Property Flashcards
What type of ownerships are there?
Sole ownership - when yöu own property by yourself
Joint ownership - when two or more people own one property - joint tenants or tenants in common.
Legal ownership - the people who are registered on the land registry as owners. This can only be sole owners or joint tenants.
Beneficial ownership - is someone who enjoys the benefits of ownership although they may not be registered.
What types of surveys are there?
Basic valuation - the surveyor will give a valuation of the property and identify and major obvious defects. It is intended to ensure the lender that they will be able to recover any losses.
Homebuyer report - more detailed than BVS, and will be suitable for properties in reasonable condition aged less than 150 years
Full structural survey - should especially be considered when property
- is lister OR,
- has had extensive renovations OR
- extensive alterations are planned
What kind of tax could be applied during sale of a property?
Stamp Duty Tax - a buyer must pay stamp duty if they buy a property or land over a certain price in England or Northen Ireland. It is payable in wales if purchase after April 2018. Thresholds are different between residential and Commericial.
Capital gains tax - capital gain is tax on the profit when you sell certain assets including that have increased in value.
It the gain you make that is taxed.
VAT - tax that is added to the price of certain goods and services. Residential are VAT except. Buyer usually pays the VAT.
What are the aims of the buyer?
Buyer is concerned about time, costs, restrictions and liabilities.
Aims
- whether seller has the right to sell the property
- the physical condition of the land and building is adequate for buyer need and the property is worth the purchase price
- the rights the property enjoys
- third party rights effecting the property
-The property is free from any security interest or will be on completion i.e. mortgage
- the contract reflects what has been agreed
There are sufficient funds to finance the purchase
Aims of the lender
Lender is concerned whether property is marketable and is sufficient to cover any losses on chance of failure to pay mortgage
Aims
- whether seller has the right to sell the property
- the physical condition of the land and building is adequate to resell and cover losses if needed
- third party rights effecting the property
-The property is free from any security interest or will be on completion i.e. mortgage
- the contract reflects what has been agreed
-There are sufficient funds to finance the purchase
Aims of seller
- sell as quickly as possible
- contract reflects the terms agreed between parties
- provide the buyer solicitor with what they need to proceed to purchase
- tie the timing of the sale to any relate purchase
- transfer legal ownership (and responsibility) of the property to the buyer
- collect money from sale, repay mortgage and account to the seller for the balance
The conveyancing process - pre exchange
- buyer decides to buy property and agrees price
- surveyor surveys property and reports on value and condition
- buyer solicitor investigates and reports on title
- only when the buyer is satisfied with the above they will proceed with exchange
The Conveyancing process - exchange
- the seller and buyer enters into a contact to sell and buy the property on the completion date
-They buyer pays a deposit - from this point on, neither of them can pull out without serious financial consequences.
The conveyancing process - pre-completion
- buyer solicitor orders mortgage funds and ensures they have full money from client in time for the completion date.
- seller ensures that they have all the necessary paperwork to transfer property on completion.
Conveyancing process - completion
The buyer solicitor sends the purchase price to sellers solicitors
The sellers solicitors agree to send the necessary paper work to transfer the property to the buyer solicitor.
The buyer get the keys
The buyer moves in
The Conveyancing process - post completion
- seller’s solicitors pays off the mortgage and pays balance to seller
- buyer’s solicitors pays stamp duty
What are the types of residential mortgages?
Capital repayment mortgage - the borrower repay the capital sum by monthly repayments together with interest amount added each month. By the end of the term the loan has been paid off in ful.
Interest only mortgage - the borrower only pays the interest on the loan. This means the borrower pays less per month but the capital remains outstanding, and usually gets paid with the sale of the property.
Endowment mortgage - no longer available in UK - interest only mortgages topper up with payment that is invested in an endowment policy. The idea is that the policy repays the capital the end of the term.
What is caveat emptor?
“Buyer beware” - a buyer take the property as they found it - the seller is generally under no obligation to give the buyer all the relevant information that buyer may require. It is the buyer solicitor job to investigate and report back to the client.
How does the solicitor properly investigate and mitigate the risks that comes with Caveat emptor.
- look at the title to the property - land registry official copies (registered) or deed (unregistered)
- ask the seller questions about property
- searches from various bodies
- a survey of the property
What are the exceptions of the rule of caveat emptor?
Misrepresentation - the seller cannot mislead the buer by concealing physical defects or answering questions dishonesty.
