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Property 1 Flashcards

1
Q

Why is solicitor needed on property transactions?

A

Advise on rights/obligations/restrictions on property
Highly valuable asset
Lots of documentation

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2
Q

Buyer’s aims (speed/quality/cost)

A
  • ensure seller has right to sell property
  • adequate physical condition of land + buildings
  • property is worth the £ paid
  • identify all the rights the property enjoys/3rd party rights affecting property
  • property free from any security interests
  • contract reflects the terms agreed between parties
  • sufficient funds to finance purchase
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3
Q

Lender’s aims

A

Same as buyers +
- property is marketable (sells easy on open market)
- property’s £ is sufficient to cover any losses if buyer does not repay mortgage
- no discrepancies between lender’s understanding of deal and borrower’s circs
- security document (mortgage) is valid and enforceable

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4
Q

Seller’s aims

A
  • contract reflects terms agreed by parties
  • provide buyer’s solicitor with what’s necessary to proceed with deal
  • tie timing of sale to related purchase
  • transfer legal ownership + responsibility of property to buyer
  • collect money from sale, repay mortgage, account to seller for the balance
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5
Q

Conveyancing process

A

Pre-exchange: agree on price, surveyor reports on value + condition, B’s solicitor investigates title (most work)
Exchange: S + B enter into contract w/ completion date, B pays 10% deposit (serious consequences for both for pulling out from now)
Pre-completion: B’s solicitor orders mortgage funds , S confirms all paperwork necessary to transfer the property on completion
Completion: B’s solicitor send purchase price to S’s solicitor, S’s solicitor sends trader paperwork, B gets keys (both physically move house)
Post-completion: S’s solicitor pays off S’s mortgage + pays balance to seller, B’s solicitor pays SDLT within 14 days of completion (Wales- Land Transaction Tax- 30 days) and registers buyer as owner at Land Registry

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6
Q

Caveat emptor : Buyer beware

A

Buyer takes the property as they find it (after exchange of contracts can’t withdraw even if problem found)
Seller has no obligation to disclose patent encumbrances (obvious flaws) or physical defects - buyer must investigate

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7
Q

Buyer investigates property

A
  1. The title (Land Registry/deeds if not registers)
  2. Seller’s replies to enquiries
  3. Searches (ROIs from local authority/land registry/statutory undertakers (water/drainage)
  4. Property survey - value/structural defects/necessary repairs - flag issues for solicitors to investigate more (boundary issues, physical evidence of rights of way)
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8
Q

Caveat emptor - Hardy v Griffiths

A

deposit paid, mould found, C claimed reckless misrepresentation
C had to pay full deposit- failed to compete (no onus on seller, should have done professional structural survey prior to exchange, no reliance on misrep)

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9
Q

Something wrong with the property before exchange

A

Before contracts exchanged- B can walk away w/o legal liability (can’t recover costs though)
Condition of the sale contract- B can require S to remedy problem before completion

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10
Q

Initial advice: Energy Performance Certificate

A

Seller must provide free of charge to buyer - valid 10 years, available online

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11
Q

Initial advice: likely timescale and costs

A

avg. residential sale - 6-8 weeks from sale agreed to completions (fixed costs)
large value commercial- exchange in 2 weeks, completion in 4 weeks

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12
Q

Co-ownership: 2 or more owners

A

Legal ownership: max 4 legal owners registered at LR, over 18, sole/joint tenancy. Hold on trust for beneficial owners.
Beneficial ownership: may be same/diff as legal owners, not registered at LR, no max. no. , any age, sole/joint tenancy/tenancy in common
BO joint tenancy- couples (not passed in will/business)- single entity + right of survivorship
BO tenants in common: can leave in will/unequal contributions/business - each owns undivided share - no right of survivorship
Negligent if co-ownership not done correctly- declaration of trust of land written + signed by declarant (LPA s53.1b),confirm share entitlement if TiC

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13
Q

Surveys

A

Buyer should always instruct surveyor (allows them to withdraw/renogotiate/get contribution from seller)
If defects serious, lender may refuse to lend
Basic valuation- major obvious defects (need more detailed survey)
Homebuyer report- suitable for most properties in reasonable condition under 150 yrs old
Full structural survey- listed prop/extensive renovation/extensive alterations planned (most £)

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14
Q

Tax considerations

A

Stamp Duty Land Tax - over certain £ in England + NI (rates depend on residential/commercial)
Land Transaction Tax- Wales (after 1 Apr 2018)
Capital Gains Tax- gain taxed not £ received- not for most residential (Private Residence Relief)(seller pays)
VAT- existing residential properties exempt, some others must pay VAT- seller pays

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15
Q

Funding the purchase- Buyer

A

Cash to pay deposit on exchange
Balance of price on completion
Agreed price for extras (contents)
Tax
Solicitor’s fees (always subject to VAT)
Solicitor’s disbursements (search fees/ LR fees)

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16
Q

Residential buyer funding

A

Own resources
Mortgage loan
Proceeds of any related sale

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17
Q

Commercial buyer funding

A

Public company- equity finance (selling shares to raise capital)
High value properties - group of lenders (syndicate)- limits their risk
Lender can fund development (of buildings)- lender requires power to complete development if buyer fails to

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18
Q

Types of residential mortgage

A

Capital repayment: monthly payments of capital sum + interests
Interest only: B only pays interest (less per month but still owe full capital at end of term - capital repaid on sale of property). B may be better off as they have equity. (B2L)
Endowment : generally no longer in UK, interest only + payment invested in endowment policy (which repays capital at end of term). Unsuccessful- B makes up shortfall out of their own £.

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19
Q

Deducing registered title (proving ownership to buyer)

A

Seller’s solicitor deduces title from:
Title documents
- Land Registry official copies of the register
3 separate registers in 1:
1) Property register (rights benefitting property)
2) Proprietorship register (registered proprietor’s name + address, class of title, entries affecting ownership)
3) Charges register (rights burdening property- mortgage/covenants/easements/leases)
- Land Registry title plan
- Copies of any documents referred to in the official copies of the register (noting other rights)

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20
Q

Buyer’s solicitor investigates the title ensuring:

A
  • seller has right to sell
  • title is adequate for buyer’s purposes
  • no title defects affecting the value of the property or the ability to sell in the future
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21
Q

Property Register

A
  1. Property description
    - freehold/leasehold
    - address, ref to title plan
    Buyer’s solicitor sends title plan to buyer -> confirm size + location
  2. Rights benefitting the property
    - extracted (all relevant info here) or filed (in filed doc- provided by seller’s solicitor)
    - right of way/light/ to run services (service media)
    - excluded rights (minerals under land)
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22
Q

Property has benefit of right of way

A

Consider
- Registration of the burden
Benefit: Proprietorship register
To be enforceable, burden must also be registered (against land over which it passes (servient land- if unregistered issue caution against 1st registration)
- Adequacy
Legal/physical - inspect that its sufficient (narrow, car only)
- Maintenance
Common law- if using right of way, must maintain
- Adoption
Private road adopted (made public) -> owners of properties facing road required to pay costs of making road adoptable

