Property

Question 1

1. DIFFERENT TYPES OF TRANSACTION

Answer 1

1. Freehold estate in a residential or commercial property may be sold.
2. Lease interests in residential and commercial property may also be granted.

Question 2

2.2 PRELIMINARY MATTERS – STAGE 1

iv. Acting for Buyer

Answer 2

iv. ACTING FOR BUYER
i. Advise buyer to instruct a surveyor to carry out a physical inspection of the property to identify any structural problems or problems that might affect value.

Question 3

2.2 PRELIMINARY MATTERS – STAGE 1

v. Acting for Seller

Answer 3

v. ACTING FOR SELLER
i. Advise seller re CGT (usually none is owed in residential transaction due to Principal Private Residence Relief)

Question 4

2.3 PRELIMINARY MATTERS – STAGE 1
2. Conveyancing transactions depend on solicitors giving undertakings:
i. A solicitor who breaches an undertaking may be:

Answer 4

i. Subject to an action for specific performance = order to comply
ii. Subject to disciplinary action or sanctions by the SRA

Question 5

2.4 PRELIMINARY MATTERS – STAGE 1

3. A solicitor may represent the buyer and lender if:

Answer 5

i. Lender is an institutional lender (not borrower’s friend or relative).
ii. The standard certificate of title is provided
iii. Solicitor maintains client confidentiality between the two

Question 6

2.5 PRELIMINARY MATTERS – STAGE 1

4. A solicitor may not represent both the buyer and seller:

Answer 6

i. even if they agree all of the terms of the instruction and contract because there would be a conflict of interest as the parties’ interests are not aligned.

Question 7

2.6 PRELIMINARY MATTERS – STAGE 1

5. A solicitor may represent 2 buyers or 2 sellers who are buying together:

Answer 7

i. Provided that the parties agree on the specifics of sale and there is no conflict of interest

Question 8

2.7 PRELIMINARY MATTERS – STAGE 1

6. If the solicitor is acting for more than one buyer:

Answer 8

i. the buyer should give co-ownership advice:
ii. + if the buyers want to hold the equitable beneficial estate as tenants in common = advise the buyers to enter into a declaration of trust.

Question 9

3.1 STARTING A CONVEYANCING TRANSACTION

1. A seller of property must provide a valid Energy Performance Certificate.

Answer 9

i. Includes information about the property’s energy use.
ii. Valid for 10 years

Question 10

3.3 STARTING A CONVEYANCING TRANSACTION

3. If an existing tenant asks to assign their commercial lease:

Answer 10

i. The lease will require landlord’s consent to assign
ii. = Is assignee of good standing?
iii. Landlord’s solicitor will draft a license to assign
iv. To be signed by all parties to create privity of contract between assignee and landlord
v. = to ensure that the **lease is enforceable between landlord and assignee.

Question 13

12.1 SDLT

deadline to submit

Answer 13

1. A person who buys or leases land or buildings in the UK must send a Stamp Duty Land tax (SDLT) return within 14 calendar days of completion irrespective of whether any SDLT is actually due.

i. If SDLT is owed, the buyer must pay within same 14-days
ii. Interest may be charged if SDLT is paid late
iii. Fixed penalties may apply if the SDLT form is submitted late (even if no SDLT is actually payable)

Question 14

12.2 SDLT

is based on…

Answer 14

ii. SDLT is based on the purchase price of land + any other consideration
(e.g. work done in exchange for the property).

Question 15

12.3 SDLT

exemptions from SDLT

Answer 15

The following transactions are exempt from SDLT:
i. property given as a gift and
ii. property transferred to a spouse upon divorce

Question 16

12.4 SDLT

tax rates and thresholds

Answer 16

Up to £250,000 @ 0%
£250,001 to £925,000 @ 5%
£925,001 to £1.5 million @ 10%
Over 1.5 million @ 12%

Question 17

12.5 SDLT

premium for additional property

Answer 17

If a person already owns a residential property and buys an additional residential property an additional 3% is added to each residential tax band:
i. e.g. 0% is increased to 3%, 5% is increased to 8%.
ii. These higher rates are not charged for transactions under £40,000, and they do not apply if the new property replaces the purchases only or main residence.

Question 18

12.6 SDLT

SDLT is chargeable on the grant of a new lease.

Answer 18

i. The tax may be based on either or both of any lease premium paid and the net present value of the total rent payable over the entire lease term.

Q - What determines what it’s charged on?

Question 19

12.7 SDLT

Tax relief is available to first-time home buyers
Up to what level of purchase price

Answer 19

i. provided the purchase price does not exceed £625,000.
ii. If applicable buyer pays:
- 0% on the first £425,000
- 5% from £425,000 to £625,000
iii. If purchase price exceeds £625,000 no relief is given (= the usual rates apply).

