Property Flashcards
FSMA regulation regarding mortgages
Giving advice on a regulated mortgage contract is a regulated contract which needs FSMA authorisation
Do not need authorisation for generic advice about mortgages, but arranging, advising on, or arranging the execution of a mortgage are regulated activities
–> otherwise look if s327 exception applies
mortgage types
repayment
interest
sharia
in how many days is SDLT/LTT payable
14d for SDLT
30d for LTT
first time residential buyer tax
SLDT is discounted if purchase price is under 625k
If selling a property, may be exempt from CGT if it was their main residence and not used for business at any part and garden under half hectare
purchase of property interview checklist
1) financing (mortgage) (act for both?)
2) enquiries needed (remember if old factory may be contamination = environment)
a) any private roads/waterways? who owns, will it go public, costs to contirbute?
3) will VAT be taxed? what can be done
4) are there tenants in occupation, any incumbrance that sticks out and slows down conveyance
5) how do you want equitable title to be held
is it dead set that cant act for borrower and lender in commercial transaction?
not dead set but depends mostly if its on standard terms or certificate
- explain that if everythin’s agreed; both parties likely to have common interest
- but easy for disagreement to start and in that case would have to stop acting for lender
what are the criteria for root of title to be valid
1) show legal and equitable interest (whereas and beneficial interest respectively)
2) must have a recognisable description of land
3) root must do nothing to cast doubt on title (proper execution + stamp duty paid)
4) should be at least 15 years old
- fifth criteria not mandatory but ideal for transaction to be with 3rd party who gives consideration
what to do when you recieve the epitome of title
make sure the chain of ownership is unbroken (legal estate always transferred by deed, if PRs responsible for sale there needs to be grant of probate available)
+ each doc must have description of land
where to find artcle 4
LLC1 search
what does the local search show
LLC1: charges and restrictions imposed by the local authorities, conservation areas and TPOs
CON29: planning permission, development restrictions, land contamination, coal authority searches and road repair liability
CON290: common rights and hedgerow notices
what happens if a road is not public and next to your prop
no automatic right to use - need to check if there’s easement or make private arrangemens for use (ask seller what they used to do)
what’s the point of a TPO
criminal offence to remove a tree that is subject to it
what does full title guarantee mean
seller has right to dispose of land + will do all reasonably can to transfer title + land is being sold free from incumbrances other than those the seller does not know of and sale is already subject to
what does sale with limited title mean
similar to full title but seller covenants to not have encumbered the property and not know of any one else doing it since last sale (covenant)
wording if you want to alter deposit
X% above BASE LENDING RATE, changed from time to time
!! if you say X% above law society…. that would mean like 8%
what to do with standard condition 5 (completion time)
remove it if completion is at the standard 2pm time (because provides for NON standard time)
what to do with special condition 6
says no reliance should be placed on representations not in writing - be careful if buyer is particulalry relying on something that was said to him
what’s special condition 7 important for
if theres a 3rd party right (like FLA) or someone living there atm- states that non-owning adult occupier agree to the sale and to give vacant possession and release of any rights they may have
what do you write in ‘specified incumbrances’ in 1ts page of contrac
the main matters that will bind buyer (eg mine and mineral, indemnity cov)
thing to remember if there is a content price
need to add special condition about it
rule for deduction of title in underletting/sublease
reg. freehold: cannot deduce but can simply look at Open Registry like normal title investigation
headlease with absolute title: no need to look at freehold (just need lease + official copies)
unreg. headlease: cannot deduce but can ask for pervious 15y assignments
–> if sublease is over 7y, that’s the only time can ask to deduce
rule for deduction of title in assignment
general rule is that you must always deduce title from leasehold. question is whether you also need to deduce from freehold?
assignor’s lease with absolute title: no need to deduce freehold
assignor’s lease good title: reg. land simply look at open registry
unreg. land: ask for epitome/root of title
assignor’s lease is unreg: entitled to call for lease and all assignments in past 15y but NO deduction of freehold title
how does tenant get absolute title when registering lease
when the freehold is registered
(otherwise can obviously still register but probably lesser title - good title = satisfied leasehold is sound but no access to superior title)
what does it mean to be registered with good title?
that lease is sound but no superior title
–> means registrar does not guarantee the lease against defects in the freehold, or that the freeholder has the right to grant lease
why is it important to add special consideration for content price paid separately
because SDLT is not paid on that consideration
wording to appoint 2nd trustee
For the purpose of giving valid receipt for purchase price, the seller will appoint another person to act as second trustee in the sale of the property and procures that person to enter into the transfer
The second trustee will sell with no title guarantee
wording if seller wants to remove a fixture
the X (identify fixture) shall be removed by the seller prior to the sale
the seller shall be liable for the price of removal
The seller shall not be required to make good any damage caused by the removal
wording if there’s a missing covenant (or something the seller will give indemntiy to)
the property is sold subject to covenants in a (explain conveyance where covenant comes from). The buyer accepts that neither the original conveyance nor a certified copy or examined abstract thereof can be produced and shall raise no objection or requisitioning respect thereof.
