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SQE 2 Exam Preparation > Freehold Property Practice > Flashcards

Freehold Property Practice Flashcards

1
Q

What are the three stages of a property transaction?

A

Pre-contract, Pre-completion, Post-completion

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2
Q

Why is caveat emptor important in property transactions?

A

It places the responsibility on the buyer to investigate the property before purchasing.

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3
Q

What is the significance of the Property Register?

A

It contains details of the property, including address, tenure, and any rights.

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4
Q

What are the three main parts of an official copy of register of title?

A

Property Register, Proprietorship Register, Charges Register

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5
Q

What makes a document a good root of title?

A

At least 15 years old, clearly describes the property, no adverse entries.

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6
Q

What problems can arise with easements?

A

Unregistered easements may restrict the buyer’s intended use of the property.

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7
Q

What should a title report to the client include?

A

Ownership details, restrictions on use, financial burdens such as mortgages.

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8
Q

Why are pre-contract searches conducted?

A

To identify legal, planning, and environmental issues before purchase.

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9
Q

Who is responsible for ordering searches?

A

The buyer’s solicitor, often in consultation with the lender.

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10
Q

What issues might a local authority search reveal?

A

Planning permissions, compulsory purchase orders, road adoption status.

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11
Q

What is the purpose of the Law Society Conveyancing Protocol?

A

It standardizes residential conveyancing to ensure best practices.

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12
Q

What are common sources of finance for property purchases?

A

Mortgages, Bridging loans, Private loans.

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13
Q

What is the difference between a repayment and an interest-only mortgage?

A

Repayment mortgage reduces capital and interest; Interest-only requires principal payment at the end.

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14
Q

What key factors does a lender consider before granting a mortgage?

A

Property valuation, Borrower’s creditworthiness, Title issues.

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15
Q

Why is a Certificate of Title important?

A

It reassures the lender that the property is a safe investment.

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16
Q

What is the purpose of the Standard Conditions of Sale?

A

To provide a uniform contract structure for property transactions.

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17
Q

What is the difference between a stakeholder and an agent?

A

A stakeholder holds the deposit for both parties, an agent holds it for the seller.

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18
Q

What form is used to transfer property ownership?

A

TR1 form (for freehold).

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19
Q

What are priority searches?

A

They protect the buyer from third-party claims before registration.

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20
Q

What must the buyer’s solicitor do after completion?

A

Pay SDLT/LTT, Register ownership at HM Land Registry.

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21
Q

When can a buyer claim common law damages?

A

When they suffer financial loss due to the seller’s delay.

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22
Q

What is contractual compensation?

A

A pre-agreed sum for delayed completion.

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23
Q

What does a Notice to Complete do?

A

It gives the defaulting party a deadline to complete the transaction.

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24
Q

When can a buyer rescind a contract?

A

If the seller fails to complete after a Notice to Complete is served.