Question 20

12.8 SDLT

Linked transactions

Answer 20

When there are several linked transactions, the relevant consideration is the total of the chargeable considerations for each transaction
= more SDLT may be payable than if SDLT was charged on the individual transactions.

is this because different thresholds, whereas if you average you might lower the tax burden?

However 2 types of relief available:
i. If a person buys more than one residential property through a linked transaction (e.g. 1 building with 4 flats) they may opt to pay tax based on the mean consideration rather than on the entire consideration
ii. If a person buys 6 or more residential properties in a single transaction they can choose to apply the non-residential property rates (which are lower than the residential rates).

Question 21

02.01
Property
Taking Instructions

Answer 21

1. PARTICULARS OF SALE
2. FINANCES
3. SURVEY
4. PROPERTY SPECIFICS
5. NEXT STEPS

Question 22

02.02
Property
Existing Restrictive Covenants

Answer 22

1. Restrictive covenants on a property title should be assumed to be valid unless proven otherwise.
2. Inform the buyer of any restrictive covenants so they can consider how they may impact their use of the property.
3. Options
   i. Walk away
   ii. Buy it and live with it.
   iii. Approaching the beneficiary for consent
   i. Existing breach – Seller should pay
   ii. New breach – Buyer should pay
   iv. If you can’t identify the beneficiary = take out insurance.
   v. Going to the lands tribunal = only for high value redevelopments not normal domestic purchases.

Question 23

02.03
Property
Existing Positive Covenants

Answer 23

Positive covenants cannot be enforced directly
= they are enforced through a chain of indemnities
* Check whether current owner gave an indemnity when they purchased the property:
o Unregistered land = on the conveyance
o Registered land = on the title.
* Positive covenants usually refer to maintenance so:
o Buyers should have a surveyor check:
- item is in a good condition or not
+ identify repair costs.
* Negotiate:
o Either get the seller to fix issues before purchase, or
o Negotiate reduction in the purchase price

Question 24

02.04.1
Property
1. If there is an existing easement over the property that your client is buying:

Answer 24

= tell client where it goes and what it relates to:
o e.g. tell client that the next-door neighbour has a right to use the driveway / sewage pipe under the land
o = they know where it is and don’t dig a big hole in it.
o = they know that the neighbour has the right to use the driveway so they can’t stop the neighbour from doing it.

Question 25

02.04.2
Property
2. If your client has the benefit of an easement across some other property
e.g. a right of way:

Answer 25

o Are they adequate i.e. do they cover everything that the client needs?
o Is it subject to a contribution towards maintenance? If so, tell the client.
o Like any physical thing, is it in a good state of repair?
o How much will it cost to repair?
o Who should pay? In full or contribution from seller and buyer?
o Does the client want to negotiate a reduction in price?
o Does the client want to proceed?

Question 26

02.04.3.2
Property
3. if your client needs the benefit of an easement across another property, but doesn’t currently have it:
(from a 3rd party)

Answer 26

(If you need an easement from somebody else (not the seller):
- check that you’ll be able to get that easement from that person before you exchange contracts.
= Make sure that you arrange before exchange of contracts (otherwise the third party will have you over a barrel)

Question 27

02.04.3.1
Property
3. if your client needs the benefit of an easement across another property, but doesn’t currently have it:
(defective title seller)

Answer 27

if it’s a defective title (from the seller):
e.g. the property drains to a septic tank on somebody else’s land, and there’s no easement,
= Ask the seller to sort it out
**= Make sure that any easements that are necessary are actually contained in the transfer. **

Question 28

PFA 2 - Boundary Disputes

5 scenarios

Answer 28

1. Conduct a search of the index map to identify whether the land is:
   i. Registered and who owns it:
   i. Owned by the seller = seller to provide official copies + update contract
   ii. Owned by sb else = seller to purchase OR buyer purchase + reduce purchase price
   ii. Or if it is unregistered:
   i. Owned by seller = seller to deduce title + have a separate conveyance for first registration.
   ii. Owned by sb else = seller to identify who + purchase OR buyer purchase
   iii. Or has buyer acquired by adverse possession?
   i. Registered = 10 years
   ii. Unregistered = 12 years
   iii. = Seller to register at HMLR based on their adverse possession.
   +iv. Must keep mortgage lender notified

Question 29

Week 4 – 24/6/2024 - 04.09
Property – Co-owners

Answer 29

• When advising joint buyers, determine if they will hold the property as beneficial joint tenants or tenants in common, as this affects inheritance and ownership.
• If the owners are tenants in common, discuss what happens when one owner dies - whether the other gets the right to live in the property or if it is sold.
• When buying from joint owners, ensure all registered proprietors sign the contract and transfer, or appoint a second trustee to overreach any beneficial interests.
• Require a death certificate if one owner has died, and signatures from the remaining tenants in common to complete the sale.