If the buyer has been induced by such statement to enter into the contract they will have remedies under common law and statue. In practice, the standard conditions fun’s that where there is an error or omission to be sufficient for misrepresentation.
Lantent encumbrances and title defects
- seller must disclose latent encumbrances or title defects that they are aware of or should be
- Laurent encumbrances are thing which cannot be disco red when inspecting the property.
What is the difference between deducing and investigating title?
The sellers solicitors deduces title - the process of proving ownership and the buyer investigate title
What does the property register do?
Describes the property and any rights benefiting the property - e.g Covenants or easements
States whether the property is freehold or leasehold,
Describes the property by address and references to the title plan
What do you need to consider when you have a right of way?
- Registration of the burden - to be enforceable - the burden must also be registered against the land over which the right of way passes
- Adequacy - may be legal or physical
- Maintenance - a person using a right of way is obliged in common law to contribute toward its maintenance.
- Adoption - if a private road is adopted then the frontages are required to pay the costs of bringing the road up to adoptable standard.
Proprietorship register - what does it do?
Gives the registered properietors (owners) name and address,
class of title and entires effecting ownership,
any restrictions on the registered properitors rights to sell,
if the registered proprietor gave an indemnity convening to the transfer on acquiring the property then it will appear as a numbered entry,
the price paid or stated value on the land if after before April 2000
What class of title is there?
Title absolute (freehold or leasehold) - best and most common class - indicated no issues in terms of the proprietors proof of ownership
Qualified title (freehold or lease hold) - is where there is a specific defect in the title e.g. a deed known to contain covenants or easements was missing on first registration.
Good leasehold title (leasehold only) - is granted when the leasehold cannot provide evidence of the landlord’s title.
Possessory title (freehold or leasehold) - is granted when the registered proprietor has shown that they have possession of the property but has no title deed or is claiming through adverse possession.
What should the buyer solicitor do if the property does not have title absolute?
- should report it to the client and explain what this means
-check the mortgage lender requirement as they may not accept inferior title classes - consider and advise on obtaining title indemnity insurance to cover risks
- consider the possibility of upgrading to title absolute if for example missing documents can be located
How will you know if property is beneficially owned?
Tenants in commons - the land registry will add a restriction to the proprietorship register
What should a solicitor do if there are beneficial owners?
- they buyer solicitor would need to be able to satisfy to the land registry that they hold both legal tile and beneficiary title. Thus, all beneficial owners should sign the contract and execute the transfer deed.
If dealing with a surviving JT - SJT signs and buyer solcitors sees certified copy of the deceased JT
If dealing with surviving TIC - the buyer solictor needs to see a certified copy of the death certificated and a second trustee need to be appointed to sign and execute the deed.
Charges register - what is it?
A register that lists rights burdening the property
What interests can be burdening the property
- mortgage in favour of the lender
- leases
- easements
- covenants (restrictive or positive)
How do you register a mortgage
A legal mortgage must be created by deed.
It must be entered in the charges register other the lender will not have a legal interest.
Some lenders require a restriction on the proprietorship register
What will a mortgage entry do on the proprietorship register?
Proprietorship register - restriction will prevent the mortgage being sold.
How do you deduce title in unregistered land?
- by examining the bundle of deeds and docs for the property - identify which docs are relevant and list them in the epitome of title - copies of the list docs are provided to the buyer solicitors.
- most important doc to identify is root of title
What is root of title? What are the requirements to qualify as a root of title
Root of title means the deed can be relied upon as proving the title.
- Must be date more than 15 years ago and date before the 1 December 1990.
- Deals with both the legal and beneficial title to the property.
- Adequately describe the land being converted
- Casts no doubt on the sellers title
What is chain of title
Establishes a chain of title from the root of title to the seller
How do you check how a beneficial interest in unregistered land is held?
Joint tenants if -
1. The conveyance form the the seller to the buyer state that the seller to the buyer state that the seller is beneficially entitled to the whole of the property.
2. There is n memorandum of severance
3. There is no bankruptcy order
The surviving JT should provide a death certificate
Tennants in common
- if the above conditions are not met - then a second trustee should be appointed
Where do you check whether there is a land charge in unregistered land?
Central Land charges register
Where do you check whether there is a land charge in registered land?
charges register
when will covenants be binding on unregistered land?
positive covenants - will only bind unregistered land if there is a chain of indemnity covenants. Buyer solicitor should check each deed in the chain. you can not register positive covenants in unregistered land.
restrictive covenants - will only bind unregistered land if the burden is registered a d iii Land charge.