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23
Q

Proprietorship register

A
  • Registered proprietor name and address
  • Class of title
    1. Title absolute (freehold/leasehold)
    Best + most common, no issues- true + proper owner
  • Qualified title (freehold/leasehold)
    specific defect in title (covenant/easement missing on 1st registration
  • Possessory title (freehold/leasehold
    Registered proprietor has physical possession but no title deed or has adverse possession (squatters rights)
  • Good leasehold title (leasehold only)
    Leaseholder cannot provide evidence of the landlord’s title to the land (upgraded easily if landlord’s title registered)
  • Entries affecting ownership
  • Price paid/value if acquired after 1 April 2000
  • Restrictions on registered proprietor’s right to sell
  • indemnity covenants to observe positive covenants -> numbered entry
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24
Q

Issues with class of title

A

Title absolute - no issue
Qualified/possessory/good leasehold title- buyer’s solicitor must
- report it to client + explain
- check mortgage lenders’ requirements (may not accept or conditional)
- advise on title indemnity insurance to cover risks
- consider if possible to upgrade to title absolute (can locate missing docs)

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25
Q

Registered proprietor

A

Individual/company/LLP
up to a max of 4 legal persons (all must sign/execute purchase deed)
Verify with Companies House searches
Owner unless executor of deceased’s estate

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26
Q

Co-ownership

A

Legal title always held as joint tenants
Beneficial title held as:
1) joint tenants
- assume if no restriction
- survivorship
2) tenants in common - restriction in proprietorship register - “no disposition by sole proprietor unless ordered by court”
- transferable by will

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27
Q

Co-ownership: title investigation

A
  • If all co-owners living -> should all sign contract + transfer deed
  • Surviving beneficial joint tenant selling- sign contract + transfer deed and provide copy of deceased joint tenant’s death cert.
  • Surviving beneficial tenant in common selling -> appoint second trustee (their solicitor) to sign contract + transfer deed with them and provide copy of deceased tenant in common’s death certificate.
    Buyer can take property free from beneficial interests where transferred by at least 2 trustees and purchase price paid in good faith (overreaching beneficial interests)
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28
Q

Charges Register

A

Rights burdening the property
Mortgage in favour of lender- undertaking given on completion to discharge this (buyer takes free of mortgage)- 2 entries in Charges (1st : date of mortgage, 2nd :name + address of mortgagee (lender)
Leases- w/ their terms
Easements
Restrictive/positive covenants- their burden
Report all to client

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29
Q

Registration of mortgages

A

Legal mortgage must be created by deed
Legal mortgages entered in charges register so mortgagee (lender) has legal interest (1. date, 2. name + address of bank)
Lender usually requires restriction in proprietorship register preventing mortgagor (owner) from selling without lender’s consent (no disposition without consent of proprietor of charge)
Modern mortgages not transfer of ownership

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30
Q

Third party in land law

A

new owner burdened by the right

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31
Q

Property always sold free of mortgage

A
  • ensure seller has sufficient funds to clear the mortgage
  • ensure it is a term of contract before exchange that mortgage will be redeemed on completion
  • obtain undertaking from seller’s solicitor to redeem mortgage from proceeds of sale on completion
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32
Q

Burden of covenants shown on charges register

A

Restrictive covenants on register are binding.
Positive covenants only binding on original covenanter unless there is a chain of indemnity (noted on proprietorship register)
If buyer buying from original covenanter/unbroken chain of indemnity covenants then the buyer will be required to give indemnity covenant to seller (if none, refuse)
Unknown covenants (assume some restrictive) - should be reported and appropriate insurance obtained

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33
Q

Indemnity covenant

A

Covenant given by buyer to seller to observe positive covenant
Chain of indemnity - if covenant broken , seller can sue buyer

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34
Q

Buyer’s options for dealing with covenants

A
  • Land’s current use in breach of covenant but no objection received -> Indemnity insurance policy (at seller’s expense)
  • consent from Person With Benefit (PBW) (may be difficult to chase/ask for £) (check insurance first!)
  • Restrictive covenants only- application to Upper Tribunal (Lands Chamber) to discharge (£££ + impractical)

Proposed use breaching covenant- insurance (insurers require PWB not contacted (alerted of breach -> claim for loss)) -> approach PWB for consent
Buyer fixes past breach-ends breach unless person owning land claims loss

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35
Q

FSMA allows solicitor to arrange insurance policy for breach of restrictive covenant

A

Not excluded under FSMA (insurance) but incidental (small part of buying) and arises naturally (complementary- discovered after title investigation)

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36
Q

Compulsory first registration of unregistered land

A

On any sale- 1 December 1990 /gift of property from 1 April 1998 - buyer’s solicitor must register buyer’s title
Imposed in phases on areas too- if not done, seller’s solicitor should do at their expense before buyer purchases
First registration at Land Registry can take months

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37
Q

Deducing unregistered title

A

Seller’s solicitor deduces by
- examining bundle of deeds + documents for property (held by owner/any lender)
-> relevant deeds listed in epitome of title
Send copies of listed docs to buyer’s solicitor (seller’s solicitor undertakes to send originals on completion) along with bundle of deeds
Most important: root of title document

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38
Q

Root of title (deed proving title)

A

Usually most recent deed that meets reqs. (legal mortgage/sale conveyance preferred - title investigated 15 years before that so 30 years at least)
Requirements s44 LPA
1. dated more than 15 years ago
2. deals with both the legal and beneficial title to the property (not ‘bare legal title only’)
3. adequately describes the extent of the land being conveyed
4. doesn’t cast doubt on seller’s title

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39
Q

Chain of title

A

Deed 1 -> Deed 2 -> Root of title -> Deed 3 -> Deed 4 (to seller)
Seller’s solicitor identifies root of title and establishes chain to seller
Root of title, Deed 3, Deed 4 in epitome of title
Deed 1 and 2 only relevant if they have covenants/easements referred to in root of title

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40
Q

Epitome of title

A

Copies of relevant title deeds w/ front sheet setting out details proving the ownership history of a property, where a property is not yet registered at the Land Registry
Include power of attorney (if any deed done under that)
Death certificate for survivorship
Grant of representation/assent for will/intestacy
Any mortgages created after root of title even if discharges
NO trust deed/expired leases/land charges searches/planning permissions (can be provided elsewhere)

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41
Q

Buyer’s solicitor investigates title to unregistered land

A
  • ensure its registrable at LR
  • check valid root of title and uninterrupted chain of title up until seller’s title
  • check each conveyance/deed in chain of title, including root, is validly executed (clear that deed is a deed, signed, sealed, delivered) and stamped (Particulars Delivered stamp (after 1931) and certificate of title or ad valorem stamp- show stamp duty paid)
  • if conveyance not properly executed/stamped, buyer’s solicitor should insist that seller rectifies this at their expense before completion
    + interest + penalties for late stamp duty
    + diff rates of stamp duty for different years
    Most deeds before LPMPA (31 July 1990) - common law formalities (sealed with wax/paper- company -> in presence of 2 directors/ 1 director + company secretary who have both signed)
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42
Q

Index map search (SIM) of property

A

reveals
- any registered titles within the boundaries
- any pending applications for registration
- caution against first registration -> investigate further (claiming right against property)

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43
Q

Unregistered land: extent of land

A

Root of title may include a scale plan /refer to plan in pre-root doc (included in epitome of title)
If not, residential addresses can be identified by postal address

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44
Q

Unregistered land- assume that seller (surviving co-owner) was beneficial joint tenant (survivorship) if:

A
  1. Conveyance from seller to buyer states the seller is beneficially entitled to whole property
  2. No memorandum of severance converting interest to tenancy in common attached to conveyance to seller
  3. No bankruptcy order/petition registered against seller
    If not all 3 -> treat seller as surviving tenant in common (same as registered- overreach by transferring by 2 )
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45
Q

Conveyance

A

Transfer

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46
Q

Unregistered land- land charges

A

Rights burdening property will only bind unregistered land if registered at the Land Charges Department of Land Registry (1925)
Different to charges register (registered)
Leases not registrable (if still running then in epitome of title)
- Puisne mortgage c(i)
- Estate contract c(iv) (protect buyer if long period between exchange + completion)
- Restrictive covenant d (ii)
- Equitable easement d (iii) (legal not registrable- apparent from epitome/inspection)
- Home right F (protect right of spouse to occupy)
Must investigate title with search of Land Charges Department registers - online/Form K15 by years of ownership + full name (spelling/middle names not nicknames), do for each owner in chain of title

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47
Q

Puisne mortgage

A

Second/ subsequent mortgage of unregistered land of which the title deeds are retained by a first mortgagee (lender)

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48
Q

Unregistered land- mortgages

A

Should be discharged on completion
All mortgage deeds on epitome of title
If discharged (repaid in full) -> vacating receipt signed on behalf of lender
1st legal mortgage not registrable as land charge because mortgage lender doesn’t release original deeds until repaid (protection) unlike subsequent mortgages ( c(i) charge)

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49
Q

Unregistered land- rights benefitting/burdening

A

Buyer’s solicitor should review deeds provided in epitome of title and identify any covenants/easements/leases
Root of title refers to earlier deed then provided in epitome, otherwise buyer’s solicitors not allowed to see earlier deeds
Positive- only bind if chain of indemnity covenants (check each deed), not registrable as land charges
Restrictive- only bind if d (ii) land charge
Unknown- arising from missing deed (raise with seller who takes indemnity insurance and report to buyer and lender)

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50
Q

Report on title

A

Solicitor reports to client on investigation of title, search results, replies to enquiries.
Material facts of property, issues and their implication, solutions available
Buyer shouldn’t exchange contracts before understanding report on title

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51
Q

Report on title confidential to the client + sets out limitations on solicitors liability

A

No opinion on value/commerciality of transactions.
No physical inspection - advice to carry out survey

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52
Q

Report on title contents

A
  1. Interpretation
  2. Scope of the review and limitation of liability
  3. Executive summary
  4. Purchase price and other contract terms
  5. The Property
    6.Matters benefiting the Property
  6. Matters burdening the Property
  7. Search results
  8. Replies to enquiries
  9. Planning and building regulations
  10. Insurance
  11. Stamp Duty Land Tax
  12. Conclusion
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53
Q

Report on title protects solicitors from claims from professional negligence

A

CCS 6.4 - Solicitors must ensure client is aware of all information material to the matter of which they have knowledge
CCS 8.6- Solicitors must give clients information in a way they can understand (lay language, offer to talk through)

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54
Q

Caveat emptor -> searches

A

Carried out by buyers solicitor (usually once contract received)
Seller’s solicitor might if dividing land between buyers
Lender’s solicitor might for a remortgage
Submitted as early as possible as take a few weeks
Standard searches - always necessary, some optional

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55
Q

Standard searches

A

Local search - local authorities, local land charges
Drainage + Water
Desktop environmental search
Chancel repair liability

Unregistered land - land charges search
Search of index map - mineral rights
Companies search

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56
Q

Optional searches

A

CON29O- commons registration search
Highways
Coal mining
Cheshire salt
Tin/clay/limestone
Phase 1/2 survey
Flood
Utility providers
Railways - over/under, cross rail, HS2
Waterways

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57
Q

National Land Information Service (NLIS)

A

intermediary between solicitors and various institutions
order searches online here from channel providers (search flow etc.)
some available immediately/some a few weeks later

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58
Q

Local search: all matters of property in knowledge/records of LA (always done)

A
  1. Standard enquires (CON29)
    - planning/building regulations, roads, public rights of way, environmental notice
  2. Optional (CON29O)
    commons search, pipelines, low noise zones
  3. Local Land Charges Search (LLC1)
    Each LA keeps register (some transferred to LR) - some require money (make road adoptable) or affect use (listed building, granted planning permission, tree preservation, restrictions on development)
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59
Q

Drainage and water search (always done)

A

check with relevant water service company - check mains water supply, contamination
CON29DW- residential
CommercialDW- commercial

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60
Q

Desktop environmental search (always done)

A

Owner can be liable for costs of cleaning contamination even if not responsible
Local search - notices served but desktop shows historical records of contaminative use (industrial )
Flooding, subsidence, industrial land used in 250m

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61
Q

Chancel repair search (always done)

A

Properties in parishes with pre-Reformation churches. Responsibility for repairing church roof shared amongst parishioners- can be very expensive so requires indemnity insurance.

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62
Q

Highways search (depends)

A

CON29 shows adopted highways (LA £ for public use)
Mostly commercial properties need
If property doesn’t directly border highway - ensure rights of access

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63
Q

Mining searches (depends)

A

Coal mining (CON29M)- areas affected listed in free gazette, identify subsidence risk and if compensation already paid (can’t be paid in future)
Cheshire salt search- brine subsidence in Cheshire, similar to coal mining search
Tin, clay, limestone - dependent on area (tin in Cornwall + Somerset), similar to coal mining search but for minerals

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64
Q

Environmental searches (more detailed than standard desktop) (depends)

A

Environmental Phase 1 Survey- with site inspection
Environmental Phase 2 Survey - where Phase 1 shows risk of contamination, test soil/water samples
Flood search- where property has flooded in past

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65
Q

Other searches (depends)

A

Utility providers- new development/site for development , checks connection (electricity, gas, telecom, broadband)
Railways - passes nearby or proposed- no standard search but check relevant rail company about access rights/other issues
Waterways search - river/canal passing by, liability for maintenance of river bank, rights of way, drainage, fishing rights and owner’s liability for flooding (not flood risk)

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66
Q

Pre contract enquiries with seller (always done)

A

Commercial property - CPSE1 (standard enquiries)
Residential property-
- Property information form (TA6) - boundaries, alterations, neighbour disputes, work done, occupiers, utilities
- Fittings and contents form (TA10) - items included/not included in sale- curtains, lights etc.
Other additional enquiries - bounce back and forth

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67
Q

Seller’s liability for pre-contract enquiries

A

Rely on seller being co-operative, they can decline if no knowledge,
‘ not so far as seller aware’ - still liable if answer is yes - should make reasonable investigations
Seller cannot deliberately mislead buyer (concealing defects/lying.) - action in misrepresentation

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68
Q

Searches for title/seller (investigation of title)

A

Index map search (SIM)- unregistered/ unregistered + registered/ registered notes mineral rights -> shows extent of registered titles and unregistered land in area searched (doesn’t show ownership- official copies needed)
MapSearch- LR free map of registered titles - LR doesn’t guarantee result (like SIM)
Central Land Charge Search (K15) (not land charges register in local search)- unregistered property, check full names of seller/previous owners in epitome of title
Bankruptcy search - against seller if not at full market value (at Central Land Charges Registry) and buyer taking out mortgage
Companies search- check existence/liquidation/dissolution, shows security interests company given

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69
Q

When is planning permission needed?

