Freehold Property Transactions

Question 1

What are the two milestones in a conveyancing transaction?

Answer 1

Exchange of contracts and completion

Question 2

What is the significance of ‘exchange of contracts’?

Answer 2

It fixes the completion date and provides time for final preparations. It also records the agreed terms and can be relied upon if anything goes wrong before completion.

Question 3

What is ‘caveat emptor’ and how does it relate to property transactions?

Answer 3

It means ‘let the buyer beware.’ The seller isn’t obliged to disclose information about the property, except for limited title matters, so the buyer must discover as much as possible before exchange

Question 4

What are the three stages of a conveyancing transaction?

Answer 4

Pre-contract stage, pre-completion stage, and post-completion stage.

Question 5

What is the Law Society Conveyancing Protocol?

Answer 5

It is a set of instructions to conveyancers designed to standardise the residential conveyancing process. It includes standard documents such as the Property Information Form (TA06)

Question 6

What is the main professional conduct issue when acting for both a buyer and seller?

Answer 6

There is a high risk of a conflict of interest, and solicitors cannot usually act for both if such a risk exists.

Question 7

Under what circumstances can a solicitor act for both borrower and lender?

Answer 7

When the mortgage is a standard mortgage and the solicitor uses the approved certificate of title.

Question 8

What are the ‘Etridge guidelines’ related to?

Answer 8

They relate to situations where a spouse is agreeing to a mortgage for a business loan secured on the matrimonial home, and provide guidance for solicitors in such cases.

Question 9

What is a ‘contract race’ and what is a solicitor’s obligation in one?

Answer 9

A contract race is when a seller sends a pre-contract package to multiple buyers, who then compete to be ready to exchange first. The solicitor must inform all buyers immediately if a contract race is taking place

Question 10

What is an ‘undertaking’ in the context of property transactions?

Answer 10

A statement by a solicitor that they will do something, and they must comply with it.

Question 11

What are the two most common types of mortgages?

Answer 11

Repayment mortgages and interest-only mortgages.

Question 12

What is Stamp Duty Land Tax (SDLT) and when is it paid?

Answer 12

A tax on property transactions in England, payable by the buyer within 14 days of completion

Question 13

What is Land Transaction Tax (LTT) and how does it differ from SDLT?

Answer 13

A tax on property transactions in Wales, payable by the buyer within 30 days of completion. There is no first-time buyer relief under LTT.

Question 14

What is Private Residence Relief (PRR)?

Answer 14

It is relief from Capital Gains Tax (CGT) on the sale of an individual’s dwelling house used as their only or main residence.

Question 15

In property transactions, is Value Added Tax (VAT) usually charged on residential transactions?

Answer 15

No, VAT is not usually paid on residential transactions.

Question 16

What constitutes ‘development’ under planning law?

Answer 16

Carrying out of building, engineering, mining or other operations (BEMO), or making any material change of use of land or buildings.

Question 17

What is the Town and Country Planning (Use Classes) Order 1987 and what is its function?

Answer 17

It groups together uses of buildings or other land into use classes. A change of use within the same use class does not require planning permission

Question 18

What is a ‘sui generis’ use in planning law?

Answer 18

A use which is considered to be in a class of its own and for which any change of use will require planning permission.

Question 19

What are ‘permitted development rights’?

Answer 19

These are set out in the Town and Country Planning (General Permitted Development) Order (GPDO) and mean certain types of development are granted automatic planning permission without the need for an express application

Question 20

What is an Article 4 Direction?

Answer 20

It is a direction issued by the Local Planning Authority or the Secretary of State which removes permitted development rights in a specific area

Question 21

What is a Building Regulations Certificate of Compliance?

Answer 21

A document issued by the building control authority to confirm that works carried out are safe and that the necessary health and safety aspects of buildings meet building regulations standards.

Question 22

What is the purpose of listing a building?

Answer 22

To protect buildings of special architectural or historic interest and impose additional restrictions on alterations or demolition.

Question 23

What is a conservation area?

Answer 23

An area designated by a local planning authority as being of special architectural or historic interest, which has additional planning controls placed on properties within the area

Question 24

What is the purpose of an Energy Performance Certificate (EPC)?

Answer 24

It is produced by an accredited energy assessor and the seller must provide it to the buyer free of charge at the earliest opportunity.