Unknown covenants may arise from missing deeds.
what other interests in unregistered land can be registered?
equitable easements as d (iii) land charges
estate contract as c (iv) land charged
What is a report on title?
A report on title is the report in which a solicitor reports to its client on the investigation of title, search results and replies to enquires. The report will identify:
- material facts of the property
- issues and complications
- solutions available
What are the typical contents of a report of title?
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
7. Matters burdening the Property
8. Search results
9. Replies to enquiries
10. Planning and building regulations
11. Insurance
12. Stamp Duty Land Tax
13. Conclusion
What is the scope of review and limitation on liability regarding the report of title?
The report of title should be based on the results from research of the property and documents BUT the solicitor is not liable if the report does not identify an issue that should of been revealed by a search but wasn’t.
The report should set put limitations to the solicitor’s liability.
CCS 6.4 requires that a solicitor inform their client fully of material facts to their transaction
CCS 8.6 requires that a solicitor give their client information in a way that they can understand
Who should carry out a search and when shall it be done?
Usually carried out by the buyer’s solicitor
Seller’s solicitor might carry out searches, for example, if dividing land in plots to different buvers
Lender’s solicitor might carry out searches, particularly for a remortgage with no associated purchase
Searches usually submitted as early as possible, as some searches can take several weeks
What are the 5 standard searches?
- Enquires of the local authority (COG29) - the replies will reveal information about the property and immediate surroundings such as planning consents and building regs
- Local land charges Search (LLC1) - is a search of the local authority register of local land charges that reveals matters such as whether there is a tree preservation order, or planning permission or if it is a listed building.
- Drainage and water enquires - to the relevant water company of the area.
- Desktop environmental search - based on historical records. Will indicate whether the property has been used for potentially contaminative land uses (that you would be liable to clean up). likelihood of flooding and industrial land uses within 250 meters of the property.
- Chancel repair search - if the search shows potential liability then get indemnity insurance.
what searches shall be done depending on type of title or seller?
- Central Land charges search for unregistered land.
- Index map search - Where the property is unregistered, or comprises more than one title (registered or unregistered) or the registered title refers to mineral rights. The index map search shows the extent of registered titles and unregistered land within the area searched. It does not show ownership, and the official copies must be ordered if this information is required.
- companies search when seller is a company.
- Bankruptcy search - when property is not at its full market value
What optional searches can you do?
- CON290
- Highway search - CON29 shows whether there the roads of the property are adopted highways but where there is any doubt or for commercial properties - complete highways search.
- Coal Mining search - When property falls within an area that could be subject to coal mining. The search identifies the risk of subsidence, and whether any compensation has already been paid.
- Cheshire salt - When property falls within an area that could be subject to brine
- Tin, clary and limestone
- Environmental Phase 1 Survey - This is more detailed than the standard desktop environmental search and includes a site inspection.
- Environmental Phase 2 Survey - This will be taken where Phase 1 study indicates risk of contamination. Soil/water samples are tested to indicate whether there is contamination or not.
- Flood search - Desktop flooding search goes into more detail than desktop environmental search.
- Utility providers - Where property is a new development or a site for development. Checks that the property has the benefit of utility connections (electricity, gas, telecom, broadband, etc)
- Railways - Where a railway passes near the property or property may be within proximity of proposed railway. There is no standard railway search, but specific enquiries may be made of Network Rail or the relevant railway company (London Underground, Crossrail, HS2, etc) about such issues as access rights across the property.
- Waterways - Where property has a waterway (river or canal) passing through or next to it. Search shows liability for maintenance of river bank or canal, rights of way for banks and tow paths, drainage and fishing rights, and owner’s liability for flooding (but do not use to assess flood risk).
When is planning permission needed? What are the exceptions
Panning permission is needed wheneere there is development on land, unless:
- the Building works only affect the interior of the building
- the building works do not materially affect the external appearance of the building
- the change of use falls within the same class
- If it falls into the GDPO exceptions.
What are the use classes?
B2 - Genreral industrial
C1 - Hotels
C2 - Residential institutions
C3 - dwellings (residential properties)
E - Commercial, Business and Services (wide use class) - including retail, goods, food and professional services
F1 - learning and non residential institutions
F2 - Local community
Sui generis - any uses that dont fall within a class.
Breakdown the General permitted development order (GDPO)?
