Freehold Transactions

Question 1

What are the initial conduct issues before you can agree to act for a client on a freehold transaction purchase?

Answer 1

• Identification checks
• Authority to act?
• conflicts of interest

Question 2

Initial issues to raise with buyer (as buyer’s solicitor)

Answer 2

• Timescale - consult client about ideal timescale (and advise that some matters are beyond solicitor’s control)
• Costs - advise client on likely costs
• Co-ownership - advise on difference between beneficial joint ownership and tenancy in common

Question 3

Survey

Answer 3

• basic valuation (essential minimum if a mortgage is being taken - identifies basic defects)
• homebuyer report - more detailed and suitable for most properties
• full structural survey - most suitable where property is listed or has had extensive renovations or alterations (most expensive option)

Question 4

Sources of finance

Answer 4

• residential purchases: may use cash, money from sale of another property, or mortgage
• commercial purchases: syndicate loan, equity finance, development finance

Question 5

Taxation

Answer 5

• SDLT / LTT
• CGT
• VAT

Question 6

Caveat emptor

Answer 6

For land, it is for the buyer to identify problems before the exchange of contracts

• pre-exchange process is where these investigations take place

Question 7

Pre-exchange process

Answer 7

• Seller’s solicitor will provide buyer’s solicitor with title and draft contract and replies to standard enquiries
• Buyer’s solicitor investigates title, undertakes searches, reviews replies to enquiries. Then reports on title to the buyer

Question 8

What is the consequence of exchange?

Answer 8

Following the exchange of contracts, the buyer and seller are legally obliged to complete the purchase

Question 9

What is the completion date?

Answer 9

This is the date on which the property and money change hands.

Legally, the title to the property will pass when the new owner is registered at the Land Registry (post-completion stage)

Question 10

Can you act for buyer and lender?

Answer 10

Residential transactions: it is usual to act for both parties, as there is unlikely to be a conflict of interest

Commercial transactions: usually does not happen as lender and borrower has different approach as to how they would resolve issues which arise during the transaction. The same solicitor cannot negotiate with themselves the terms of a loan agreement or security document. Conflicts of interest are likely and often significant