that the house is worth £20,000 less than it would be if the seller’s statement had been correct.
Which of the following options best describes if your client can make a claim for damages?
(a)
Your client cannot make a claim for damages as it has not suffered any loss in the circumstances
(b)
Your client cannot make a claim against the seller because it is a subjective matter and most of the neighbours are not offended by the smell
(c)
Your client may wish to a claim for damages from the seller based on misrepresentation
(d)
Your client may wish to claim for damages from the search provider as this should have been flagged in the desktop environmental report
(e)
Your client cannot make a claim against the seller because of the principle of caveat emptor
(c) Your client may wish to a claim for damages from the seller based on misrepresentation
Although the principle ‘caveat emptor’ means the buyer takes the property as it find its and there is no onus on the seller to disclose patent incumbrances or physical defects in the property, the seller cannot mislead the buyer by answering questions dishonestly, which it has done here. The standard conditions of sale do not require the buyer the prove they were induced to reply on the conduct or statement; it is sufficient to prove that there was an error or omissions, which there has been there. The client can therefore make a claim for damages.
You act for a buyer who is buying a house with a loan to be secured by a mortgage. You also act for the mortgage lender.
One of the conditions of the mortgage is that the buyer will meet the balance of the purchase price from their own funds, and not further borrowing.
You are due to exchange tomorrow, or the seller has indicated that they may withdraw from the transaction. The deposit has arrived today. Your accounts department tell you that the payment has been made from a company who only deal in personal loans.
How should you proceed?
(a)
You should notify your lender client, and let your client know when you have their response.
(b)
You should advise your client that the loan company should have made the payment to your client, and then from their account to you, so that it would appear as a cash advance.
(c)
Given the urgency of the transaction, you should exchange, but raise this issue with the client before completion.
(d)
Under the Conveyancing Protocol, you should advise the seller’s solicitor of the issue so that they understand the cause of the delay.
(e)
You should advise your client that you will need to disclose this to your lender client, and if your client does not give their consent to you doing this, you will need to cease acting for both buyer and lender.
(e) You should advise your client that you will need to disclose this to your lender client, and if your client does not give their consent to you doing this, you will need to cease acting for both buyer and lender.
In residential transactions it is common for the buyer’s solicitor to act for the lender because there is unlikely to be a conflict of interest between these parties.
On the facts, you have a duty to disclose (CCS 6.4) all information material to the matter which you have knowledge, which includes the fact the balance of the purchase price is being met by a company who deal in personal loans, not the buyer ie in breach of one of the conditions of the mortgage.
The duty of confidentiality (CCS 6.3) that you owe your buyer client will override the duty, which means you cannot disclose this information without the permission of the buyer.
If the buyer does not give consent, you will have to cease to act for the lender. You would be advised to stop acting for the buyer.
A solicitor is acting for a buyer of a registered freehold title in England. Part of the purchase price is to be funded by a mortgage loan.
Which of the following options describes what the buyer’s solicitor will do after completion of the purchase?
(a)
Exchange contracts.
(b)
Pay off the outstanding balance of the seller’s mortgage.
(c)
Nothing. Completion marks the end of the transaction.
(d)
Report on title to the buyer.
(e)
Pay Stamp Duty Land Tax and register the buyer as owner of the property, and the lender as a chargee, at the Land Registry.
(e) Pay Stamp Duty Land Tax and register the buyer as owner of the property, and the lender as a chargee, at the Land Registry.
These are the main tasks for the buyer’s solicitor to carry out after completion.
A buyer is buying an unregistered freehold property. The epitome reveals the following information: Company A sold the property in 1945 to Company B and Company B sold the property in 2003 to Company C. Company C is the current owner and seller of the property.
Which one of the following best sets out the Central Land Charges searches (Form K15) (‘CLC searches’) which the buyer’s solicitor should carry out pre-exchange?
(a)
None. These are pre-completion searches.
(b)
CLC searches against: (1) Company A for the period 1926 – 1945; (2) Company B for the period 1945 – present date; (3) Company C for the period 2003 - present date.
(c)
CLC searches against: (1) Company A for the period 1926 – 1945; (2) Company B for the period 1945 – 2003; (3) Company C for the period 2003 – present date.
