Property 1

Question 1

What are the four key questions to ask yourself in a property practice SQE question?

Answer 1

• What kind of title am I dealing with - is it registered or unregistered land, and is it freehold or leasehold? * Is my client selling, buying, or both? * Is the transaction residential or commercial? * And importantly, what stage of the transaction are we at?

Question 2

In a question, what are the indicators that it relates to registered property?

Answer 2

References to the registered proprietor, charges register, title number

Question 3

In a question, what are the indicators that it relates to unregistered property?

Answer 3

References to the epitome of title, conveyance on sale

Question 4

In a question, what are the indicators that it relates to residential leasehold property?

Answer 4

Flat/apartment99, 125, 999 yearsUpfront premium purchase price and low annual rent

Question 5

In a question, what are the indicators that it relates to commercial leasehold property?

Answer 5

Shop, office, factory unit3, 7 or 21 yearsHigh monthly or quarterly rentsMore restrictive clauses on alienabilityRent review clauses (arbitration if they can’t agree)Permitted commercial use specified

Question 6

What are the two types of leases most likely to arise in a residential context?

Answer 6

• Head leases: Granted by a freehold owner to a tenant * Underleases: Leases granted by the tenant to an undertenant (or subtenant) out of the head lease (cannot be granted for a longer term than the head lease).

Question 7

What is the key difference between the grant of a new lease and the assignment/sale of an existing lease?

Answer 7

• The terms of the new lease can be negotiated between the seller and the buyer.* If the incoming tenant finds any of the terms of the existing lease unacceptable, they will need to ask the outgoing seller/existing tenant to negotiate directly with the landlord to alter the terms of the lease with a deed of variation. Under the terms of the lease, the landlord (the freehold owner) may also have to give their consent to the sale.

Question 8

What are the two meanings of ‘assignment’ in the context of conveyancing?

Answer 8

• The transfer of a leasehold estate from one party to another; and* The name of the document that transfers the leasehold estate itself.

Question 9

How do management companies operate in the context of leasehold property?

Answer 9

A management company is often set up in both residential and commercial leases to take responsibility for the maintenance of the common areas that are shared between all leaseholders.* Often the buyer will take a share in the company when their purchase completes.* The landlord may covenant in the lease to transfer the freehold of the property to the company when the last leasehold sale in the building or development completes. * It will typically prepare a yearly budget that accounts for anticipated maintenance costs. This sum is then divided up amongst the tenants who pay a defined share of the service charge in addition to their rent.

Question 10

A lease with a term of less than how many years is normally unacceptable to a mortgage lender?

Answer 10

80 years

Question 11

What is a ‘suspension of rent’ clause in a lease?

Answer 11

A clause suspending the payment of rent in the event that the premises are damaged or destroyed

Question 12

What types of covenants in a leasehold treasaction is considered to be unacceptable, and what should a buyer’s solicitor do if there such a clause?

Answer 12

A clause imposing an absolute prohibition against assignment in a long residential lease or a provision whereby the landlord can forfeit the lease on the bankruptcy of the tenant. * The solicitor should resist its inclusion in a new lease.* If an unacceptable clause is contained in an existing lease, the buyer’s solicitor should insist that the lease is amended between the seller and the landlord by a deed of variation. * If the clauses are not altered or removed, they should advise their client to withdraw from the transaction.

Question 13

If a lease agreement contains an unacceptable covenant, can the sale go ahead?

Answer 13

Only if the buyer is a cash buyer. If using a mortgage, the matter won’t be able to proceed because the buyer’s solicitor will not be able to give the property a clean bill of health when requesting drawdown of funds from the lender.

Question 14

What are the 6 stages of the transaction?

Answer 14

1. Pre-market2. Pre-contract3. Exchange of contracts4. Pre-completion5. Completion 6. Post-completion