Investigating Title and Pre-Exchange (Freehold) Flashcards
What are the initial stages of a freehold transaction? (PCON)
Client instructions; client due diligence; ensuring authority to act for multiple parties; conflicts check.
How can a property purchase be funded?
Cash; Mortgage; or money from sale of another property.
What tax affects residential properties?
SDLT (England); LTT (Wales); CGT (if not a principle private residence)
What tax affects commercial properties
SDLT (England); LTT (Wales); CGT; VAT (100% if less than three years old, optional if more)
What is ‘caveat emptor’ and its practical implications?
‘Buyer beware’ - Buyer buys a property subject to all incumbrances they could have reasonably discovered.
What does caveat emptor not apply to? In which case what does the seller do?
Caveat emptor does not apply to incumbrances that the buyer could not have reasonably discovered.
E.g. if there was a nuisance on the adjacent property that wasn’t active when the buyer inspected the land.
When is the caveat emptor principle relaxed?
When the seller has misrepresented the state of the property. Must be a written, rather than oral, representation.
What are the sellers’ solicitors priorities in the initial stages?
Provide title to the buyer, prepare a draft contract and reply to standard enquiries.
What are the buyers’ solicitors priorities in the initial stages?
Investigate title, undertake searches, review replies to standard enquiries and raise further enquiries.
What does the buyers’ solicitor do upon completion of their investigation?
They draft a report on title for the buyer, who then decides if they want to continue with the purchase.
What does it mean to ‘deduce’ title?
It means the sellers solicitor provides the proof of title (proving that the seller can actually sell the property) and the buyer inspects this.
Why do buyers inspect title at the land registry?
Shows whether the seller can sell the property and if there are any rights or burdens affecting the property.
What are the three official copies?
Property register;
Proprietorship register;
Charges register
What is in the property register?
Description of the property and identifying any rights benefitting the property.
What are the four considerations when there are rights affecting a property?
(i) Whether the right is adequate for the purpose it serves;
(ii) Whether the right requires maintenance costs for the buyer;
(iii) Whether the burden has been registered on the servient lands’ charges register; and
(iv) If it is a private road, whether there is a potential of the local authority adopting it and expecting the ‘frontager’ to pay for its upkeep.
What is in the proprietorship register?
Includes details of the registered proprietor, the class of title, any restrictions and a possible indemnity covenant.
What are the classes of title?
Title absolute: No issues with the sellers ownership/ability to sell;
Qualified title: Potential issues, e.g. if there is a missing deed for an easement;
Possessory title: E.g. where someone has acquired a property via adverse possession and have no deeds etc.
Good Leasehold title: Tenant cannot provide evidence of landlord’s title to land
What is a possible restriction on the proprietorship register?
Tenants in common restriction, meaning the property cannot be sold without the approval of all beneficial owners.
Can be overreached by paying to two trustees or by seeing a death certificate of the TIC.
What happens if there is an indemnity covenant in the proprietorship register?
Then the buyer, if they go through with purchase, would be required under the standard conditions to give the seller an indemnity covenant.
What is on the charges register?
Anything that burdens the property, e.g. a mortgage, easement, covenant etc.
What are the assumptions with restrictive and positive covenants on the charges register?
If it’s restrictive - assume it binds
If it’s positive - unless there is a mention in the proprietorship register, it will not bind.
What happens if a covenant has already been breached by the seller of the property?
Then the seller should provide an indemnity policy to the buyer at their expense.
What impact could a covenant have on your advice to the client?
It could mean you advise them against buying the property, e.g. if there is a restrictive covenant against the sale of alcohol but they want to build a hotel.
What are the remedies for when a covenant affects the land?
Indemnity insurance;
Discuss release with the person whose land benefits;
(Restrictive) Apply to the upper tribunal.
