Initial Advice to Clients in Property Transactions Flashcards
What is an Energy Performance Certificate (EPC)?
A) A certificate confirming the property is legally registered
B) A report on a property’s energy efficiency rating
C) A document confirming property ownership
D) A certificate required only for commercial properties
B) A report on a property’s energy efficiency rating
📌 Explanation: An EPC provides an energy efficiency rating and recommendations for improvement.
How long is an EPC valid for?
A) 1 year
B) 5 years
C) 10 years
D) Indefinitely
C) 10 years
📌 Explanation: An EPC remains valid for 10 years and is available on a public register.
Which of the following is NOT a factor affecting the timescale of a transaction?
A) How quickly solicitors act
B) Whether the property is freehold or leasehold
C) The time taken to prepare an EPC
D) The complexity of mortgage approvals
C) The time taken to prepare an EPC
📌 Explanation: EPCs must be provided before marketing and do not delay the transaction process.
Which of the following is true about beneficial ownership?
A) Beneficial owners must be over 18
B) Beneficial owners must be named at the Land Registry
C) Beneficial owners hold a financial interest in the property
D) A property cannot have more than four beneficial owners
C) Beneficial owners hold a financial interest in the property
📌 Explanation: Beneficial ownership refers to equitable interests in the property, even if not registered at the Land Registry.
Which of the following types of surveys is the most detailed and comprehensive?
A) Mortgage Valuation Survey
B) Homebuyer’s Report
C) Full Structural Survey (Building Survey)
D) Snagging Survey
C) Full Structural Survey (Building Survey)
📌 Explanation: This is the most detailed survey, recommended for older or non-standard properties.
Which type of survey is commonly required by mortgage lenders?
A) Mortgage Valuation Survey
B) Homebuyer’s Report
C) Full Structural Survey
D) Boundary Survey
A) Mortgage Valuation Survey
📌 Explanation: This survey is for the lender’s benefit, confirming the property’s value but not identifying defects.
A solicitor is advising a buyer on VAT for a commercial property purchase. In what circumstances might VAT be payable?
A) If the property is residential
B) If the seller has opted to tax the property
C) If the property is leasehold
D) If the property is valued above £250,000
B) If the seller has opted to tax the property
📌 Explanation: Commercial properties are generally exempt from VAT unless the seller has opted to tax.
Which of the following statements about Stamp Duty Land Tax (SDLT) is correct?
A) SDLT is payable by the seller of the property
B) SDLT is payable on all property purchases, regardless of value
C) SDLT is a progressive tax, meaning different portions of the price are taxed at different rates
D) SDLT applies to residential property only
C) SDLT is a progressive tax, meaning different portions of the price are taxed at different rates
📌 Explanation: Different price bands attract different SDLT rates in a progressive system.
Which type of property transaction is exempt from SDLT?
A) Purchase of a new-build house
B) Transfer of property between spouses due to divorce
C) Buying a commercial property over £150,000
D) Purchasing a second home
B) Transfer of property between spouses due to divorce
📌 Explanation: SDLT is not payable on property transfers due to divorce or separation.
Which of the following best describes the legal ownership of a property?
A) The beneficial interest in the property
B) The registered title at the Land Registry
C) The right to receive income from the property
D) A right of occupation only
B) The registered title at the Land Registry
📌 Explanation: Legal ownership is recorded at the Land Registry, while beneficial ownership may be different.
What is the maximum number of legal owners who can be registered at the Land Registry?
A) Two
B) Four
C) Six
D) Unlimited
B) Four
📌 Explanation: A maximum of four people can be registered as legal owners under land law in England and Wales.
What is the main difference between joint tenancy and tenancy in common?
A) Joint tenants hold separate shares, whereas tenants in common hold equal shares
B) Joint tenants have survivorship rights, whereas tenants in common do not
C) Joint tenants can leave their share in a will, whereas tenants in common cannot
D) There is no difference
B) Joint tenants have survivorship rights, whereas tenants in common do not
📌 Explanation: Under joint tenancy, the property automatically passes to the surviving owner(s) upon death.
Which of the following statements about tenancy in common is correct?
A) Each co-owner has a distinct share in the property
B) Shares must always be equal
C) A tenancy in common has automatic survivorship rights
D) It must be declared in a will
A) Each co-owner has a distinct share in the property
📌 Explanation: Tenants in common own separate shares, which can be unequal and passed on in a will.