The GDPO lists permitted developments that don’t need planning permission. However, the GDPO can be excluded or amended by the local authority.
Therefore an enquiry should be made to the local authority whether the GDPO has been excluded or amended. If so, you would need to apply for planning permission.
if unsure whether the development falls within GDPO - apply for a certificate of lawfulness - confirms works does not constitute as a development or if it does, it falls within the GDPO.
Breakdown listed buildings and their regard to planning permission.
Listed buildings are of special architectural or historic interest.
Grade I listed buildings are buildings of exceptional interest (eg, Tower Bridge)
Grade II*listed buildings are particularly important buildings of more than special interest (eg, Battersea Power Station)
Grade II listed buildings are of special interest (eg, Adelphi Hotel, Liverpool)
Listed building consent is needed to demolish, alter or extend a building.
It is a separate requirement from planning permission, and may be necessary even where planning permission isn’t, such as internal alterations.
Various matters in the GDPO does not apply to listed buildings.
Breakdown conservation areas and their regard to planning permission.
Conservation areas are areas of special historic or architectural interest, the character or appearance of which it is desirable to preserve or enhance.
The local authority is under a duty to designate conservation areas within its locality.
Some effects of a conservation area –
*The GPDO will be restricted, so changes to external appearance may require planning permission.
* In England, planning permission is needed to demolish an unlisted building within a conservation area.
* In Wales, conservation area consent is needed to demolish an unlisted building within a conservation area (conservation area consent in England was abolished in 2013)
* Consent is needed to cut back or cut down trees
What are building regulations and when do you need them?
The Building Regulations 2010 (SI 2010/2214) (“BR2010”) applies to “building work” which includes:
- erection or extension of a building
- installation or extension of a service or fitting that is controlled under the Building Regulations (for example, windows, boilers)
- work required where there is a material change of use of the whole building
Building Regulations regulate issues that affect health and safety, such as the structural integrity of the building, fire escape, water supply, stairways, etc
What do you need to do regarding building regulations?
Before carrying out work covered by the regulations, building regulations consent is needed.
The work may be inspected by a building control inspector, who will issue a building regulations certificate of compliance if the work is in accordance with building regulations.
Self-certification schemes exist for certain types of work.
What is a breach of planning permission?
A breach of planning permission is when:
1. development has taken place without the planning permission or a condition OR
2. limitation of planning permission has been breached?
.
What are the local authority’s options for a breach of planning permission?
1) Enforcement notice
Local authority gives 28 days’ notice that:
- land must be restored to condition it was in before unauthorised development; or
- comply with any conditions or limitations imposed by planning permission
After 28 days, land owner may be fined, and the local authority can enter the land to carry out the work, recovering its expenses from the land owner
2) Breach of condition notice
Similar to enforcement notice, but only concerned with breach of conditions or limitations to planning permission.
3) Stop notice
Local authority can serve a stop notice only after serving an enforcement notice – requires that specified activity (for example, an unauthorised use) to stop immediately
4) Injunction
Local authority can apply to court for an injunction, but it is discretionary, and local authority needs to show good reason
What are the enforcement time limits?
The local authority must take enforcement action within the following time limits:
4 years
- Building works – starting with the date on which the building works were “substantially completed”
Change of use to single dwelling house – starts with the date the use was begun
10 years
- Other changes of use
- Breach of planning condition
Where the time limit has expired, the local authority can apply to the magistrates court for a planning enforcement order.
What are the local authority’s options for a breach of Building regulations?
1) Prosecution
Local authority has six months after discovering breach to prosecute the person responsible (builder, installer or main contractor) for the breach in the Magistrates’ Court.
Unlimited fines may be imposed.
Prosecution may take place up to two years after completion of the building work.
2) Enforcement notice
Local authority has one year after completion of the building work to serve an enforcement notice. Gives the land owner 28 days to alter or remove the work. If the land owner fails to comply, the local authority can undertake the work at the land owner’s expense.
3) Injunction
Local authority can apply to court for an injunction. If the work is unsafe, then there is no time limit.
What could the buyer solicitor do upon discovering a breach of planning or building regulations?
- Withdraw from transaction
- Invite seller to regularise matters before completion, whether by removing/altering work, or further paperwork. This may need to be a term of the contract on exchange.
- Obtain indemnity insurance (usually at seller’s expense) for breaches of planning or building regulations. However, only covers financial loss for enforcement.
