Pre-contract searches and enquiries when acquiring freehold and/or leasehold

Question 1

Who would make the searches and raise enquiries:

Answer 1

*Principle of caveat emptor applies to conveyancing transactions.
*Pre-exchange searches normally carried out by the person acquiring the property OR taking charge over it.
*Proof of title is normally a pre-contract issue, the buyer’s solicitor MUST make all relevant pre-exchange searches
AND enquiries about the property on behalf of the buyer AND/OR lender
to find out as much as possible about the property.
*Review of the pre-exchange searches
AND replies to enquiries will allow the buyer to make the decision whether to proceed with OR to withdraw from the purchase before the contract becomes binding.

Question 2

Results of searches and enquiries -
The buyer’s solicitor WILL then formally report to AND advise the client as follows:

Answer 2

*Review the search results are satisfactory before exchange
AND meet the client’s requirements.
*Clarify any unsatisfactory results before exchange with the search provider
OR by additional pre-contract enquiries with the seller’s solicitor.
*Order a more detailed search OR additional searches, IF necessary.

Question 3

The buyer’s solicitor SHOULD discuss the additional cost AND?

Answer 3

impact on the acquisition timetable of obtaining additional surveys, reports,
OR searches with their client.

Question 4

Range, type, AND purposes of searches and enquiries -
All land acquisitions:
Survey OR inspection of the property:

Answer 4

A site visited by a surveyor
OR a physical inspection by the buyer will reveal the condition of the property
AND any overriding interests OR home rights.
PURPOSE

Instruct OR arrange site visit.
FORM

Question 5

Range, type, AND purposes of searches and enquiries -
All land acquisitions:
Enquiries of seller:

Answer 5

Information which the seller is expected to know about the property
AND which would give rise to an action in misrepresentation
IF the answer proves to be incorrect OR misleading.
PURPOSE

Protocol provides a standard set of enquiries (F/H-Form TA 06) (L/H-Form TA 07)
BUT additional specific enquires can be added.
FORM

Question 6

Range, type, AND purposes of searches and enquiries -
All land acquisitions:
Local search (3 searches submitted together to local authority):

Answer 6

Information known by the LA such as local AND land charges, road schemes, planning consents, refusals notices, enforcement notices, smoke control orders, listed buildings, conservation areas
AND compulsory purchase orders.
PURPOSE

Form LLC1, Form CON29 (standard enquiries) FORM CON290 (additional optional enquires)
FORM

Question 7

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Water and drainage search:

Answer 7

Search at the water company to ensure main water supply AND sewer connection to the property.
PURPOSE

Form CON290DW
FORM

Question 8

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Coal Authority:

Answer 8

Property is an affected coal mining area, search to establish any historical OR future mine OR mineral extraction.
PURPOSE

Form CON29M
FORM

Question 9

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Companies House:

Answer 9

Seller is a company, MUST check company exists AND has the power, capacity, AND authority to enter into the transaction.
PURPOSE

Online at CO HSE
FORM

Question 10

Range, type, AND purposes of searches and enquiries -
All land acquisitions:
Other searches:

Answer 10

Additional searches can be undertaken where appropriate – chancel repairs search (unregistered land), commons search (near open land), flood search (if at risk of flooding), environmental search (contaminated land), bankruptcy OR insolvency search (check no proceedings AGAINST individual OR company).

Question 11

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Unregistered land:
Index Map Search:

Answer 11

If any cautions AGAINST registration OR pending applications for registration.
PURPOSE

Form SIM
FORM

Question 12

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Unregistered land:
Land Charges Search:

Answer 12

Search Land Charges Department for encumbrances over unregistered land such as, easements, covenants, mortgages, estate contracts AND home rights.
PURPOSE

Form K15 AGAINST the name of current owner OR previous estate owners for their period of ownership.
FORM

Question 13

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Registered land:
HMLR Official Copies:

Answer 13

Order from HMLR to reveal proprietor, property AND encumbrances affecting title.
PURPOSE

Form 0CL – application for official copies of register/plan.
FORM

Question 14

Range, type, AND purposes of searches and enquiries:
All land acquisitions:
Registered land:
Index Map Search:

Answer 14

Necessary if property comprised in more than one registered title OR where there could be mines/minerals registered under a title number different from the title number relating to the land itself.
PURPOSE

Form SIM
FORM

Question 15

Law society conveyancing protocol:

Answer 15

standardised practice framework (instructions and documents) for the sale AND purchase of a home for an owner-occupier (not a new build home).

Question 16

Law society conveyancing protocol regulates?