(d)
CLC searches against: (1) Company A for the period 1926 –present date; (2) Company B for the period 1926 – present date; (3) Company C for the period 1926 – present date.
(e)
CLC searches against: (1) Company A for the period 1925 – 1945; (2) Company B for the period 1945 – 2003; (3) Company C for the period 1945 – 2003.
(c) CLC searches against: (1) Company A for the period 1926 – 1945; (2) Company B for the period 1945 – 2003; (3) Company C for the period 2003 – present date.
CLC searches are carried out against previous owners of the property for their periods of ownership.
You would need a CLC search against Company A. As you don’t know when they bought the property, you would carry out the search from 1926, the year when the CLC register was started. However, you do know that Company A sold the property in 1945, so you only need search up to then.
The CLC search against Company B will be for the period 1945 to 2003, as you know that this is the period that they owned it.
The CLC search against Company C will be for the period of their ownership, being 2003 to the current year.
Note that the searches against companies A and B can be relied upon whenever they are dated, so if the seller’s solicitor provides them, the buyer’s solicitor need not carry out fresh searches. However, the search against Company C will need to be carried out again just before completion to confer priority.
A solicitor is acting for a lender which is lending 80% of the purchase price to the buyer of a registered commercial property. The buyer has agreed to the lender taking a first ranking fixed charge over the property after completion. The buyer has also agreed not to deal with or dispose of the property during the term of the loan without X Bank’s consent and for all relevant entries to be made in the Land Registry official copies.
What will the lender’s solicitor look for when examining the Land Registry official copy of the title to the property after completion to confirm the relevant entry or entries relating to X Bank have been correctly registered?
(a)
An entry referring to a restriction on dealings in the Property Register and an entry referring to X Bank’s charge in the Charges Register.
(b)
An entry referring to X Bank’s charge in the Charges Register.
(c)
An entry referring to a restriction on dealings in the Proprietorship Register and an entry referring to X Bank’s charge in the Charges Register.
(d)
A restriction on dealings in the Proprietorship Register.
(e) An entry referring to a restriction on dealings in the Charges Register and an entry referring to X Bank’s charge in the Proprietorship Register.
(c) An entry referring to a restriction on dealings in the Proprietorship Register and an entry referring to X Bank’s charge in the Charges Register.
Charges such as mortgages are recorded in the Charges Register and any entries restricting the current proprietor’s ability to deal with the property are recorded in the Proprietorship Register.
You are acting for the buyers of a property. The seller is Mark Arthur. The seller’s solicitor tells you that Philip Arthur recently died. You review the official copies, which contain the following entry:
Proprietor(s): PHILIP ARTHUR and MARK ARTHUR of 35 Yewdale Road, Leeds, LS3 8QP
RESTRICTION: no disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.
Which one of the following statements best explains what you need to do in respect of this entry in the Proprietorship Register?
(a)
You do not need to do anything as Philip Arthur has died so the restriction is no longer relevant.
(b)
You need to ensure another trustee is appointed to pay the purchase money to so the restriction will not apply.
(c)
You do not need to do anything, the right of survivorship will apply so Mark Arthur can sell as a sole proprietor.
(d)
You do not need to do anything, this is for the seller’s solicitors to deal with.
(e)
You need to see a certified copy of the death certificate and then Mark Arthur can sell as a sole proprietor.
(b) You need to ensure another trustee is appointed to pay the purchase money to so the restriction will not apply.
This restriction tells us Mark and Philip are beneficial tenants in common and prevents a sale by a sole owner. This means a sale by Mark alone is not permitted and would not be registered by the Land Registry. A second trustee needs to be appointed in order to comply with the restriction. This will overreach Philip’s beneficial interest, which will have passed under his estate because the right of survivorship will not have applied on his death.
Your firm is investigating title on behalf of a client who is buying a commercial property. The seller’s solicitor has deduced title. There is a restrictive covenant in the Charges Register of the Official Copies for the Property not to make any alterations to the property. In the CPSE Replies the seller admits that they have breached this restrictive covenant by building an extension to the rear of the property. There is no indemnity covenant in the Proprietorship Register.