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25
What are the three stages of a property transaction?
Pre-contract, Pre-completion, Post-completion
26
Why is caveat emptor important in property transactions?
It places the responsibility on the buyer to investigate the property before purchasing.
27
What is the significance of the Property Register?
It contains details of the property, including address, tenure, and any rights.
28
What are the three main parts of an official copy of register of title?
Property Register, Proprietorship Register, Charges Register
29
What makes a document a good root of title?
At least 15 years old, clearly describes the property, no adverse entries.
30
What problems can arise with easements?
Unregistered easements may restrict the buyer’s intended use of the property.
31
What should a title report to the client include?
Ownership details, restrictions on use, financial burdens such as mortgages.
32
Why are pre-contract searches conducted?
To identify legal, planning, and environmental issues before purchase.
33
Who is responsible for ordering searches?
The buyer’s solicitor, often in consultation with the lender.
34
What issues might a local authority search reveal?
Planning permissions, compulsory purchase orders, road adoption status.
35
What is the purpose of the Law Society Conveyancing Protocol?
It standardizes residential conveyancing to ensure best practices.
36
What are common sources of finance for property purchases?
Mortgages, Bridging loans, Private loans.
37
What is the difference between a repayment and an interest-only mortgage?
Repayment mortgage reduces capital and interest; Interest-only requires principal payment at the end.
38
What key factors does a lender consider before granting a mortgage?
Property valuation, Borrower’s creditworthiness, Title issues.
39
Why is a Certificate of Title important?
It reassures the lender that the property is a safe investment.
40
What is the purpose of the Standard Conditions of Sale?
To provide a uniform contract structure for property transactions.
41
What is the difference between a stakeholder and an agent?
A stakeholder holds the deposit for both parties, an agent holds it for the seller.
42
What form is used to transfer property ownership?
TR1 form (for freehold).
43
What are priority searches?
They protect the buyer from third-party claims before registration.
44
What must the buyer’s solicitor do after completion?
Pay SDLT/LTT, Register ownership at HM Land Registry.
45
When can a buyer claim common law damages?
When they suffer financial loss due to the seller’s delay.
46
What is contractual compensation?
A pre-agreed sum for delayed completion.
47
What does a Notice to Complete do?
It gives the defaulting party a deadline to complete the transaction.
48
When can a buyer rescind a contract?
If the seller fails to complete after a Notice to Complete is served.
49
Is the Law Society Conveyancing Protocol mandatory for all conveyancers?
No, but it is required for firms in the Conveyancing Quality Scheme (CQS).
50
What is the Property Information Form (TA06) used for?
It is a standardised form completed by the seller to provide property details.
51
What is a bridging loan?
A short-term loan used to cover gaps in financing a property purchase.
52
What is an Islamic mortgage?
A Sharia-compliant mortgage that avoids interest payments.
53
What is the purpose of an Offer of Mortgage?
It sets out the terms on which the lender is prepared to lend money to the borrower.
54
What is the role of the UK Finance Mortgage Lenders’ Handbook?
It provides guidance for solicitors acting on behalf of lenders.
55
What happens at exchange of contracts?
The agreement becomes legally binding, and the completion date is set.
56
What happens if the buyer fails to pay the deposit at exchange?
The seller may terminate the contract and claim damages.
57
What is a requisition on title?
A final inquiry made by the buyer’s solicitor before completion to confirm readiness.
58
Why is a bankruptcy search conducted before completion?
To check if the seller or buyer is bankrupt, which could affect the transaction.
59
What are the two most common methods of completion?
Completion by post and completion in person.
60
What is the significance of the transfer deed at completion?
It legally transfers ownership of the property to the buyer.
61
Can you act for Buyer and Seller?
No, there is a substantial risk of a conflict of interest
62
Can you act for joint Buyers?
Typically yes, but must ensure compliance with SRA CoC 6.2 and check compliance with Etridge Guidelines Often best to recommend separate legal advice
63
Can you act for Buyer and Lender?
Usually yes, but must ensure there is a substantially common interest (6.2). Ensure the mortgage terms are set out in standard terms and certificate of title is accepted by lender
64
Conditions for Substantially Common Interest exception to Conflict of interest
1. Consent is obtained from all parties 2. Effective safeguards are put in place to protect confidential information 3. Solicitor is satisfied that it is reasonable to act for both clients
65
Are there reliefs from SDLT?
For residential properties, first time buyers can seek relief from SDLT - 0% on first £300,000 - 5% on amount between £300,000 and £500,000 Cant claim relief if property is valued over £500,000
66