Which legal requirement applies to a declaration of trust over land?
A) It must be signed by at least two witnesses
B) It must be in writing and signed by the declarant(s)
C) It must be registered at the Land Registry
D) It must be executed as a deed
B) It must be in writing and signed by the declarant(s)
📌 Explanation: Under s53(1)(b) of the Law of Property Act 1925, a declaration of trust over land must be in writing and signed.
Which statute governs the formalities for creating a trust of land?
A) Land Registration Act 2002
B) Law of Property Act 1925
C) Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996)
D) Settled Land Act 1925
B) Law of Property Act 1925
📌 Explanation: Under s53(1)(b) of the Law of Property Act 1925, a declaration of trust over land must be in writing.
Which of the following applies to a resulting or constructive trust?
A) It must always be in writing
B) It must be signed by all parties
C) It can arise without formal written documentation
D) It requires registration at the Land Registry
C) It can arise without formal written documentation
📌 Explanation: Unlike express trusts, resulting or constructive trusts do not require written formalities.
What happens if a joint tenant dies?
A) Their share passes automatically to the surviving joint tenant(s)
B) Their share is distributed according to their will
C) Their share goes to the Crown
D) Their share is held on trust for their heirs
A) Their share passes automatically to the surviving joint tenant(s)
📌 Explanation: This is known as the right of survivorship, a key feature of joint tenancy.
James and Lisa are buying a house as co-owners. They want to be able to pass their share separately to their children in their wills.
How should they structure their ownership?
A) Joint tenancy
B) Tenancy in common
C) Sole ownership
D) Legal ownership only, without beneficial interest
B) Tenancy in common
📌 Explanation: Tenancy in common allows co-owners to specify individual shares and pass them through a will.
Tom is buying a house but refuses to get a survey. After moving in, he finds major foundation issues.
What is the legal position?
A) Tom can sue the seller for not disclosing defects
B) Tom cannot claim compensation, as caveat emptor applies
C) Tom’s mortgage lender must pay for repairs
D) The estate agent is responsible for failing to warn him
B) Tom cannot claim compensation, as caveat emptor applies
📌 Explanation: Under caveat emptor (“buyer beware”), the buyer is responsible for inspecting the property before purchase.
Sophie sells a rental property and makes a £50,000 profit.
What tax is likely to apply?
A) Stamp Duty Land Tax
B) Inheritance Tax
C) Capital Gains Tax
D) Council Tax
C) Capital Gains Tax
📌 Explanation: CGT applies to profits made from selling investment properties.
Ben is purchasing a commercial property from a seller who has opted to tax the property.
What additional tax will Ben likely have to pay?
A) Stamp Duty Land Tax
B) VAT on the purchase price
C) Capital Gains Tax
D) Council Tax
B) VAT on the purchase price
📌 Explanation: If a seller has opted to tax a commercial property, VAT is payable in addition to the purchase price.
A buyer is purchasing a leasehold property with 98 years remaining on the lease. Their solicitor warns them about possible future costs.
What might be the issue?
A) The lease may be difficult to sell once it drops below 80 years
B) They will have to pay SDLT annually
C) The lease will automatically convert into a freehold after 10 years
D) They must apply for a new lease every 5 years
A) The lease may be difficult to sell once it drops below 80 years
📌 Explanation: Lease extensions can become expensive when a lease nears 80 years due to marriage value.
Mark and Rachel are joint tenants. Mark dies unexpectedly.
What happens to his share of the property?
A) It passes automatically to Rachel
B) It becomes part of Mark’s estate
C) It is held in trust for his heirs
D) It must be sold immediately
A) It passes automatically to Rachel
📌 Explanation: Under the right of survivorship, joint tenants inherit the deceased co-owner’s share automatically.
Alex and Sophie buy a property together. Their solicitor drafts a declaration of trust confirming that Alex owns 60% and Sophie owns 40%.
What legal requirement must be met for the declaration to be valid?
A) It must be signed by the seller
B) It must be in writing and signed by Alex and Sophie
C) It must be witnessed by a solicitor
D) It must be registered with the Land Registry
B) It must be in writing and signed by Alex and Sophie
📌 Explanation: Under s53(1)(b) LPA 1925, a declaration of trust must be in writing and signed by the declarants.
