intro to freehold transactions (week1)

Question 1

what is a lender’s aim in a freehold transaction?

Answer 1

buyer tends to get a mortgage over the property. lender has a security interest over the property, as they know if the buyer doesnt repay their mortgage, then the lender can sell the property to cover the losses.

Question 2

what does a lender want to know in a freehold transaction?

Answer 2

• that the property is marketable
• that the property’s value is sufficient to cover nay losses if the buyer doesn’t repay the mortgage

Question 3

who investigates and reports on title in pre-exchange?

Answer 3

buyer’s solicitor

Question 4

how much is the deposit in exchange?

Answer 4

10%

Question 5

what point in the transaction can neither party pull out without serious financial consequences?

Answer 5

exchange

Question 6

who pays stamp duty land tax and registers buyer as new owner at land registry at the completion stage?

Answer 6

buyer’s solicitor

Question 7

what does ‘caveat emptor’ mean?

Answer 7

‘let the buyer beware’ = means buyer must take the property as they find it.

Question 8

where does information about the property come from?

Answer 8

the land registry official copies or the deeds
sellers replies to enquiries
searches
survey the property

Question 9

what is the average timescale for a residential sale from sale being agreed to completion?

Answer 9

6-8 weeks

Question 10

what is the maximum number of legal owners of a property?

Answer 10

max is 4 people

Question 11

what is the maximum number of beneficial owners of a property?

Answer 11

there is no max

Question 12

what is joint tenancy?

Answer 12

co-owners collectively own the whole of the beneficial estate with each other (seen as a single entity)

Question 13

when does right of survivorship apply in co-ownership?

Answer 13

joint tenancy

Question 14

what is tenants in common?

Answer 14

suitable where co-owners wish to have an interest to leave in their will or have contributed unequal portions to the purchase price or where it is a business relationship.
purchases own undivided share of property and can share portions however they choose eg, 40% and 60%

Question 15

what are the 3 different types of survey?

Answer 15

basic valuation
homebuyer report
full structural survey

Question 16

what is a basic valuation survey?

Answer 16

cheapest option, and the surveyor will give a valuation and identify any major obvious defects. It is intended to ensure that the lender will be able to recover any losses by selling the property, and is not detailed

Question 17

what is a homebuyer report (survey)?

Answer 17

This is much more detailed than the basic valuation. and will be suitable for most properties in reasonable condition aged less than 150 years

Question 18

what is a full structural survey?

Answer 18

suitable for any property, but should especially be considered where the property is listed, has had extensive renovations, or where extensive alterations are planned. It is the most expensive option.

Question 19

does a residential property need to pay VAT?

Answer 19

no -usually are exempt

Question 20

what is an own interest conflict?

Answer 20

any situation where your duty to act is in the best interests of any client in relation to a matter conflicts

Question 21

what is a conflict of interest?

Answer 21

situation where your separate duties to act in best interests of 2 or more clients in same or related matter conflict

Question 22

what is a substantially common interest?

Answer 22

situation where there is a clear common purpose between clients and strong consensus on how it is to be achieved