Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

(APD) Freehold > Preparation for and Exchange of Contracts > Flashcards

Preparation for and Exchange of Contracts Flashcards

1
Q

After the exchange of contracts, are both the buyer and seller legally bound to complete the transaction on the agreed terms?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Who typically drafts the contract?

A

Seller’s solicitor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the 2 ‘standard conditions’ used for the contracts in property transactions?

A

(1) Standard Conditions of Sale (SCS)
(2) Standard Commercial Property Conditions (SCPC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What 2 types of property transactions are the Standard Conditions of Sale (SCS) used for?

A

(1) Residential
(2) Simple commercial

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What type of property transactions are the Standard Commercial Property Conditions (SCPC) used for?

A

High-value commercial

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are ‘Specified Incumbrances’?

A

Burdens (third party rights)t hat the buyer accepts the property with e.g. restrictive covenants, easements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Under the SCS, what are the 4 Incumbrances the property is sold to the buyer with (i.e. binds buyer)?

A

(1) Specified in contract
(2) Discoverable on inspection of property
(3) Buyer aware of (except mortgages)
(4) Seller could not reasonably know about

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the difference between the SCS and SCPC re Incumbrances?

A

SCPC harsher on buyer than the SCS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who gives a ‘Title Guarantee’ and to whom?

A

Seller to Buyer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the 3 types of Title Guarantee?

A

(1) Full
(2) Limited
(3) No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does a ‘Full Title Guarantee’ mean?

A

Seller covenants the property is free from all:
(1) Incumbrances
(2) Charges
(3) Third party rights

Aside from those the seller does not know about / could not reasonably have known about

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What type of seller will normally give a ‘Full Title Guarantee’?

A

Owner-occupier

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the meaning of a ‘Limited Title Guarantee’?

A

Seller covenants that since the last DISPOSITION BY VALUE (I.E TRANSFER) they have not created / allowed to be created any:
(1) Incumbrances
(2) Charges
(3) Third party rights

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What type of seller will normally give a ‘Limited Title Guarantee’?

A

Personal Representative / Trustee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Under the SCS and SCPC what is the standard Title Guarantee that will be given by the seller?

A

Full

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

(1) What is the ‘Contract Rate’?
(2) What is this under the SCS and SCPC?

A

(1) The rate of interest charged if a party is late completing

(2) Law Society’s interest rate - 4% above Barclay’s base rate

17
Q

Under the SCS and SCPC
(1) What Deposit is paid by the buyer on the exchange of contracts?
(2) How is this held?

A

(1) 10% purchase price
(2) Stakeholder

18
Q

A deposit can be held as a ‘Stakeholder’ or an ‘Agent’ by the seller’s solicitor.

(1) What does each term mean?
(2) What is preferable for the buyer?

A

(1)
Stakeholder - seller’s solicitor CANNNOT give deposit to seller until after completion

Agent - seller solicitor can give the deposit to the seller after exchange

(2) Stakeholder (why? - may not be able to recover deposit e.g. if seller goes bankrupt)

19
Q

(1) Under the SCS and SCPC from whom to whom does the RISK OF DAMAGE pass between on the exchange of contracts?

(2) In response to this, what should be done?

A

(1) From seller to buyer

(2) Buyer to take out INSURANCE from exchange onwards

20
Q

Is the seller of a property required to insure the property?

A

No UNLESS agreed in contract

21
Q

(1) Is VAT generally payable on RESIDENTIAL property?
(2) Under the SCS will the purchase price be inclusive of VAT?

A

(1) No - ‘Exempt’
(2) - Yes - INCLUSIVE of VAT (i.e. no VAT paid on top)

22
Q

(1) What is a ‘New commercial property’?
(2) What rate of VAT is charged?
(3) Under SCPC 2, will the purchase price be inclusive or exclusive of VAT?

A

(1) Completed 3y ago or less
(2) Standard-rated - 20%
(3) EXCLUSIVE of VAT

23
Q

(1) What is a ‘Old commercial property’?
(2) What rate of VAT is charged and what is the exception to this?

A

(1) Completed more than 3 years ago
(2) Exempt (0%) UNLESS option to tax is exercised (standard-rated 20%)

24
Q

What are the 4 key steps the BUYER’S SOLICITOR must take pre-exchange?

A

(1) REPORT TO CLIENT - results of (a) Title Investigation (b) Searches & enquiries
(2) DEPOSIT - cleared funds deposited in buyer’s client account (to send to seller at exchange)
(3) MORTGAGE - formal offer of finance has been received and accepted & buyer has sufficient funds to proceed to completion
(4) CONTRACT - buyer signs their part of the contract

25
Q

What are the 4 key steps the SELLER’s SOLICITOR must take pre-exchange?

A

(1) PREPARE CONTRACT - first draft of contract
(2) EVIDENCE OF TITLE (i.e TITLE GUARANTEE)
(3) SEARCHES - if carried out
(4) CURRENT MORTGAGE - get a provisional ‘redemption figure’ to check proceeds of sale will be enough to discharge current mortgage
(5) CONTRACT - seller signs their part of contract

26
Q

What is the difference between ‘Title Guarantee’ and ‘Class of Title’?

A

Title Guarantee - re seller
Class of Title - re property

27
Q

What are the 3 methods of exchange of contracts?

A

(1) In person
(2) By post
(3) By phone (Formula A, B or C)

28
Q

When is Law Society Formula A used?

A

When one solicitor holds both the buyer and seller’s parts of the signed contract

29
Q

When is Law Society Formula B used?

A

Each solicitor holds their own client’s signed part of the contract - MOST COMMON

30
Q

When is Law Society Formula C used?

A

Chain of residential property transactions

31
Q

In Law Society Formula B, what are the 3 main steps?

(1) Confirm…
(2) Agree & insert…
(3) Undertakes to:
(a)
(b)
(c)
(d)

A

(1) Confirm they hold their CLIENT’S SIGNED PART OF CONTRACT
(2) Agree & insert COMPLETION DATE

(3) Undertakes:
(a) To hold their client’s part of the contract to the order of the other solicitor (EXCHANGE OCCURS HERE)
(b) Insert DATE OF EXCHANGE (that day)
(c) Send CONTRACT (that day) (by 1st class post, DX or by hand)
(d) Send DEPOSIT (buyer-solicitor only)

32
Q

What are the 3 main consequences of Exchange:

A

(1) Buyer gains EQUITABLE TITLE to property (seller keeps LEGAL TITLE)

(2) RISK of damage / loss transferred to buyer

(3) Seller remains in PHYSICAL OCCUPATION / POSSESSION (unless buyer occupies as a licensee)

(APD) Freehold (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions