Key Elements And Structures Of Freehold Property Transaction Flashcards
What are the different stages of conveyancing?
Per-contract stage
Exchange of contracts
Pre-completion stage
Completion
Post-completion stage
What is the pre-contract stage?
Starts with solicitors taking instructions, establishing consensus and identifying issues that may cause delay, frustration and costs.
Carry out additional searches and enquiries about boundaries, titles, access, disputes, previous word.
What is the pre-completion stage?
Only when contracts are exchanges that parties are BOUND to complete.
Spent making sure al correct documentation and completion money will be available on completion date.
Transfer deed will need to be prepared and executed. Completion searches to ensure everything is still Vaud.
What is the post-completion stage
Both sides must finalise administrative matters.
Ensure that any mortgage the seller had is paid off and removed from the title (usually an undertaking)
Buyer solicitor must ensure SDLT or LTT is paid on teh transfer, and register the client as the new owner of the property
What are the law society conveyancing protocls?
They apply to residential conveyancing ONLY.
It is designed to standardise the residential conveyancing process, set of instructions as to how to carry out a residential sale and purchase and is accompanied by standard documents.
What is the standard form for pre-contract enquiries to the seller that the sellers solicitor will ask their client to complete>
TA06, the property information form
What is CQS?
Conveyancing quality scheme. All firms that undertake residential conveyancing and want to be part of CQS are requires to comply with Protocl, Charter, mandatory training and enforcement procedures.
Who drafts the contract?
Sellers solicitor
Who drafts the transfer deed?
Buyers solicitor
Who drafts the mortgage deed, if acting for lender?
Buyers solicitor
Who raises pre-completion spaces and enquiries?
Buyers solicitor
Who submits report on title and certificate of title to lender and requests for mortgage pre-completion stage?
Buyers solicitor
Can you act for a seller and a buyer?
NO, conflict of interest nay arise. May not seem like it at first, but it will
Can a solicitor act for joint buyers?
Usually acceptable to act, provided that solciitor complies with code of conduct. May be necessary to advise residential buyers separately about how they want to hold the equitable interest.
Can you act for borrower and lender?
Yes, is common. Must make sure the risk of conflict f interest is not high though (2 situations where it is hig)
What are the 2 situations where risk of conflict of interest is high between borrower and lender?
If the mortgage is not a standard mortgage of property to be used as borrowers private residence
If the mortgage is a standard mortgage, but you do not use the approved certificate of title.
Can you act for joint borrowers?
Usually yes, provided no conflict of interest.
Make sure there is no undue influence if it is husband and wife and asking for house to be enforced security.
What are contract races and what must a solicitor do?
Where a seller client is selling a property using a contract race- pre-contract package is sent to multiple buyers, who then compete to be ready to exchange contracts first.
Where a solicitor acts for this, they MUST NOT mislead or attempt to, buyers.
This means that the buyer should inform all buyers immediately of the sellers intention to deal with more than one buyer.
If the seller refuses to agree to disclosure, solicitor cannot disclosure it, and should immediately stop acting in matter.
What is an undertaking
Statement made by or on behalf of a solciitor or firm, to someone who reasonably places reliance on it, that the solicitor or firm will do something, cause something to be done, or will not do something
What are examples of activities which the solicitor may not be in the best position to advise on, or are restricted on?
Regulated mortgage contract: If borrower is individual and lender takes first legal charge over propoerty and at leases 40 of property is intended for occupation
Regulated activities: arranging, advising on a regulated mortgage contract. Can give generic advice, r arrange with an independent client or authorised person.
What is the s 32 exemption for professional firms?
This means that solicitor can arrange or advise Ona. Regulated mortgage contract, if it DERIVES and is INCIDENTAL to the provision by the firm of professional services.
What are the different types of mortgages?
Repayment mortgages (monthly payments to lender, instalments of original and interest)
Interest only mortgages (just interest, will have to find the rest at the end)
Other types (financial schemes, that avoid payment of interest.)
