PP Extra Flashcards
Overview of completion?
- Buyer’s solicitor has received (hopefully) mortgage advance and balance of money required from client, and sends required amount to seller’s solicitor by bank transfer
- Seller’s solicitor telephones buyer’s solicitor when the money arrives to confirm completion, and dates the transfer deed, calls seller to let them know, and estate agent to release keys to the buyer if appropriate
- Buyer’s solicitor calls buyer, who can now collect the keys and physically move into the property. If acting for the lender, the buyer’s solicitor dates the legal charge.
- Seller’s solicitor sends the transfer deed and any other agreed deeds and documents to the buyer’s solicitor, redeems the mortgage, and sends the balance of the money (less costs, Land Registry fees, etc) to the seller (by end of working day following completion)
In an assignment, what enquiries will the assignee’s solicitor raise?
Who deduces title at pre-exchange?
Important pre-completion steps?
CPSE 1 and CPSE 4 (specific to assignment)
The tenant’s solicitor deduces title - providing official copies for leasehold title, or if not registered (7 yrs or less) will provide landlord’s title
-Tenant’s solicitor prepares completion statement (proportions of rent due attributable to tenant and assignee)
-Pre-completion searches - if registered, only need OS1 to search whole of tenant’s title (does not matter whether lease of whole or part - as not landlord’s title being searched)
-Assignee will draft deed of assignment - if registered lease will be in form TR1 (if tenant happy, tenant will execute - landlord not involved)
For subletting:
What will need to take place pre-exchange?
Pre-completion?
The tenant (rather than landlord) will deduce title:
if over 7 years - provide official copy of registered leasehold
if 7 yrs or under - provide official copy of landlords freehold title together with copy of lease
Underletting of whole: Os1 against tenant’s registered leasehold title
Underletting of part: OS2 against tenants title
Where underlease not registrable: OS3 against tenant’s title (no priority)
NOT required to carry out search against landlord’s title as under lease is not granted out of freehold
Procedure to consider when alterations
Consider lease and whether absolute, qualified (auto upgraded), fully qualified
If silent on alterations - tenant free to carry out as long as they don’t reduce value of the premises
If landlord consents to alterations - usually documented in licence for alterations (another flashcard)
If absolute covenant, consider tenant’s statutory right to carry out improvements (another card)
Procedure to consider for user covenants?
Consider covenant - if lease silent = free to use premises for what they like
Qualified NOT auto upgraded
landlord cannot give consent on condition on charge lump sum or increasing rent (unless structural alteration - another card)
Regarding fully qualified covenants, what is considered reasonable refusal?
Examples?
Cannot withhold consent on grounds not related to landlord/tenant relationship
Reasonable refusal:
-unsatisfactory tenant’s reference
-damage landlord’s own commercial interest
-existing tenant in breach of covenant
-Proposed use doesn’t fit with policy of landlord (e.g. in a shopping centre)
Unreasonable:
-Personal dislike
In panel 4 for a TR1 (transferor), what would be stated if someone had died and the property was held as a JT? TiC?
JT - surviving co-owner would be able to sell property as a JT (so their name would appear alone in the box)
TiC- surviving co-owner would need to appoint a second trustee (name of surviving tenant and second trustee would need to appear in panel)
If there is a covenant against user/underletting/alterations etc, what should be done firstly? What else can be done?
Need to submit a formal application in writing for consent
If there is a good relationship - could approach landlord informally in first instance to discuss proposals
What does the seller need to with title regarding unregistered land?
Identify root of title
Establish a chain of title from that deed to seller
Other docs to include:
-power of attorney (under which root or any deed been executed)
-death certificate (survivorship), grant of representation or asset (will or intestacy)
-Mortgages created after root of title (even if discharged)
Why is the risk arising of conflict low with lender and buyer in residential transactions?
What does the lender’s solicitor do in commercial transactions?
High street lenders will have standard non-negotiable mortgage terms
Lender’s solicitor:
-specifies what enquiries and searches are needed
-ask buyer’s solicitor to send copies of all searches and replies to enquiries
-review them and ask buyer’s solicitor to make any additional enquiries
-Draft legal charge and other security docs
-Draft certificate of title or ask buyer’s solicitor to provide it
Give the 4 lending docs? What is each?
Mortage offer - formal offer by lender to lend (subject to lender being satisfied with transaction and security (i.e. property))
Facility letter - mortgage offer sets out terms and conditions of loan
Certificate of title - certifies that property is satisfactory for lending purposes
Legal charge - deed that creates security interest and is registered to Land Registry (gives lender right to repossess)
What are the 3 title guarantees?
Full title guarantee - default of SCS and SCPC - free of all incumbrances other than those disclosed in contract and those which couldn’t and reasonably known about
Limited - given by sellers with little knowledge of property (e.g. executors) - no incumbrances have been created over property during seller’s period of ownership
No title guarantee - does not guarantee seller’s right to sell property or that property is free of incumbrances (buyer has no remedy against seller if title issue arises) - administrator or liquidator may offer this
Formula B?
Formula A and C?
After exchange, Law Society Formula B imposes the following undertakings on the solicitors:
* to hold the signed contract to the other solicitor’s order – this means that the buyer’s signed part belongs to the seller and vice versa
* to post the signed contract to the other solicitor that day by first class post or DX (the document exchange used by solicitors and certain other professionals) or by hand delivery
* in the case of the buyer’s solicitor, to send the deposit in the form of payment specified by the contract (e.g., solicitors’ client account cheque in the first class post, or same day electronic transfer)
Formula A - same solicitor signs contracted for both seller and buyer (when other solicitor is unavailable)
Formula C - chain transactions (two or more properties) - complex and usually B used
What is now almost always done on completion?
Takes place by post using the Law Society Code for Completion by Post - avoids need to physically attend each other’s offices
What are the types of rent review?
Stepped rent - clearly sets out how it goes up
Turnover rent - linked to tenant’s turnover on property
Index-linked rent - rent increased by agreed measure of inflation
Open market rent review - most common adopted by Full Repairing and Insurance (FRI) leases - ascertaining rent based on comparable premises and certain principles (usually upward only)
