Professional Conduct Issues in Freehold Transactions Flashcards
How is service charge calculated where there is a purchase of one flat in a block of flats?
If there are 25 flats, each of whom shall pay service charge
- client’s liability is calculated as a 25th proportion of the landlord’s expenditure
- this provision provides certainty for the client that service charges will be apportioned equally
An unmarried couple are buying a new house to live in together. They are having a small mortgage and are contributing equally to the balance of the purchase price. They have agreed that the name of only one of them should appear on the registered legal title. The buyer whose name will not be on the legal title has asked their solicitor how they can protect their beneficial interest.
How can the client protect their beneficial interest?
Register a restriction
- Joint ownership restriction can be entered on the register - to reflect beneficial ownership
- ensures a co-trustee would have to be appointed in event of sale - alerts to overreaching
How must a solicitor advise a new client as to the complaints procedure?
It must be brought to the attention of the client at the time of engagement
Client must be informed in writing of:
a) right to complain
b) how a complaint can be made and to whom
c) any right to complain to legal ombudsman
Recommendations in practice notice to advice clients on beneficial ownership
Clarify how beneficial interests are to be held and advising clients on use of a declaration of trust
- clients then decide the basis of their co-ownership
What does adopting Law Society Conveyancing Protocol mean for the client?
Its adoption does not mean compliance takes precedence over obligation to act in client’s best interests
What is LSCP
- Use is compulsory for firms which are members of Conveyancing Quality Scheme
- Used in residential conveyancing transactions only (freehold and leasehold)
- Aims to make the conveyancing process more efficient and transparent
By adopting the Protocol, what do solicitors agree to adopt?
- Standard Conditions of Sale
- Property Forms
- Formulae for Exchange
- Code for Completion by Post
What are the CGT rates?
Capital Gains tax free allowance is:
- £3,000
Residential property rate:
- 24% on gains from residential property
- below basic rate - 18%
What must a solicitor do before they can proceed with a purchase?
They must carry out due-diligence checks
- the solicitor should speak to the client before and explain that they cannot proceed with the purchase until relevant checks are completed
Checks include:
- obtaining ID and verifying the source of funds
What is the best practice for a ‘contract race’
SRA Code of Conduct permits contract races (competition between prospective buyers) provided that:
- all buyers are immediately informed that there is a contract race
- and the client gives the solicitor consent to this disclosure
Advice for a buyer client where the seller’s solicitor requests that the deposit is held as agent (rather than stakeholder)
Agreeing to a deposit being paid as agent is risky because the funds will be released to the seller. If the seller was to default and completion did not go ahead, it could be difficult to get the funds back
Fee-sharing arrangements
Must ensure that clients are informed of any fee-sharing arrangement in writing
What will the Land Registry do if a mortgage has not been registered at Companies House and it sent to HM Land Registry to register the purchase of a property?
Register the mortgage in the register of title, subject to a note referring to the lack of registration at Companies House
- lack of registration at CH means that the mortgage is unenforceable against liquidator or administrator
What is the purpose of the UK Finance Mortgage Lenders’ Handbook (the Handbook)
It provides a standard set of mortgage instructions to a solicitor acting for a lender
Under whose name is the OS1 search carried out against?
- the name of the buyer client
- unless they have a mortgage, in which case it is carried out in the name of the bank (lender)