What are property taxations?
SDLT, LTT.
Stamp duty land tax or land transactional tax.
When you purchase the prperty
CGT, if you make a capital gain on selling property for more (only if not residential).
What is SDLT?
A tax on TRANSACTION of a property.
Charged using separate rate of tax per portion of purchase price.
What are the basic charges for residential freehold property, SDLT?
<250,000 : 0%
250,000-925,000 : 5%
925,000-1,500,000 : 10%
Remainder : 12%
Are chattels included in the SDLT?
No, SDLT is payable on the LAND, which includes fixtures, but not chattels, so if the sale involves valuable chattels (curtains, carpets), it may be possible to SAVE SDLT by apportioning part of the purchase price to the chattels.
What are the basic charge for non-residential or mixed use freehold property, SDLT?
<150,000 : 0%
150,000-250,000 : 2%
Exceeds 250,000 : 5%
How is SDLT paid?
Paid to HMRC. Online bank transfer, and form SDLT1.
When must SDLT be paid?
Within 14 days of COMPLETION.
If SDLT is not paid within 14 days, what happens?
The transfer of teh property to the buyer will not be registered by the land registry.
Attracts penalties and interest
What are the rates for residential freehold property for LTT?
<225,000 : 0%
225,000-400,000 : 6%
400,000-750,000 : 7.5%
750,000-1,500,000 : 10%
Remainder. :12%
Is LTT payable on first time residential buyers?
No, this is different to SDLT
What are the LTT rates for non-residential or mixed use freehold properties?
<225,000 : 0%
225,000-250,000 : 1%
250,000 - 1,000,000 : 5%
Exceeds 1 mil : 6%
When must LTT be submitted to welsh revenue authority?
Within 30 days of completion
What is the private residence relief on CGT?
Seller of residential property can claim benefit of private residence relief, if it is he sale of their dwelling house as their only or main residence.
Must have occupied as main residence throughout period of ownership. If have 2 or more, can choose which one gets it.
What is the issue with more than 0.5 hectare for SDLT?
Gain on the excess is chargeable to CGT, unless seller can demonstrate to HMRC that extra garden is necessary for enjoyment of house
What is VAT?
Value added tax, tax on taxable supplies
How is VAT collected?
By HMRC from each supplier collected at end of VAT period (3 months), by completing a VAT return online .
What constitutes a taxable supply in property transaction?
A new commercial property, which has been built within 3 years.
What is the option to tax?
Can choose to tax or not, can be made into taxable supplies by the seller exercising the right.
What are the examples of properties that have the option to tax?
Sale of greenfield site
Sale of old freehold building
Grant of a lease
Why would a client make an option to tax?
To enable recover of input ta incurred - buiindg works, professioanl fees, renovating etc.
What are the disadvantages to option to tax?
Seller has to charge VAt on purchase price. This is not an issue if buyer makes taxable supplies and is therefore able to RECOVER it. However if the buyer cannot recover, then the purchase price is basically just INCREASED.
What constitutes “development”?
As the carrying out of building, engineering, mining or other operations in, on, over or under the land, or making any material change int eh use of ay buildings or other land.
What are matters that DO NOT constitute development?
Maintenance, improvement or other alteration of any building or work which affects ONLY the interior of the building, or does not materially affect the external appearance of a building
What does s 57 town and country planning act state?
Planning permission is required for carrying out of any DEVELOPMENT of land.
What are the different classes of use in s 55 of TCPA?
B 2 ; general industrial
B3: storage
C : residential
E : commercial business and service
F: local community
What are the subcategories of E as a class of use?
A - retail of sale and goods, not hot food
B: sale of food ad drink within premise
C: financial and professioanl services
G: uses carried out in residential area withotu detriment to amenity
What are the class of uses in Wales?