A

Whenever there is development of land (building works or material change of use of land) unless:
- building works exclusively on interior or
- building works which don’t materially affect external appearance or
- changes of use within the same use class (shops, financial, food, business, hotels, dwellings,) - some are Sui generis (unique) so always require planning permission

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70
Q

Use classes (amended in 2020)

A

B2 general industrial
C1 Hotels
C2 Residential institutions
C3 Dwelling houses
E commercial, business, service (retail, food, public professional services)
F1 Learning and non-residential
F2 local community
Sui generis (not a class- miscallaneous) - any uses that don’t fit classes, theatre, launderettes, fuel, pubs, nightclubs, concerts, takeaways - always need planning permission to change

71
Q

Permitted development without planning permission (GPDO)

A

Town and County Planning General Permitted Development Order 2015- England 1995 - Wales - some changes allowed
can be excluded/amended by Article 4 direction (in Local land charges search)-> will need planning permission
if unsure if GPDO, get certificate of lawfulness - confirms it’s not development or falls in GPDO

72
Q

Listed building planning rules stricter

A

Listed - special architectural/ historical interest
Grade 1 - exceptional interest
Grade 2*- more than special interest
Grade 2- special interest
Listed building consent needed to demolish/alter/extend - separate from planning permission , sometimes needed for internal
GPDO doesn’t apply

73
Q

Properties in conservation areas- stricter planning permission

A

Conservation area- special historic/architectural interest, desirable to preserve/enhance its character/appearance
LA designates these areas
GPDO restricted - external appearance changes require planning permission
Demolish unlisted building in conservation area - England: planning permission, Wales : conservation area consent
Consent needed to cut back/down trees

74
Q

Building regulations consent (separate from planning permission- some both): Building Act 1984

A

Building Regulations 2010- consent needed for internal works
- erecting/extending building
- install/extend service or fitting controlled under Building Regulations (windows, boilers)
- work where there is material change of use of whole building
Regulate health and safety (structural integrity, fire escape, water, stairways)
Building control inspector issues certificate of compliance.
Self-certification- (window, roof, gas, cavity walls)
Fensa Window, Fensa lodges cert with local authority, appears in local ordinary search (CON29) replies

75
Q

Grenfell Tower -> Building Safety Act 2022

A

new Building safety regulator - focus on safety of people, particularly for high risk (high rise) buildings
Wales forming similar regime

76
Q

Breach of planning control

A
  1. development taken place without planning permission
  2. condition/limitation of planning permission has been breached
    Buyer’s solicitor must check for breaches as enforcement is against current land owner (not person breaching)
77
Q

Local authority’s enforcement of planning breach

A
  1. Enforcement notice - 28 days notice that:
    - land must be restored to condition it was in before unauthorised development
    - comply with conditions/limitations imposed by planning permission
    After 28 days, owner can be fined, LA can enter to carry out work (recovering expenses from owner)
  2. Stop notice - only after enforcement notice, requires unauthorised use stop immediately
    - cannot prohibit use as dwelling house or other activity carried out for over 4 years
  3. Breach of condition notice - for breach of conditions/limitations to planning permission (similar to enforcement notice)
  4. Injunction - LA applies to court for injunction, discretionary so must show good reason
78
Q

Enforcement time limits for planning breaches

A

Work done before 25 April - LA must enforce before
4 years -
- building works (starting on date they were substantially completed)
- change of use to single dwelling house (starts with date use begun)
10 years-
- other change of use
- breach of planning condition

Works done on/after 25 April 2024
10 years for all planning breaches

79
Q

Enforcement outside time limits for planning breaches

A

Where breach of planning deliberately concealed, LA can apply to Magistrates Court for a planning enforcement order
Limitation runs from day concealment stops

80
Q

Building regulations enforcement - time limits (changed following Building Safety Act 2022)

A

Buyer’s solicitor must check as enforcement may affect current land owner

Wales (prev England too)
1. Prosecution- 6 months after discovering breach to prosecute person responsible (builder, installer) in MC- unlimited fine (prosecution can take up to 2 years
2. Enforcement notice - 1 year after completion of building work to serve , 28 days to remove/alter work -> LA can do at land owner’s expense
3. Injunction - no time limit if work unsafe

England now
1. Prosecution - unlimited time (in MC, unlimited fines)
2. Enforcement notice- 10 years after completion of work, 28 days to alter/remove -> LA enters to do work at owner’s expense
3. Injunction - if work unsafe, no time limit

81
Q

Implications of planning/building regulation breach for buyer’s solicitor

A
  1. Local Search - planning permissions, building regulation consent + approval, enforcement action, GPDO, Article 4 , Conservation Area, Listed Building
  2. Seller’s replies to enquiries - for work done/change of use that needed planning permission/ building regulations approval
  3. Buyer’s survey - reveal work not in enquiries
    If breach found, advise on options
82
Q

Options available to buyer on discovering breach of planning/building regulations

A
  1. Withdraw from transaction (if central to purchase)
  2. Invite seller to fix matters before completion (term of contract on exchange)
    - remove/alter work
    - obtain retrospective planning permission
    - regularisation certificate for works that didn’t have building regulations approvals but comply
  3. Obtain indemnity insurance at seller’s expense - only covers financial loss for enforcement (not PI/death claims for breaches of building regulations so risky)
83
Q

Pre contract enquiries with seller

A

should be treated with caution and done alongside other searches
buyer’s solicitors request

84
Q

Commercial Property Standard Enquiries

A

CPSE1- applies to all commercial property transactions
- boundaries
- rights benefitting/burdening
- access
- physical condition
- contents
- utilities + services
- planning + building regulations
- occupiers + employees
- notices + disputes
- VAT treatment
CPSE2 - commercial tenancies (buying office block)
CPSE3 - grant of new lease (tenant on commercial estate)

85
Q

Residential property - protocol forms (pre-contract enquiries)

A

TA6 - Property information form (always) :
- boundaries
- rights benefitting/burdening
- disputes /complaints/notices
- alterations
- planning + building regulations
- occupiers
- utilities + services
- energy efficiency
TA10 - fittings and contents form (always) - which are included/excluded in sale or available for buyer to buy in addition
TA7 - leasehold information form - long leasehold (100 years)
TA8- new home information form (where property newly built)

86
Q

Form TA6 update from 15 January 2025

A

more complicated- seller requires solicitor (but most sellers want to find buyer before solicitor )

87
Q

Buyer’s solicitor raising additional enquiries

A

Commercial - can raise whatever they like but seller’s solicitor can decline to respond if irrelevant/ time consuming/ £
Residential - following conveyancing protocol - only raise additional enquiries arising out of documents provided, or relevant to title, existing or planned use, nature or location of property (not state and condition unless arising from searches, standard replies, inspection, surveyor’s report)

88
Q

Wrong replies to pre-contract enquiries

A
  • Misrepresentation- wrong fact if buyer relies and suffers loss
  • Seller cannot deliberately mislead- conceal physical defect/lie in answers
  • “not so far as seller aware”- implies reasonable investigations + no knowledge of defect - seller should check records and enquire with people(if company with employees)
  • if unable to make investigations, the seller should state this in reply
89
Q

