Freehold Transactions

Question 1

What are the solicitor’s aims when acting for the buyer?

Answer 1

Make sure that the seller has the right to sell the property, the physical condition is adequate and worth money, identify all rights property enjoys and third party rights, make sure the property is free from any security interest, sufficient funds to finance the purchase.

Question 2

What are the solicitor’s aims when acting for the lender?

Answer 2

Seller has right to sell property, condition of land is adequate for the lenders needs and the property is enough to cover any losses if the buyer fails to repay the mortgage. There are no discrepancies in lenders understanding of transaction and borrowers circumstances and the security document is valid and enforceable.

Question 3

What happens in pre-exchange stage?

Answer 3

Buyer decides to buy property and agrees price, buyers solicitor surveys, investigates and reports on title.

Question 4

What happens on exchange?

Answer 4

Seller and buyer enter into a contract to buy and sell the property on the completion date, buyer pays a deposit.

Question 5

What happens in the pre-completion stage?

Answer 5

Buyer’s solicitor orders mortgage funds, ensures they have full amount of money, book removal vans, ensure have necessary paperwork.

Question 6

What happens on completion?

Answer 6

Send purchase price, sellers solicitors agree to send the necessary paperwork to transfer the property, buyer gets the keys, buyer and seller physically move house.

Question 7

What happens in the post-completion stage?

Answer 7

Sellers solicitor pays off seller’s mortgage and pays balance to seller, and buyers solicitor pays SDLT/ LTT and registers the buyer at land registry.

Question 8

What does ‘caveat emptor’ mean?

Answer 8

Buyer beware!!! With some limited exceptions, the seller is under no obligation to give the buyer all the relevant information

Question 9

What is an energy performance certificate?

Answer 9

Report on energy efficiency rating prepared by an accredited energy assessor. Seller should commission and make it available for free to a prospective buyer.

Remains valid for ten years; is available on a public online register.

Question 10

How are co-ownership arrangements recorded?

Answer 10

A declaration of trust of land must be in writing and signed by the declarants (s53(1)(b) LPA 1925.

standard Land Registry form transfer deed - usually TR1 - provides a panel to include a declaration of trust.

Question 11

What are the different types of survey?

Answer 11

Basic valuation - identifies any major obvious defects.

Homebuyer report - more detailed and suitable for most properties in reasonable condition less than 150 years old.

Full structural survey - especially consider when property is listed, has had extensive renovations, or where extensive alterations are planned.

Question 12

What is a capital repayment mortgage?

Answer 12

Borrower repays capital sum by monthly payments, together with an interest amount added each month. End of the term, the loan has been paid off in full.

Question 13

Interest only mortgage

Answer 13

Borrower only pays interest on the loan. Capital remains outstanding no matter how long the loan is in place.

Question 14

Endowment mortgage

Answer 14

Not used much - interest only mortgages topped up with a payment invested in an endowment policy.

Question 15

Can you act if there is an own interest conflict?

Answer 15

Never and there are no exceptions.

Question 16

Can you act if there is another conflict of interest (not own interest)?

Answer 16

No, unless the clients have a substantially common interest or are competing for the same objective.

AND they have given informed consent in writing, you put in safeguards, and you are satisfied that it is reasonable for you to act for all the clients.

Substantially common interest = clear common purpose and a strong consensus on how it is to be achieved.

Question 17

Can you act for a borrower and a lender?

Answer 17

Commercial this generally doesn’t happen, residential it is common.

Remember duty of confidentiality and duty of disclosure.

Question 18

A solicitor is instructed on the purchase of a parcel of land for development. The client is also interested in negotiating the purchase of a neighbouring parcel of land, and finds out that the same solicitor had acted for the owner of that land. The client asks the solicitor if the solicitor can provide a copy of the report on title prepared for the owner. The report on title is over 20 years old.
Can the solicitor comply with the client’s request to provide a copy of the report on title?
A. No, not in any circumstances because it is never possible to pass one client’s papers to another client.
B. No, because the solicitor owes a duty of confidentiality to the owner. However, if the owner consents, then the solicitor can comply.
C. Yes, because a solicitor’s duty to act in the best interests of their client override all other considerations.
D. Yes, because the report is over 20 years old and data protection rules didn’t exist then.
E. Yes, because the solicitor prepared the report on title, it is in the solicitor’s archives, and therefore it is the solicitor’s property

Answer 18

B

Question 19

A solicitor acts for an investor client buying a house. The solicitor also intends to act for the lender, a high street bank, in securing a loan over the house.
The mortgage offer has not yet been issued, but the client is anxious to exchange, and asks the solicitor to exchange immediately.
Which of the following statements best describes the solicitor’s position?
A. The solicitor cannot exchange without a mortgage offer because the solicitor knows that the buyer cannot complete the purchase.
B. The solicitor cannot exchange without a mortgage offer because the client cannot override the solicitor’s duty to act in the client’s best interests.
C. The solicitor can only exchange with the lender’s consent.
D. The solicitor can exchange, but should ensure that the client is clear on the consequences of being unable to complete.
E. The solicitor can exchange provided the solicitor made clear in their initial client care letter what exchange meant.

Answer 19

D

Question 20

A man comes into the office to instruct the solicitor on the sale of a house owned by him and his partner. The solicitor asks if the partner can come into the office as well, and the man explains that the partner works long shifts at the local hospital and therefore will not have an opportunity to attend the office or speak to the solicitor. He declines to give out the partner’s work telephone number.
What should the solicitor do?
A. The solicitor should decline instructions as a conflict of interest has arisen.
B. The solicitor should proceed with the conveyancing as a couple buying a house together will have a substantially common interest, and one partner can speak for both.
C. The solicitor should not proceed until the man allows the solicitor to speak to his partner to confirm instructions.
D. The solicitor may proceed if the partner sends an email to confirm instructions.
E. The solicitor should call the hospital switchboard and ask to speak to the partner directly.

Answer 20

C

Question 21

A client has entered into a contract to sell her house. After the exchange of contracts, the client seeks your advice about whether she may keep the light fitting in the sitting room. This is held to the ceiling by three small screws and was made by the client’s late father. The light fitting is not mentioned in the contract.
May the client remove the light fitting before completion?
A. No, because the light fitting is likely to be a fixture due to the high degree of attachment.
B. No, because the removal would constitute a breach of an implied term of the contract as the room would be unlit when the new owners moved in.
C. No, because any item within a property is permanently part of the land and must not be removed.
D. Yes, because the light fitting is likely to be a chattel due to the slight degree of attachment.
E. Yes, because any item with sentimental value is always removable.

Answer 21

D