- For breaches of building regulations, buyer should be advised of health and safety risk, and policy will not cover claims for personal injury or death.
- In some circumstances, seller may be able to obtain:
* retrospective planning permission for development;
* regularisation certificate for works that did not have building regulations approval but otherwise comply.
What are pre-contract enquiries?
Enquiries to the seller for information regarding the property. This helps to assess and manage risk.
What are the types of enquiries are there and what method could be used?
Commercial
Solicitors usually use the Commercial Property Standard Enquiries (CPSE), and may add enquiries specific to the transaction.
Residential
If the parties adopt the Law Society Conveyancing Protocol, enquiries usually use the relevant TransAction form.
Under the protocol, the buyer’s solicitor should only add specific enquiries in limited circumstances.
What are the forms for residential property - pre contract enquires?
TA6 Property information form - Always used.
Covers such matters as:
* boundaries
* rights benefiting and burdening the property
* disputes, complaints and notices
* alterations
* planning and building regulations
* occupiers
* services and utilities
* energy efficiency
TA10 Fittings and contents form - Always used.
* Identifies any fittings and contents included or excluded in the sale.
* Also identifies those fittings or contents that the buyer may buy in addition to the property.
TA7 Leasehold information form
* Used where the property is a long leasehold (eg, a flat on a 99 year lease)
TA8 New home information form
* used where the property has been newly built
What if the answer to a pre-contract enquiry is incorrect?
Could be liable for misrepresentation - - A misrepresentation is when the seller misrepresents a fact (not an opinion). If the buyer relies upon the misrepresentation and suffers loss, the buyer could have an action against the seller in misrepresentation.
The seller cannot deliberately mislead the buyer by concealing physical defects or answering enquiries dishonestly.
A seller must take care if answering a question ‘not so far as the seller is aware’ as this implies that the seller has made reasonable investigations and has no actual knowledge of any defect. The seller should check its records and make reasonable enquiries. If the seller is unable to make such investigations, the seller should state this in their reply.
Remedies for misrepresentation are rescission or damages.
Most commercial and residential property contracts include standard conditions which limit the buyer’s ability to rescind the contract: - These provisions are in 7.1.1 of the Standard Conditions of Sale (Fifth Edition) for residential contracts and 10.1 of the Standard Commmercial Property Conditions (Third Edition) for commercial contracts. Thus if unamended, they apply.
What is the law society conveyancing protocol?
Protocols used in conveyancing to ensure that all clients are treated fairly and the process is transparent in order for efficiency and reduction of wasted time and costs.
Give an overview of the law society conveyancing protocol for residential conveyancing?
- There should be transparency
- Buyer’s solicitor should only make enquiries that are essential to act in their client’s best interests
The seller’s solicitor should confirm and update, where necessary, replies to enquiries if completed more than two months earlier.
when can a breach of the law society conveyancing protocol arise and what are the consequences?
A solicitor may breach the Protocol if they:
- use non-Protocol ‘standard’ enquiries indiscriminately
- raise enquiries that seek the seller’s opinion rather than fact
Note - The seller’s solicitor does not have to deal with any enquiries that do not comply with the Protocol
If a solicitor breaches the Protocol, then the Law Society may require an explanation, potentially leading to their being monitored and even removed from membership of the Conveyancing Quality Scheme.
Can a solicitor work for both the lender and buyer of the property?
Yes.
A solicitor working for a lender and buyer will not have a conflict of interest as the parties have a substantially common interest (Clear common purpose and a strong consensus of how it will achieved).
What are the 4 relevant lending documents?
- The mortgage offer (Residential)
A formal letter that set out the terms and conditions of the loan. - A facility letter (Commerical)
A formal letter that set out the terms and conditions of the loan. - A certificate of title
A document in which a solicitor certifies that the title to the property is satisfactory for lending purposes.
The industry standard is the City of London Law Society (CLLS) Certificate of Title:
- The format of the certificate is a series of statements that would be given if the property title is in perfect order. The solicitor completing the certificate must give a disclosure after a statement if any of these statements is incorrect.
- The lender will rely on the solicitor’s certificate, and will be able to sue if there are any material errors or omissions.
4) The legal charge (or mortgage deed)
Used to provide the lender with security over the property, and will give the lender the right to repossess and sell the property. Registered at the Land Registry.
What are the differences in terms of licences for assignment and underletting?
What are the statutory ground when a landlord can oppose a continuation of the lease - section 25