Limiting liability for incorrect replies to pre-contract inquiries

A

Misrepresentation remedies- rescission or damages
Most commercial + residential contracts include standard conditions limiting buyer’s ability to rescind (unless fraud/recklessness, error/omission leading to accepting a property substantially different to expected (quality/quantity/tenure)
Damages only available where- material difference between represented and actual description/value of the property

90
Q

Acting for seller- pre contract enquiries

A

Check that they remain up to date at exchange (if completed more than 2 months earlier)
CPSEs- complex, solicitors part complete, check replies against title and information you have, have caution for ‘not so far as seller aware’, make sure client approves replies before sending
Residential - client completes all, but solicitor checks replies (incorrect/incomplete)

91
Q

Law Society Conveyancing Protocol - residential conveyancing transactions only (not new build)

A

Ensures all clients treated fairly and are protected. Open and transparent processes increase efficiency (reduce loss of time + money)
Voluntary steps when acting in sale/purchase for owner-occupier
Solicitors who are members of Law Society’s Conveyancing Quality Scheme have to adopt protocol + specific training - recognised quality standard and reduce fraud risk
Must comply with terms and act in spirit of Protocol

92
Q

Law Society Conveyancing protocol - enquiries

A

only make enquiries essential to acting in buyer’s best interest, notify seller of delays to searches
seller’s solicitor should confirm and update replies if completed over 2 months earlier, don’t have to deal with enquiries breaching protocol

solicitor breaches if uses non- Protocol standard enquiries whenever, or raises enquiries seeking seller’s opinion not fact - Law Society requires explanation -> monitoring or removed from membership of Conveyancing quality scheme

93
Q

Acting for lender- lender’s aims

A

Similar aims to buyer but mainly:
Property has sufficient value + marketability to repair their loan
Lender rarely accepts title risks

94
Q

Acting for both lender and buyer: residential

A

Substantially common interest exception - clear common purpose + strong consensus on how its achieved
Risk of conflict low:
- high street lenders have standard non-negotiable mortgage terms/conditions, prescribed docs
- solicitor’s discretion in acting for high street lender limited by standard instruction - Council of Mortgage Lenders Handbook

95
Q

Acting for lender: commercial transactions

A

Most lenders in commercial deals instruct their own solicitor as more potential for conflict.
Lender:
- enquiries + searches
- asks buyer’s solicitor to send all copies of searches + replies -> ask them to make any additional enquiries
- draft legal charge + other security docs
- draft certificate of title/ask buyer’s solicitor to provide

96
Q

Lending documents

A
  • Mortgage offer : formal offer by lender to lend (subject to being satisfied with transaction + security (property)), terms + conditions of loan
  • Facility letter : commercial mortgage offer
  • Certificate of title : solicitor certifies title to property is satisfactory for lending purposes
    residential- 1 page signed form
    commercial - complex doc
    Before exchange of contract
  • Legal charge (mortgage deed)- creates security interest, registered at LR (charge by way of legal mortgage - gives lender right to repossess + sell)
97
Q

CLLS Certificate of title - commercial property

A

Prescriptive form unlike report on title
Confirms property matters through series of statements - solicitor discloses whether correct for that property
Lender relies on this -> can sue solicitor for material errors/omissions
Done before exchange of contract

98
Q

Property contract

A

Contracts for land must satisfy s2 LPMPA:
- in writing
- incorporate all terms which the parties have expressly agreed
- be signed by/on behalf each party
Not a deed- can’t transfer but
- fixes completion date
- ties related transactions
- sets out related obligations (buying furniture)
- includes conditions
Might be unnecessary for property gifts between family/ land of low value (selling a part of land)

99
Q

Types of property contract

A

Standard form:
- always for residential : referring to Standard Conditions of Sale
- sometimes for commercial - Standard Commercial Property Conditions
Standard conditions always used - some common to all deals -> easier to refer to than write out, contract drafting + negotiation more transparent/simpler

Tailor made forms:
- Commercial - use precedents from firm’s own precedent bank/ Practical Law with Standard Commercial Property Conditions (amended if required- weighted in favour of seller assuming that buyer’s solicitor will negotiate)

100
Q

Standard Conditions of Sale- Residential contracts

A

If Law Society Conveyancing Protocol -> Standard Conditions of Sale are obligatory + Special conditions only added if absolutely necessary
Simple/low value commercial deals
Updated to follow changes in law
Page of conditions in contract

101
Q

Standard Commercial Property Conditions- Most commercial deals

A

Cover areas like taxation, occupational leases
Updated to follow changes in law
Page of conditions in contract

102
Q

Special conditions amending/excluding/supplementing Standard Conditions

A

included with tick boxes - chosen as appropriate
Law Society Conveyancing protocol- only if absolutely necessary - some pre-printed special conditions attached
other deals- matter of negotiation

103
Q

Despite caveat emptor, seller must disclose latent incumbrances + title defects - standard conditions amend this duty

A

Latent incumbrances- rights burdening property not apparent on inspection (covenants/easements)
Defects in title - issues casting doubt on seller’s ownership/rights
(deed showing lost covenants)
Standard conditions amend this:
SCS (res.)- seller needs to disclose encumbrances registered at LR, Land Charges Registry, Companies House -> if not, in breach
SCPC- buyer deemed to buy property subject to any encumbrances revealed by a prudent buyer’s searches + enquiries -> onus on buyer to do so

104
Q

Title guarantee - exception to caveat emptor, seller must provide

A

Confirms seller has right to sell the property
Full title guarantee : default for SCS + SCPC, should be offered - property is free of all incumbrances other than those disclosed in contract + those which it didn’t + couldn’t reasonable know about
Sole surviving tenant in common- full title guarantee + 2nd trustee provides limited title guarantee in TR1 on completion
Limited title guarantee: sellers w/ little knowledge of property - executors of deceased estate/trustees -Means no incumbrances have been created during seller’s period of ownership
No title guarantee- seller can’t guarantee right to sell/incumbrance -> buyer has no remedy against seller after completion, administrators/liquidators

105
Q

Completion date/time

A

Usually fixed by parties
Default in SCS/SCPC- rare- 20 working dates after date of contract
Time for completion SCS/SCPC- 2pm (money received by seller’s solicitor by then)
If buyer using related sale funds - b’s solicitor ensures sufficient time to receive + forward funds (later time)
Time is not of the essence (specified time, if not walk away + damages) until a notice to complete is served - defaulting party fails by specified time, other party can claim damages but can’t walk away -> serves notice to complete
Contract rate- interest payable by defaulting party for the delayed completion

106
Q

Deposit

A

SCS/SCPC- 10% deposit (varied by special condition)
If parties agree a lower deposit but buyer doesn’t complete on time -> seller serves notice to complete -> buyer must pay balance of 10% deposit (unless special condition amends)
Acting for seller- ensure they want reduced deposit
Completion price = purchase price - deposit
SCS- deposit by cheque from buyer’s solicitor client account/ electronically
SCPC- deposit must be paid electronically
Deposit held by seller’s solicitor as stakeholder/agent

107
Q

Seller’s solicitor holding deposit

A

Stakeholder- keep until completion
Agent- seller can demand deposit immediately after exchange (buyers dislike as risk if seller unable to complete - insolvent)
SCS/SCPC- stakeholder
Residential seller may need deposit for related purchase- SCS provides that it can be used for this (any remaining held by solicitor as stakeholder)

