Key Elements & Structure Of Freehold Property Transaction Flashcards
What is the conveyancing procedure for sale and purchase of freehold property?
Pre-contract stage - take instructions from client, investigate title, raise/respond to enquiries, draft/approve contract
Pre completion stage - making sure correct documentation and completion money will be available on completion date.
Post- completion stage - both sides must finalise the administrative matters.
Caveat emptor
Let the buyer be aware.
Seller is not obliged to disclose information about the property, other than about limited matters of title, and would not be liable for any defects in the property which later come to light.
The onus is on the buyer to discover as much about the property as possible before exchanging contracts and committing to the purchase.
Law society conveyancing protocol
Set of instructions to conveyancers as to how to carry out a residential sale and purchase and is accompanied by a series of standard documents issued under the ‘TransAction’ brand.
Contract races
A pre-contract package is sent to multiple buyers who then compete to be ready to exchange contracts first.
Legitimate selling technique provided that all the prospective buyers know that they are engaged in a race.
Undertakings
Statement made by or on behalf of a solicitor, or the 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.
They are legally binding.
Example: buyer cannot deposit money to the firms account because of technical issues. Seller solicitor gave an undertaking that the buyer must deposit the money by tomorrow.
What are repayment mortgages?
Borrower will make monthly payments to the lender made up partly of instalments of the original amount borrowed and partly of interest chargeable on the loan.
By the end of the mortgage term, the borrower will have paid off everything they owe.
What are interest-only mortgages?
Borrower will make monthly payments to the lender, but those payments will only comprise interest chargeable on the loan.
By the end of the mortgage term the borrower will still owe the lender the whole of the original amount borrowed.
What is stamp duty land tax in England?
What is land transaction tax in Wales?
SDLT - property taxation. First time buyers of residential property can claim relief from SDLT if they intend to occupy the property as their main residence and the purchase price is no more than £625,000.
LTT - similar to SDLT. However, there is no relief for first time residential buyers.
Capital gain tax (CGT)
The gain on a sale of property is calculated by deducting the purchase price of the property from its current sale price.
Certain forms of expenditure for improving the property can also be deducted.
Private residence relief
A seller of a residential property is likely to be able to claim the benefit of private residence relief if it is the sale of an individuals dwelling house used as their only or main residence.
What is VAT?
Value added tax
Taxable supplies - goods and services provided by a taxable person in the course or furtherance of a business.
Output tax
VAT charged by the supplier on its goods or services
Input tax
The customer, the recipient of the goods or services, pays the VAT.
Calculation of VAT due to HMRC
Supplier deducts input tax it has paid against the output tax it has charged and only the net amount is sent to HMRC.
Statutory definition of development
S.55 TCPA 1990
Carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in the use of any buildings or other land.