A1: Shops
A2: financial and professioanl services
A3: food and drink
B 1: business
B2 : general industrial
B8 : storage and distribution
C : residential uses
D; Non evidential institution, assembly and leisure
When will planning permission be needed for change of use?
Changes of use to another use, or MIX of uses within the SAME USE CLASS, wll not require planning permission.
Eg, if you change from E(a) to E(c), not needed.
In wales, if you change from clothes shop to stationers, will not, as they are both within A1.
What is the effect of planning permission?
Continues to exist for benefit of land and all persons from time being interested in it.
Implemented within a certain time, and will LAPSE if not implemented in taht time
What is the lapse date of planning permission in England?
3 years from date of permission
What is the lapse date for planning permission in wales?
5 years from date of permission
What can the local planning authority do if the authorised development of a planning permission is not completed within reasonable time?
Can serve a completion notice stating that the permission will CEASE to have effect,if completion has not taken place on a certain expiration date.
These are rare
When is planning permission EXPRESS?
Automaticlaly ranted.
In the town and country planning order - GPDO.
Developments within the curtilage of a dwelling house and minor pertains (painting exterior or installing CCTV etc)
Also grants automatic planning permission for specific changes between use of classes, and for changes for Sui generic uses, although should be CHECKED, as they change often.
What is a certificate of lawfulness of proposed use or development?
This is a certificate which can be made t LPA before works are commenced, specifying proposed works, the certificate shows that the LPA are satisfied with proposals and it would not constitute development, or grant permission if GDPO.
What is an enforcement notice to do with planning permission?
LPA can exercise a right if plannignpermission has not been complied with .
enforcement notice can be issued where it appears to LPA that there has been a breach. Must be served to the OWNER, or anyone with INTEREST int he land.
When does an enforcement notice take effect?
28 days after service.
What must an enforcement notice specify?
Appeared breach, steps to be taken, or activiites to be discontinued, in order to remedy breach.
What is a stop notice for enforcement of planning permissioN?
Because an enforcement notice cannot become effective until 28 days after service, LPA can serve a stop notice to bring activiites eto an end before the enforcement notice takes effect.
When can a stop notice be served by LPA?
AFTER the enforcement notice. This is effective only for 28 days if temporary stops notice.
What is a breach of condition notice?
This is the same as an enforcement notice, but can ONLY be served where the breach of planning control is a breach of a conditional attached to the planning permission, which they have broke
What is an injunction with the LPA can apply to for breach of planning permission?
Restrain an actual or apprehended breach of planning control.
Discretionary remedy, must show that an injunction is expedite the and necessary
When can injunction enforcement action be taken within?
4 years for operational develment carried out without planning permission
4 years form change of use to single swelling house
10 years from date of breach of all others
What is building regualtion control?
Separate to planngin permission. Concern with health and safety aspects.
When is it necessary to apply to building regulation control?
WHENEVR any works is carried out, even where changes themselves do not require an applciation for planning permission.
What is given at the end of a building regulation control?
A certificate of compliance
What is the time limit for prosecution for breach of building regulation controls?
2 years of relevant work being completed
What action can be taken against a breach of building regulation control?
Enforcement notice within 1 year of work
Injunctions, NOT time limited, if the work is unsafe!!
How can a buyer check that building regulations have been complied with during per-contract searches?
Ask about any works carried out to the property, and any consents, and CON29, part of the local search - will reveal details of building regulation consents and certificates granted.
What are listed buildings/
Buildings of special architectural or historical interest by relevant government department
If. A building is listed, what must be done with building consent?
Owner will require LISTED building consent to demolish, alter to extend the building ina edition to planning permission.
Higher listing, harder it is to obtain listed building consent from local authority.
What are conservation areas?
LPAs are obliged to designate as conservation areas any part that are of special architectural or historic interest, the character and appearance f which it is desirable to preserve or enhance.
What is an EPC?
Energy performance certificate
When must an EPC be produced for the buyer?
Preferable within 7 days of first marketing, and in any event, within 28 days.