108
Q

VAT : Residential

A

Usually exempt/zero rated supply- no VAT paid by buyer
SCS- purchase price includes any VAT -> buyer doesn’t need to worry about VAT on top

109
Q

VAT: Commercial

A

Default SCPC- standard rated supply -> VAT at 20% on top of purchase price
Exception - property over 3 years old + seller has not made option to tax -> no VAT payable -> parties amend SCPC with special condition

110
Q

After exchange -> risk passes to buyer (SCS/SCPC)

A

if property damaged between exchange and completion, buyer must still complete
B’s solicitor advises buyer to obtain insurance quotes before exchange, ready to insure property from date of exchange
Lender may want confirmation of insurance before advancing completion funds
Some cases, better to extend seller’s insurance (if building under construction) -> special condition + standard SCS/SCPC seller’s obligations for insurance

111
Q

Indemnity covenants

A

Burden of positive covenants passed by chain of indemnity covenants
SCS/SCPC- if chain unbroken, seller requires buyer to continue chain
(if seller didn’t give IC, no obligation)
Wording of indemnity covenant in special condition

112
Q

Pre-written special conditions in standard residential contract

A

7:
- tying contract to SCS
- allowing parties to amend title guarantee from full (default)
- allows parties to specify included/excluded contents (chattels/fittings) on attached list
- indicating vacant possession (no occupiers ) or subject to leases/tenancies
- different time of completion (not 2pm)
- seller’s protection against misrepresentation by limiting liability to written statements (unless fraudulent/reckless)
- occupier’s consent - adults living in property other than seller sign ensuring vacant possession- replies reveal them to buyer’s, seller’s solicitor obtains signatures (occupier should get separate legal advice- conflict of interest)

113
Q

Pre-written special conditions to standard form commercial contract

A
  • tick box for limited title guarantee as rarely used for commercial
  • parties can specify that deposit + balance of purchase price will come from a diff account to buyer’s solicitor’s client account (buyer is financial institution trusted)
  • space for specific terms of transfer/ draft transfer to be annexed - sale of part where seller retains rights
  • options for VAT treatment, capital allowances (tax for plants + machinery), rights of residential tenants with long leases
114
Q

VAT

A

chargeable on any taxable supply incl. goods/services from taxable person (VAT registered business)
Every 3 months, VAT registered business pays VAT to HMRC
Output tax- VAT charged to buyers on goods/service
Input tax- VAT paid by business in buying goods/services (can be offset by output tax)

115
Q

Taxable persons

A

Business with VAT taxable turnover of over £85k per year must register for VAT at HMRC
Under £85k- can voluntarily register at HMRC
Advantage of registration - offset input tax paid to suppliers by output tax charged to customers
Some only make exempt supplies (banks), not taxable for VAT, unable to recover input tax

116
Q

Property and VAT

A

VAT registered business sells standard rated property supply -> must charge VAT on purchase price (output tax), any VAT paid in connection with property is input tax (can be offset)

117
Q

VAT of different types of property

A

Exempt supplies:
- Residential, apart from newly constructed
- Commercial property over 3 years + owner not opted into tax

Zero-rated supplies:
- Newly constructed residential property - buyer pays no VAT but output is taxable - seller recovers input tax (for development) from HMRC - default is purchase price inclusive of VAT, in this case exclusive of VAT

Standard rated supplies (20%):
- Newly constructed commercial property (under 3 years)
- Older commercial property if seller has opted in to tax (tenant have to pay VAT on rent)

118
Q

Option to tax

A

CPSE asks seller, if so, must provide a copy of the option + related correspondence w/ HMRC
if buyer not able to recover VAT (bank- exempt supplies) = 20% increase in price
Option to tax is personal- buyer can’t rely on seller’s option, has to get their own

119
Q

SCPC and VAT

A

S’s solicitor considers VAT when drafting contract
Default- property is standard-rated
- buyer agrees to pay VAT on purchase price in exchange for VAT invoice from seller

-set special condition that default doesn’t apply
exempt (no VAT/no option to tax) or
Transfer of a Going Concern (TOGC) - seller lets property for rental income, buyer will do same (+ other conditions) - not a taxable supply for VAT

120
Q

Preparing draft contract

A

Seller’s solicitor drafts the contract referring to heads of terms for instructions + to title
Law Society Conveyancing Protocol- contract bundle (standard form + official copies + protocol forms) sent to buyer’s solicitor at the same time

121
Q

Checking the contract

A

Buyer’s solicitor checks the contract against heads of terms + buyer’s instructions
Can amend if weighted towards seller or to add issues from investigations
Commercial- contracts goes back and forth between solicitors until terms agreed

122
Q

Buyer’s solicitor checklist before exchange

A

-receipt of all search results + replies + followed up on arising issues
- buyer received survey + satisfied
- advise buyer than insurance must be in place from exchange
- cleared deposit funds from buyer
- reported to buyer fully on title + issues
- send contract to buyer for signature
- obtain instructions on proposed completion date
- obtain authority of buyer to exchange contracts (not just signed contract but explicit)
- draft certificate of title+ send to lender
Commercial - ensure lender’s solicitor has approved draft certificate of title

123
Q

Seller’s solicitor checklist before exchange

A
  • obtain redemption statement (w/ amount needed to fully pay off loan) from lender to check that proceeds of sale will cover it
  • reply to outstanding enquiries (exchange refused if not)
  • prepare engrossments (final versions) of contract -> send 1 copy to seller for signature + 1 copy to buyer’s solicitor
  • obtain seller’s authority to exchange contracts (not just signed contract but explicit)
124
Q

Exchange of contracts

A

Parties are now in a binding agreement
Usually by telephone
Solicitors carry out exchange according to Law Society Formula B :
- each has client’s signed contract
- identify any blanks + agreed on wording
- agree to handwritten amendments/special conditions
- agree + write completion date
Once both complete + identical, agree to exchange (date+time) and write the other’s name on contract
then contract is exchanged -> parties legally obliged to complete

125
Q

Undertakings imposed on solicitors after exchange (Law Society Formula B- most often used)

A
  • hold signed contract to other solicitor’s order (B + S’s signatures belong to each other)
  • post signed contract to the other solicitor that day by 1st class post/DX/hand delivery
  • B’s solicitor sends deposit in form specified by contract (solicitor’s client account cheque in 1st class post or same day electronic transfer)
    Inform client of each step
126
Q

Law Society Formula A

A

same solicitor holds contracts signed by both seller + buyer (e.g. one solicitor away at time of exchange )
similar telephone convo- solicitor with both parts undertakes to send client’s signed contract to other solicitor

127
Q

Formula C- chain transactions

A

money from 1 used to buy the next
Chain transactions are common but Formula C rare (complex) so use Formula B and take care to tie the transactions together

128
Q

Exchanging related properties

A

Related sales/purchases must be tied together - risk of 1 falling through
Solicitor release contract to solicitor of related deal - if solicitor of related deal exchanged by agreed time, 1st contract treated as exchanged, if not exchange cancelled : Formula C release method, but applied to formula B most often

129
Q

After exchange of contract

A

Each solicitor prepares + files memorandum of exchange (key contract terms)
Keep a copy of signed contract to send if original lost
Risk passes to buyer- ensure insurance in place
Buyer has equitable interest in property- protected by notice on register or C(iv) land charge (only if long time until completion- development)
Parties make arrangements for completion: request mortgage funds for completion date, removal vans

130
Q

Buyer’s solicitor checklist before completion

A
  • draft transfer deed for S’ solicitor approval -> arrange for buyer to sign if any indemnity covenants/ other obligations for buyer
  • arrange for buyer to execute legal charge for any mortgage loan
  • send requisitions on title to S’ solicitor
  • relevant pre-completion searches
  • send certificate of title to lender + request loan in advance of completion (day before)
  • send buyer statement of money needed to complete the purchase
  • Stamp Duty Land Tax form approved by buyer
131
Q

Seller’s solicitor’s checklist before completion

A
  • approve transfer deed drafted by B’s solicitor
  • arrange for transfer to executed by seller
  • reply to requisitions on title
  • request redemption statement from seller’s lender (if any)
  • residential sale: ask seller/agent to take final meter readings
132
Q

Who drafts transfer deed?