Residential property SDLT brackets
< £250,000 : 0% £250,000 < x < £925,000 : 5% £925,000 < x < £1,500,000 : 10% > £1,500,000 : 15% but calculated in sections - So purchase is £275,000 - 250,000 taxed at 0% - 25,000 taxed at 5%
67
What are the commercial property SDLT rates?
< £150,000 : 0% £150,000 < x < £250,000 : 2% > £250,000 : 5%
68
When is SDLT paid?
Forms sent to HMRC 14 days after completion If late, buyer will not be registered by Land Registry
69
Commercial VAT, who can charge?
seller of a new commercial building (less than 3 years old) has no choice but to charge the buyer VAT. The seller of an old commercial building does have a choice
70
List some common VAT-exempt supplies? This means seller/buyer can't charge VAT
Insurance Financial Services
71
According to the Town and Country Planning Act 1990, what are the two main types of development?
Operational development Material Change of use
72
According to the Town and Country Planning Act (TCPA), what does not constitute development?
- maintenance - improvement - alteration of interior only
73
The GDPO lists certain types of development which automatically grant planning permission. What are they?
- Within the curtilage of a dwelling house (IE Extensions below a certain size) - minor operations (painting exterior of house or installing cameras) - Some changes of use and some changes to and from sui generis However, if an article 4 is present, this negates the auto granting, therefore permission must be sought
74
What is building regulations consent?
Concerned with the health and safety of the property
75
Key conditions of the Standard Conditions (SC) of sale
Specified incumbrances - list incumbrances not covered by SC in TR1 Title Guarantee - SC assumes full title, if not full title, special condition needed Contract Rate - exact percentage above the relevant base rate is a matter for negotiation, with anything between 2– 4% being considered within the normal range Deposit: Stakeholder vs Agent - 10%, but can be varied - SC provide that that the deposit can be paid by electronic means or by cheque drawn - SCPC is by electronic means only
76
Common special conditions that are usually included
- Appointment of second trustee for purposes of the transfer - Arranging for the seller to obtain or pay for a restrictive covenant insurance policy - Disclosing a defect in title - Seller selling with limited or no title guarantee - A deposit of less than 10% and/or to be held as agent rather than stakeholder - The payment of VAT - The removal of fixtures by the seller - The inclusion of an indemnity covenant in the transfer to protect the seller from liability
77
Does the buyer need insurance?
Yes, on exchange of contracts, liability passes to buyer, so insurance needed on exchange in case of damage occurring pre-completion
78
Exchange of contracts method - Formulae A
Used when one solicitor holds both contracts, then sends one to the other solicitor (both are already signed) If deposit sent electronically, must amend formulae
79
Exchange of contracts method - Formulae B
Used when each solicitor holds their clients contract (signed), Each solicitor undertakes to send their version to the other solicitor. Commonly achieved over the phone. If deposit sent electronically, must amend formulae
80
Exchange of contracts method - Formulae C
Used when there is a chain of purchase in place -> more complex
81
Who executes (signs) the Transfer Deed (TR1)?
Seller always signs, buyer signs if - entering into an obligation or declaration (ie indemnity insurance)
82
What is an OS1 form and what is its purpose?
OS1 is a pre-completion search for registered property that checks if, since exchange, any new burdens or restrictions have been registered against the property. The search results provide the buyer with protection for 30 working days (priority period) from date of search result. This search is conducted against the title number
83
What is a K15 form and what is its purpose?
K15 is a pre-completion search for unregistered property that checks if, since exchange, any new burdens or restrictions have been registered against the property. The search results provide the buyer with protection for 15 working days from date of search result This search is conducted against the owners' name
84
What is the effect of completion on registered and unregistered land?
For unregistered land, on completion legal title passes to the buyer For registered, on completion legal title does not pass to buyer, but only passes once the buyer is registered at the Land Registry as proprietor
85
When can registration of new owner occur after completion?
Before the new owner can be registered, SDLT must be paid and the appropriate form confirming this received by HMRC
86
What is a notice to complete?
If either party are delayed in completion, a notice to complete gives a time frame (10 days) on that party to complete, after which, the non-defaulting party is able to rescind the contract
87
What is a contract rate?
This is the rate specified in the contract at which compensation will be paid to the non-defaulting party from the proposed date of completion to the actual date. SCs -> both seller and buyer can be required to pay SCPCs -> only the buyer can be required to pay

SQE 2 Exam Preparation (11 decks)

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