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SQE2 > Property > Flashcards

Property Flashcards

1
Q
  1. DIFFERENT TYPES OF TRANSACTION
A
  1. The freehold estate in a residential or commercial property may be sold.
  2. Lease interests in residential and commercial property may also be granted.
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2
Q

2.1 PRELIMINARY MATTERS – STAGE 1

  1. Once a solicitor is instructed in a conveyancing transaction they should:
A

i. Send a client care letter
ii. Obtain appropriate identification documentation (passport, driving licence)
iii. Carry out due diligence (credit checks, Anti-Money Laundering – AML)

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3
Q

2.2 PRELIMINARY MATTERS – STAGE 1

Acting for Buyer
Acting for Seller

A

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

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4
Q

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

A

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

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5
Q

2.4 PRELIMINARY MATTERS – STAGE 1

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

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

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6
Q

2.5 PRELIMINARY MATTERS – STAGE 1

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

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.

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7
Q

2.6 PRELIMINARY MATTERS – STAGE 1

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

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

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8
Q

2.7 PRELIMINARY MATTERS – STAGE 1

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

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.

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9
Q

3.1 STARTING A CONVEYANCING TRANSACTION

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

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

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10
Q

3.3 STARTING A CONVEYANCING TRANSACTION

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

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.

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11
Q
A
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12
Q
A
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13
Q

12.1 SDLT

deadline to submit

A
  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)

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14
Q

12.2 SDLT

is based on…

A

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

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15
Q

12.3 SDLT

exemptions from SDLT

A

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

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16
Q

12.4 SDLT

tax rates and thresholds

A

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

17
Q

12.5 SDLT

premium for additional property

A

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.

18
Q

12.6 SDLT

SDLT is chargeable on the grant of a new lease.

A

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?

19
Q

12.7 SDLT

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

A

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).

20
Q

12.8 SDLT

Linked transactions

A

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).

21
Q

02.01
Property
Taking Instructions

A
  1. PARTICULARS OF SALE
  2. FINANCES
  3. SURVEY
  4. PROPERTY SPECIFICS
  5. NEXT STEPS
22
Q

02.02
Property
Existing Restrictive Covenants

A
  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.
23
Q

02.03
Property
Existing Positive Covenants

A

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

24
Q

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

A

= 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.

25
Q

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

A

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?

26
Q

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)

A

(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)

27
Q

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)

A

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. **

28
Q

PFA 2 - Boundary Disputes

5 scenarios

A
  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
29
Q

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

A
  • 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.

SQE2 (6 decks)

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