A

SCS/SCPC- seller’s solicitor drafts contract, buyer’s solicitor drafts transfer deed
Now more common for seller’s solicitor to draft transfer + annex to contract

133
Q

Transfer of land must be in a deed

A

Registered :
Land Registry forms must be used -
TR1- whole freehold/leasehold
TP1 - transfer part of registered title
TR5 - transfer of portfolio of registered titles (can include unregistered)
Unregistered land:
standard to use TR1 but can be any writing - conveyance

134
Q

TR1 Structure

A
  1. Title number
  2. Property description (address)
  3. Date - handwritten at completion
  4. Transferor identity
    Registered proprietor - if name changes include marriage cert
    Any trustees for overreaching
    Company’s registered number
  5. Transferee identity (max 4)
    Buyer’s change of name irrelevant
  6. Address for service
    Buyer’s address (address of property purchased), email address
    LR directs notices here
  7. ‘transferor transfers the property to the transferee’ : fixed statement transferring title
  8. Consideration
    - purchase price
    - none- gift
    - other receipts (property to pay of death, swapping property)
  9. Title guarantee- full title or limited title tick boxes (if neither, blank), guided by contract
  10. Declaration of trust
  11. Additional provisions - indemnity covenant for positive covenants, new covenants/easements, appointment of 2nd trustee to overreach (no need to send deed of appointment)
  12. Execution
    - attestation clauses
    Transferor must always execute TR1
    Transferee must only if tenants in common/ holding on trust for 3rd party (10) or any indemnity covenant/obligation (11)
135
Q

TP1 Transfer of part

A

Transfers part of transferor’s title
Plan attached to TP1
Additional provisions - positive/restrictive covenants or easements

136
Q

TR5 Transfer of portfolio of titles

A

Table of number of properties + their title numbers (if registered)

137
Q

Execution of transfer deed: Individual

A

Signs transfer in presence of independent witness who also signs + prints full name and address
Transfer delivered (comes into effect) when dated (usually seller’s solicitor)

138
Q

Execution of transfer deed : Company

A

Check company policy on executing deeds - which attestation clause
- company seal (consider articles - 1 or 2 authorised signatories)
- no company seal but 2 directors/ 1 director + 1 company secretary
- 1 company director + independent witness
- senior employee (not secretary/director) authorised by power of attorney

139
Q

Steps for agreeing + executing transfer deed

A
  1. Buyer’s solicitor drafts transfer deed
  2. Seller’s solicitor amends draft for buyer’s approval or approves draft as it
  3. Once agreed, seller’s solicitor sends engrossment (final transfer deed) to seller for execution (buyer’s solicitor sends to buyer to execute only if needed)
  4. Seller’s solicitor and if appropriate buyer’s solicitor hold executed undated transfer deed ready for completion
140
Q

Pre-completion searches

A

Done by buyer’s solicitor
Check + protect the buyer (+ lender’s) ability to obtain title to the property as per the contract

141
Q

Pre-completion search : registered land

A

OS1 search with priority form (OS2 for part of land) at Land Registry against title number
Search is run from date of the last official copies the buyer’s solicitor - comes back clear or updated official copies sent to searcher
Priority period of 30 working days from search form - if buyer submits registration application within this time, buyer’s transfer takes priority over any other application, even if lodged before

142
Q

Pre-completion search : unregistered land

A

Land charges search of Land Charges Registry - identifies encumbrances/ adverse matters registered against current owner/seller (not previous owners)
Priority period of 15 days - must complete the purchase (not just submit Land Registry application) within this period to take priority - do just before completion for priority

143
Q

Priority period - registered land

A

SCS/SCPC - seller should disclose adverse issues resulting in changes to original copies provided -> if not, buyer has claim for damages for breach of contract/misrepresentation- may even rescind
Buyer’s solicitor shouldn’t rely on this- ensure its protected by priority at Land Registry
Costs time + money to fix any entry (seller’s solicitor or litigation against seller who is unable to pay damages) - case of professional negligence for conveyancing solicitor

144
Q

Solvency search

A

Form K16- land charges department -bankruptcy search against buyer to protect lender (if acting for both) - not needed for individual seller of registered land, check against seller of unregistered land
Registered land - buyer relies on OS1 search (bankruptcy appears on register of title)
Unregistered land - bankruptcy covered by land charges search
Company search - no priority period, update often + do immediately before completion (seller + buyer), - see pending insolvency/ crystallisation of floating charge

145
Q

Requisitions on title

A

Simple questions elicit info buyer’s solicitor needs + SS undertakings
Residential : Law Society TA13 (completion info + undertakings
Commercial : CPSE SCR or firm’s precedent
generally straight forward replies + seller’s solicitor undertakings - solicitor must do - Law Society Code for completion by post
Seller’s solicitor undertaking to redeem mortgages against the seller’s title - needed for buyer’s solicitor to register buyer’s transfer

146
Q

Content of TA13 Requisitions on title

A

similar to CPSE SCR
1. Vacant possession
- arrangements to get keys
- renting tenant - authority for them to pay buyer on transfer
2. Deeds + documents
Unregistered land - sent on completion
3. Completion according to Law Society’s Completion by post
exceptions + undertakings for solicitors on completion
4. Money
- ask for seller’s solicitor client account detail + exact amount
5. Mortgages + charges
- ask seller’s solicitor to list mortgages secured on property + confirm undertaking to redeem them on completion (lender then discharges the charge at LR/ form DS1- commercial may ask for this form to be executed but undated in advance, residential - Reg- SS sends DS1 to BS when lender gives them it -> BS removes mortgage from LR, unreg- receipted mortgage shown)

147
Q

Completion

A

Balance of purchase price to seller, legal title to buyer
Usually done by post - seller’s solicitor acts as agent for buyer’s solicitor under Law Society Code for Completion by Post (voluntary)
Code sets out expectations + undertakings
Residential - usually done on Fridays