Which one of the following options is the best advice for your client?
(a)
Restrictive covenants do not bind successors in title unless there is an indemnity covenant on the Proprietorship Register.
(b)
Restrictive covenants bind successors in title so the seller should obtain restrictive covenant insurance to cover liability for breach of covenant.
(c)
Restrictive covenants do not bind successors in title so no further action is required.
(d)
Restrictive covenants bind successors in title so the buyer should obtain restrictive covenant insurance to cover liability for breach of covenant.
(e)
Your client should not proceed with the purchase as the title is defective.
(b) Restrictive covenants bind successors in title so the seller should obtain restrictive covenant insurance to cover liability for breach of covenant.
The burden of restrictive covenants bind successors in title as long as they are correctly registered, which is likely, as the restrictive covenant referred to is in the Charges Register of the Official Copies. As restrictive covenants run with the land and bind successors in title, they do not require an indemnity covenant in the Proprietorship Register to make them binding unlike a positive covenant.The seller has breached this restrictive covenant, and as a past breach it is the seller who is responsible for obtaining restrictive covenant insurance. While the other answer options might sound plausible, they are each incorrect. Note also that a firm of solicitors cannot arrange an insurance policy under section 19(1) FSMA 2000 unless they are authorised or exempt.
You act for a client company who is buying a piece of registered, undeveloped land that only has access to adopted highway via a private right of way. The burden of the right of way is registered against the registered title of the servient land. The wording of the right is as follows: “… to pass and repass with or without motorcars over the lane coloured blue …”
The lane coloured blue is just large enough to allow one car at a time to drive along it. The client intends to develop the land as an office for the client’s business with just two car parking spaces for the company directors.
Is the right likely to be sufficient for the client’s plans for the property?
(a)
No. It is neither legally sufficient nor physically adequate.
(b)
No. It is not legally sufficient, but it is physically adequate.
(c)
No. It is legally sufficient, but not physically adequate.
(d)
Yes. It is legally sufficient and physically adequate. However, the right should additionally be checked on the CON29 replies.
(e)
Yes. It is legally sufficient and physically adequate.
(a) No. It is neither legally sufficient nor physically adequate.
Although the lane may be sufficient for the ultimate intended use of the property, it will not be sufficient for the construction of the office. Construction requires heavy vehicles such as dumper trucks and cement mixers. They will not be able to access the site due to both the physical and legal constraints of the right of way.
You act for a landlord client who has received a planning enforcement notice from the local authority. The landlord owns a commercial unit (‘Premises’) and five years ago, finished converting the Premises from a storage centre to a wine bar. The enforcement notice claims the landlord’s conversion works were carried out without planning permission and the material change of use wasn’t authorised under permitted development rights.
Which of the following best describes the advice you would give to the landlord regarding the enforcement periods for the two alleged breaches of planning law?
(a)
The local authority is unable to enforce against the landlord for lack of planning permission for both the works and material change of use because service of the enforcement notice is defective – the notice should have been sent to the tenant of the Premises instead of to the landlord.
(b)
The local authority is out of time to enforce against the landlord for the lack of planning permission for the building work but they are within the time limit to enforce for the unauthorised change of use.
(c)
The local authority is out of time to enforce against the landlord for the lack of planning permission for both the works and change of use because more than four years have passed since the works and change of use were completed.
(d)
The local authority is unable to enforce against the landlord for either breach because they have allowed the wine bar to trade for the past five years without issuing a complaint.
(e)
The local authority can enforce against the landlord for carrying out works without planning permission because the works were carried out to effect the change of use and the time limit for changing use without authorisation is still running.
(b) The local authority is out of time to enforce against the landlord for the lack of planning permission for the building work but they are within the time limit to enforce for the unauthorised change of use.
This answer reflects the enforcement periods for lack of planning permission for works (four years) compared to lack of planning permission for a material change of use (ten years).
You act for the buyer of a freehold property. The preliminary information provided by your client indicates the property does not directly abut the public highway but access to the public highway is over a track (the Track) that crosses a neighbouring farm.
Which pre-contract search or enquiry would provide you with a definitive position as to whether the Track abuts the public highway?