the seller sells with no title guarantee in this respect
prior to completion, the seller shall make necessary payments (will at their own expense) to ensure Defective Title Insurance Policy in respect of the missing covenant located on entry 1 of the Charges Register on the Official Copies from Title NG12345 is adjusted to cover the current purchase price of the Property of £440,000. (and will hand over the policy to the buyer at completion)
wording in TR1 if buyers are tenants in common in unequal shares
The Transferee is more than one person and they are to hold the property on trust for themselves alone as tenants in common in the following unequal shares:
A) X to X
C) Y to Y
what to do in TR1 if buyer entering indemnity chain
add in the additional provision box
the transferee agrees with the transferor to:
a) (by way of indemnity only) observe and perform the covenant in Entry XOXO of the Charges Register of Title XXX so far as they are subsisting and capable of taking effect; and
b) to indemnify the transferor against any liability incurred for breach or non-observance of the Covenants occurring after this date of transfer
who can witness the TR1
anyone but its preferable that its not someone who is also part of the transaction
special quirk to remember when buyer is company (in TR1)
make sure that you put the registered office address in the ‘transferee intended address for service’ box and not their new property address (as you normally would in a residential transaction)
what do you add in TR1 when its assignment
The transferee covenants to indemnify the transferor against any liability for any future breach of the tenant’s covenants in the Lease and to perform such covenants from and after the date of this transfer. (this is AGA)
when is completion (typically)
20 working days after exchange
when does the seller’s signature must be witnessed in deed
if theyre an individual
(if theyre a company, normally do need 2 people anyway)
who executes the TR1 in assingment
the original tenant and the new tenant
NOT the landlord
pre-completion incumbrance search on both reg and unreg land
OS1 (or OS2) and K15 respectively
(for unreg land will get answers on K18)
how to check buyer’s solvency
in reg land need to do K16 form, in unreg land it will be shown on the K15
when does legal title pass
in unreg land on completion
in reg land when title is registered at land registry
post completion checklist
1) discharge seller’s mortgage (DS1 = buyer must apply for it to be removed, or e-DS1 = automatically removes it from register)
2) pay SDLT within 14 days
3) register the newt mortgage (at CH within 21d and at land registry within OS1 priorty period)
4) register new land owner (OS1 within prioty period, unreg land within 2 months)
whats the best repair covenant for your tenant client
‘Keep in repair/good condition and clean and tidy, except the Tenant shall not be required to put in a better state of condition than at the date this Lease was granted, as evidenced by the Schedule of conditions agreed and signed by both parties’
provisions to ensure relating to insurance clause in rent
- landlod reinstates it to its full value and covenants to complete any shortfall from its own funds
- rent suspension during period where property is not fit for occupation
- landlord can ask for insurance rent
- landlord covenants to use all proceeds from the insurance for the reinstatemnt of the property
- termination if property cannot be reinstated
drafting rent suspesion re insurance
‘If the Centre is damaged by an Insured Risk, payment of the Rent shall be suspended until the earlier of:
* the date on which the Centre has been reinstated so as to make the Property fit for occupation and use and accessible; and
* the date which is [three] years from and including the date on which the damage occurred.
covenant to use proceed of insurance for reinstatement drafting
‘the Landlord shall, subject to obtaining all necessary planning and other consents, use all use all insurance money received (other than for loss of rent) to reinstate the Centre. If the Landlord reasonably considers that it is impossible or impractical to reinstate the Centre, the Landlord may terminate this lease by giving notice to the Tenant whereupon any proceeds of the insurance shall belong to the Landlord / Landlord and Tenant proportionate to the values of the irrespective interest
thing that may be missing in clause about rent
apportionment of 1st instalment
relevant assumptions in open market rent
a) willing landlord and tenant
b) A tenancy of the whole
c) vacant possession
d) Without a fine or premium
e) that there is a rent review clause
f) that all the clauses of the lease are the same (except rent),
g) the length of the hypothetical lease will be specified
h) That the property is in a state wherein the tenant has complied with their obligations, and in a state of full restoration
However: if tenant wants greater protection:
The landlord has fully complied with its obligations under this lease unless that Landlord is in persistent and material breach of its obligations in this lease, the tenant has notified the landlord of the breaches, and the landlord has failed to remedy the breach within a reasonable time
things to be disregarded in open market rent review
a) no account given to the fact that it would be inconvenient for the tenant to relocate
b) any goodwill attached to the property by reason of any business carried out there by the tenant
c) Any effect to the rent attributable to the physical improvements to the property carried out by the tenant with all necessary consents and without obligations from the landlord.
what’s the special things about user covenants
no implied provision that upgrades it to fully qualified
if landlord consents, cannot increase rent as a condition!
what are common conditions for underletting/subletting
1st that undertenant is desirable commercially and financially
- underlease should mirror headlease
-annual rent should be at least as high
-rent must be reviewed at the same time - LTA must be excluded
- tenant must directly covenant to perform the tenant’s covenants excluding the covenant to pay rent
–> if conditions are breached, headlease will be at risk of forfeiture
who drafts a lease in subletting/assignment
landlord
whats the point of a licence to underlet
- formalises landlord consent (key otherwise headtenant will be in breach of alienation covenant
what does a licence to underlet include
- landlord’s consent
- direct covenant from tenant to landlord (to perform all covenants in lease aprt from rent BUT if the headtenant doesn’t pay rent, after 14 clear days the landlord can ask the undertenant to pay rent to them instead => direct covenant allows landlord to sue under tenant via privity of contract for breaches)
- agreement for headtenant to pay landlord’s costs
must a lease be made by deed
yes to be legal
is SDLT payable on lease (subletting also)
yes, on VAT inclusive amount of premium + rent
no SDLT if premium is under 150k (taxed at 0%)
is SDLT payable on assignment
usually not, but could be if the new tenant has paid a premium (will then be charged on premium only)
whats an upwards only open market rent review and how you know
when the rent to be payable is described as always the greater of the current rent and the market rent estimated