148
Q

Completion process

A
  1. Buyer’s solicitor received mortgage advance + balance of money required from client by telegraphic transfer to client account -> sends required amount to seller’s solicitor by bank transfer
  2. Seller’s solicitor calls buyer’s solicitor when money arrives to confirm completion + dates transfer deed (now delivered)-> calls seller to let them know -> calls estate agent to release keys to buyer
  3. Buyer’s solicitor calls buyer -> buyer collects keys + physically moves into property
    If buyer’s solicitor acting for the lender -> date the legal charge
  4. Seller’s solicitor sends transfer deed + other agreed deeds + docs to buyer’s solicitor
    SS redeems mortgage -> sends balance of money (- costs, LR fees) to seller
    Seller’s solicitor must send written confirmation that completion has taken place by the end of the next working day
149
Q

Failure to complete - breach of contract

A

Defaulting party:
Seller: Seller’s solicitor unable to date executed transfer (seller changed mind, hasn’t returned deed)
Buyer: Seller’s solicitor hasn’t received money needed to complete from BS or buyer instructs not to release as changed mind

150
Q

Failure to complete and SCS (residential)

A

If either party fails to complete by date/time specified in contract -> obliged to pay interest for each day of delay - contractual compensation
Interest rate specified in contract - if none then Law Society interest rate
Buyer late -> Buyer pays interest on purchase price minus deposit paid (SCPC too)
Seller late -> seller pays interest on full purchase price (only SCS not SCPC)
Interest only applies to delayed completion (not no completion)

151
Q

Common law damages for failure to complete

A

Available for non-defaulting party
For losses where interest doesn’t cover it all - interest received under SCS deducted from sum
Not always practical to start proceedings
Available for delayed completion + no completion at all

152
Q

Rescission not always available for non-defaulting party (must serve notice to complete)

A

Standard contract - time is not of the essence
but after notice to complete served -> time is of the essence -> parties must both complete within 10 working days (excluding day notice given)
Buyer defaulting party - must pay full deposit without delay
Notice to complete cannot be withdrawn unless both parties agree
If still not completed -> non defaulting party can rescind

153
Q

Seller’s remedies for failed notice to complete

A

Rescind the contract
-> forfeit deposit + any interest accrued
-> resell property + any contents
-> claim contractual damages

154
Q

Buyer’s remedies for failed notice to complete

A

Rescind the contract
-> demand deposit + any interest accrued back
-> claim contractual damages
-> claim specific performance (forcing seller to complete sale)

155
Q

Post - completion (buyer’s solicitor )

A

Stamp Duty Land Tax- England - paid within 14 days
Land Transaction Tax - Wales - 30 days
Companies house charge filing
Land Registry application

156
Q

Stamp Duty Land Tax (SDLT) - England

A

Dependent on purchase price
Buyer’s solicitor does on buyer’s behalf
SDLT return submitted + tax paid within 14 days of completion (penalties if not)
Done online at HMRC portal
On submission - buyer’s solicitor receives SDLT5 certificate

157
Q

Land Transaction Tax (Wales)

A

Depends on purchase price (different rates for different thresholds)
Buyer’s solicitor does for buyer - LTT return submitted + paid within 30 days of completion (penalties if not)
Welsh Revenue Authority (WRA) online portal -> gives WRA certificate on submission

158
Q

Registering charges given by company at Companies House

A

Must be done within 21 days of charge creation -> if not, void against liquidator/administrator (lender isn’t protected)
Done online
CH cannot extend deadline -> must apply for court order (time + £)
If problem -> CH return form -> resubmit if still in 21 days
Commercial transactions

159
Q

Post - completion : Land Registry application - registered title

A

Form AP1 - online/post
1. Transfer deed (TR1)
2. SDLT5/WRA
3. Form DS1 (discharge seller’s mortgage - can be sent later)
4. Mortgage deed for buyer’s lender
5. If needed - certificate of registration of charge at CH
6. Other docs (death certificate of deceased joint tenant if sole survivor seller )
Send OG mortgage deed to lender + keep OG transfer deed if has covenants (send certified copies)

160
Q

Post- completion Land Registry application : Unregistered title

A

More involved than registered - cannot be done online - send certified copies of docs (LR don’t return)
Form FR1
Enclosures listed on separate form DL
TR1/ SDLT5 or WRA/ DS1/ mortgage deed/charge certificate/other docs AND
Include epitome of title + deeds, docs referred to it
Land charges searches for the seller + previous owners in chain of title
State overriding interests (Form DI)

161
Q

Land Registry Priority Period

A

AP1/FR1 submitted within 30 working days of buyer’s solicitor’s OS1 search with priority (cannot be extended)
New OS1 can be submitted to start new priority period

162
Q

Land Registry deadlines

A

Registered - none apart from priority period - can be done any time after completion, but can query if long period elapsed
Unregistered- deadline of 2 months from completion -> if not done, void (application made to Land Registrar to extend)

163
Q

End of transaction - Land Registry

A

LR sends requisitions if more information needed
Transfer of registered land - few weeks
First registrations of unregistered - months
LR issues new official copies of buyer as registered proprietor + lender as proprietor of legal charge + title information doc - title is in online register
Buyer’s solicitor sends buyer updated official copies

164
Q

Stamp Duty Tax Calculation : Residential

A

Freehold in England
Paid by buyer
SDLT calculated on purchase price + VAT (if any)
Different increasing % for each slice
Value of contents doesn’t apply to purchase price - ensure its genuine or tax fraud
Discount to first time buyers if under £625k (if more than 1 buyer, all must be first time buyers) - no SDLT for first £425k of purchase price + 5% on any amount between £425k and £625k
Buyer buying second property - additional 3% SDLT on whole purchase price alongside normal SDLT (unless replacing main home, first property sold in 36 months)

165
Q

Stamp Duty Land Tax - non-residential

A

Applied to slices
Up to £150k - none due
£150k - £250k - 2% payable
Amount over £250k - 5% payable

166
Q

Land Transaction Tax

A
  • no relief for first time buyers
  • higher rates of LTT for second properties
  • different rates
167
Q

Basis of Capital Gains Tax

A

imposed on seller/transferor
chargeable disposal of chargeable assets by a chargeable person giving rise to a chargeable gain (must be all)
- not on death gifts (will/intestacy)
- not cars
- not companies
- not charities
- Private residence relief

168
Q

Chargeable disposal

A

Sale of asset
Lifetime gift of asset
NOT gift on death (will/intestacy)

169
Q

Chargeable asset

A

Certain valuable possessions (not cars) + certain non-physical assets like shares
All property assets are chargeable (except main home qualifying for Private Residence Relief)

170
Q

Chargeable person

A

UK taxpayer for relevant tax year
Not companies (corporation tax)
Charities usually exempt

171
Q

Chargeable gain

A

Sale/disposal gain value minus acquisition cost
Consider allowable expenditure -
- costs incurred in acquiring asset (conveyancer’s fees for purchase)
- costs contributing to value (building extension not costs of maintenance/repair)
- costs incurred in disposing asset (estate agents commission)
Minus these from disposal gain

172
Q

Capital losses + annual exemption

A

Losses on assets during tax year can be offset against gains made alongside annual exemption of £3k - remaining amount of gain taxed for CGT according to income tax status

173
Q

Private residence relief

A

No CGT on selling/disposing home if all:
- has been person’s main home for whole time they lived in it
- have not let it out (lodger allowed)
- not used for business purposes (temporary office ok)
- grounds including all buildings under 5000 sqm
- not bought just to make a gain
If some not met - PRR reduced/not available
Married/CP couples - only 1 property as main home not 1 each

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