Answer 16

the relationship between the seller’s AND buyer’s solicitors.

Question 17

Law society conveyancing protocol intended?

Answer 17

to ensure clients are treated fairly AND protected during the transaction.

Question 18

Law society conveyancing protocol -
All law firms that are members of the transaction:

Answer 18

conveyancing quality scheme MUST comply with the protocol.

Question 19

Firms that are on mortgage lender’s panel that are acting for the lender where the buyer has taken a residential mortgage will be required to?

Answer 19

comply with the law society conveyancing protocol.

Question 20

Main sources of finance when purchasing property is?

Answer 20

mortgage finance which CAN be through a bank, building society, specialist lender, OR private loan from a trust fund OR individual.

Question 21

Part of the solicitor’s role to ensure that the client is aware of the?

Answer 21

other ancillary expenses which need to be paid in addition to the purchase price,
to complete the transaction such as SLDT/LLT, HMLR fees, search fees, mortgage arrangement fee, AND premium for insurance policy (if applicable).

Question 22

Client requires financial advice
(e.g., arranging OR advising in connection with a mortgage)
Then the solicitor MUST be aware that?

Answer 22

the solicitor is carrying out a regulated activity
AND MUST be authorised to do so under the Financial Services and Markets Act 2008.

Question 23

Client making cash payment towards the property with a large cash deposit through the solicitor’s client account,
solicitor CAN be at risk of?

Answer 23

assisting a money launderer where they fail to report a client for suspicion of money laundering.

Question 24

Types of Mortgages -
Repayment:

Answer 24

Repayable in monthly instalments.
Repayments WILL be partly capital AND partly interest.
Interest rate CAN be fixed OR the lender’s standard variable rate.

At the end of the mortgage term the borrower will have repaid ALL monies owing to the lender.

Question 25

Types of Mortgages -
Interest only:

Answer 25

Monthly instalments ARE interest only.
Interest rate CAN be fixed OR the lender’s standard variable rate.
Lower monthly payments as interest only.
Borrower MUST make arrangements to pay off the outstanding amount.

At the end of the mortgage term the borrower WILL still owe the original loan amount
UNLESS alternative arrangements made.

Question 26

Types of Mortgages -
Endowment:

Answer 26

Borrower makes payment of interest only.
Interest rate CAN only be fixed OR the lender’s standard variable rate.
Borrower WILL purchase an insurance product to pay off the outstanding amount of the mortgage.

An insurance policy is taken out on the borrower when the mortgage is granted.
WILL repay the capital when the policy matures OR if the borrower dies.

Question 27

Types of Mortgages -
Sharia compliant:

Answer 27

Avoids the payment of interest.
Bank can purchase the property AND lease it to the buyer AND then transfer it to the buyer at the end of the lease.

Transferred to buyer by bank at end of the lease.

Question 28

Lender’s requirements:

Answer 28

*Acting for a buyer AND lender is common in residential property transactions.
*Both the buyer AND lender will want to know that the property being acquired has good AND marketable title.
*Buyer will want to know that it has acquired full AND clear title to the property.
*Lender will want to know the property is satisfactory security for the loan AGAINST which it has lent the monies.
*Acquire a property with a defective title would undermine the value of the acquisition AND the lender’s ability to sell the property at market rate SHOULD it need to enforce its mortgage in the event of a default on the loan by the buyer.
*Lender WILL request a Certificate of Title from the solicitor.

Question 29

Purpose of a certificate of title:

Answer 29

*Title investigation is normally carried out by the buyer’s solicitor.
*Report addressed to the buyer WILL be prepared on the results of the title investigation,
the terms of the contract AND the mortgage.
Report on title.
*Buyer has taken a mortgage to finance the purchase of the property,
the lender CAN request a certificate on title addressed to the lender to ensure the property is satisfactory security for the loan.
*Certificate on title confirms to the lender that the property being acquired has good AND marketable title.
Being acquired by the buyer to whom the funds are being lent AND confirmation of the completion date to ensure the funds are set on time to complete the purchase.
*Inaccuracies OR errors in the certificate of title WILL give the lender a remedy for breach of warranty AGAINST the buyer’s solicitor.
*Property being investigated is residential, buyer’s solicitor SHOULD comply with the UK Finance Mortgage Lender’s Handbook in preparing a certificate of title.
*UK Finance Mortgage Lender’s Handbook provides comprehensive instructions for solicitors acting on behalf of lenders in conveyancing transactions.
*Certificate of Title WILL be given to the lender (signed and dated by the buyer’s solicitor) immediately BEFORE completion of the purchase
AND the drawdown of the loan monies.