Introduction to a Freehold Transaction Flashcards
What should be considered as a lawyer when acting for a buyer of a property?
Issues restricting client’s ability to do what it wants with the property
Any issue which passes liability on to client for something seller has done
What should be considered as a lawyer when acting for a seller of a property?
Seller has the right to sell the property
Physical condition of the land and buildings is adequate for the buyer’s needs
You identify all the rights the property has enjoyed
You identify any 3rd party rights affecting the property
Enough cash to finance the purchase
What should be considered as a lawyer when acting for a lender?
Check that property is marketable - mortgage would be covered by sale price if lender exercises power of sale
At what point are parties contractually committed to the deal?
Exchange - once this has happened, would forfeit deposit.
When does legal title to a freehold pass?
When TR1 is registered at Land Registry
What is the principle of ‘caveat emptor’?
Let the buyer beware - seller is under no obligation to give a buyer all the relevant information - means that buyer’s lawyer must investigate as thoroughly as possible and report to the buyer
When taking instructions on a sale of a property, what initial matters should be considered?
- Energy Performance Certificate
- Timescale / costs
- Co-ownership
- Surveys
- Tax
Who should commission an EPC and when?
Seller
Before marketing property - make available to buyer free of charge
Valid for 10 years
Why should a buyer always be advised to instruct a surveyor?
Depending on results can renegotiate price, require a contribution from the seller, or withdraw from the property altogether
What three types of survey are there and when is each one appropriate?
Basic valuation
Homebuyer report - a more detailed report, suitable for most properties in reasonable condition less than 150 years
Full structural survey - only needed if a listed property, extensive renovations happened, or alterations planned.
What must a buyer have sufficient funds to finance?
- Cash to pay deposit on exchange
- Balance of price
- Agreed price for any extras
- Tax
- Solicitor’s fees
- Solicitor’s disbursements
What are the most common ways via which residential properties are funded?
- Client’s resources
- Mortgage loan
- Proceeds of a connected sale
What are the most common ways via which commerical properties are funded?
- Equity finance
- Group of lenders – syndicate
- Lender funded development – will include power to step in to complete development if buyer fails to carry it out
PC: Can you act for buyer and lender?
Yes, in residential transactions - ensure that the property is good quality and marketable.
There will be no negotiation in the terms / form of the loan or security documentation.