(a)
Optional enquiries of the Local Authority (CON 29O)
(b)
Pre-Contract Enquiries (CPSEs)
(c)
Physical inspection / site visit
(d)
Highways Search
(e)
CON 29 Enquiries of Local Authority
(d) Highways Search
The primary reason for carrying out a Highways Search is to ensure that the boundary of the property abuts a public highway. The result of a Highways Search would include a plan, showing exactly where the public highway ends and the Track begins.
The CON 29 tells you whether there are roads in the vicinity of the property which are adopted/public.
Replies to CPSE enquires are given by the seller and would not be definitive on this issue.
A site visit would not provide the definitive confirmation required.
You have recently been instructed to act for a buyer on the purchase of an industrial unit. The seller built a large extension to the rear of the unit in September 2008. The seller’s solicitor has sent you the replies to CPSEs and you note that the seller did not obtain building regulations approval for the extension.
Is this a problem for the buyer?
(a)
No as the building works were carried out over four years ago and therefore are outside the local authority’s enforcement period re: the lack of building regulations approval.
(b) Yes as there is no time limit for enforcement re: the lack of building regulations approval by the local authority.
(c)
No as the seller was responsible for the building works in 2008 it will not become a problem for the buyer.
(d)
Yes as you would need to check the building regulations approval conditions as if breached there is a ten year enforcement period by the local authority starting from the date of the breach of condition.
(e)
No as the building works were carried out over ten years ago and therefore are outside the local authority’s enforcement period re: the lack of building regulations approval.
(b) Yes as there is no time limit for enforcement re: the lack of building regulations approval by the local authority.
The local authority can apply to court to enforce the building regulations by injunction at any time. While the other answer options might sound plausible, they are each incorrect.
Breach of conditions apply to planning permission only.
The four year enforcement period related to planning permissions.
The ten year enforcement period related to planning permissions.
The liability for lack of building regulations approval will pass to the buyer on completion.
A planning officer for a local authority has become aware of a potential planning issue. Five years ago, a commercial property within the local area has been redeveloped into a single residential property without obtaining any planning permissions.
Which of the following options should the planning officer take for this breach of planning control?
(a)
Apply to court for an injunction to restore the property to its lawful use.
(b)
Serve an Enforcement Notice on the proprietor as the planning contravention is within the enforcement period from the date of the change of use.
(c)
Nothing as the change of use is permitted as general development.
(d)
There is nothing he can do as the planning contravention is outside the enforcement period from the date of the change of use.
(e)
Serve an Enforcement Notice on the proprietor as the enforcement period for this change of use is unlimited.
(d) There is nothing he can do as the planning contravention is outside the enforcement period from the date of the change of use.
This change of use of a building to a single residential property has a four year enforcement period which has now expired. While the other options appear plausible they are not. This change of use of a building to a single residential property has a four year enforcement period which has now expired. The enforcement period for change of use is not unlimited. An injunction applies mainly to lack of building regulations. This is not a permitted development.
You act for a client who intends to buy a registered freehold in the countryside. The client has asked you to look in the pre-contract papers to see whether a public footpath crosses the property.
Where would you normally expect to find the answer?
(a)
Search of the Index Map Result.
(b) The Local Authority Search Result.
(c)
The Commons Registration Search Result.
(d)
The Local Land Charges Search Result.
(e)
The Property Register of the Official Copy.
(b) The Local Authority Search Result.
There is a question to the local authority at enquiry 2.2 asking if there are any public right of ways (which would include footpaths) that abut or cross the property. While the other answer options might sound plausible, they are each incorrect. The Local Land Charges Search Result does not record details of footpaths, instead it records charges such as general and specific financial charges, planning charges, listed buildings charges, light obstruction notices. The Property Register of the Official Copy reveals rights benefiting the property such as private rights of way, not public footpaths. The Search of the Index Map Result reveals whether the area searched is registered or unregistered land, it does not detail any specific rights of way and indeed the Land Registry does not record public footpaths on its registers. The Commons Registration Search result (this is an optional enquiry in the Local Authority Search) will reveal whether the property is registered common land or town or village green under the Commons Registration Act 1965 or the Commons Act 2006.
