Property Flashcards
Describe the key elements and structure of freehold property transactions.
Freehold property transactions involve investigation of title, searches, contract preparation, exchange of contracts, and post-exchange activities.
What are the core knowledge areas of freehold real estate law and practice in the SQE2 Property Practice?
The core knowledge areas include investigation of registered and unregistered freehold titles, searches, contract preparation, exchange of contracts, and post-exchange activities.
How is the exchange of contracts typically conducted in freehold property transactions?
The exchange of contracts can be done in person, by post, or by phone using Law Society Formulas A, B, or C.
Define a Bona Fide Purchaser (BFP) in the context of property transactions.
A Bona Fide Purchaser is a buyer who purchases property in good faith, without notice of any defects in the seller’s title.
What are some key tasks performed by the buyer’s solicitor in the pre-contract stage of a freehold property transaction?
Tasks include ordering searches, raising queries with the seller, obtaining relevant transaction forms, considering surveys, confirming source of funds, and reviewing the contract.
How does the mutual signature of a contract impact a freehold property transaction?
Mutual signature of a contract makes the transaction legally binding between the buyer and the seller.
Describe the process of analysing an epitome of title and deducing ownership.
It involves tracing an unbroken chain of ownership back to a good root of title, meeting specific conditions like being at least 15 years old and dealing with the whole interest of the land.
Define Absolute title in the context of property ownership.
It is the strongest form of title indicating that the property is truly owned by the registered owner.
How can Qualified title be upgraded to Absolute title?
By providing missing documents/reservations, the Qualified title can be upgraded to Absolute title.
What are some common issues that could arise during a title investigation?
Defects in title such as missing deeds, title mistakes, or incomplete criteria for adverse possession can be problematic.
Do possessory title holders have clear ownership of the property?
No, possessory title holders are in occupation but the method of property acquisition is unclear.
Describe the steps involved in the completion stage of a property sale.
It includes the seller’s solicitor discharging the mortgage, transferring funds, executing the purchase deed, and ensuring mortgage redemption.
Describe the process of removing a notice unilaterally from the charges register.
Form UN4 is sent to Land Registry, who serves notice on beneficiary. If no objection within 15 business days, notice is removed. If objection persists, referral to land registry adjudicator may occur.
Define the purpose of pre-contract searches and enquiries in conveyancing.
Pre-contract searches and enquiries aim to gather essential information about the property to inform the buyer and ensure a smooth transaction, covering aspects like ownership, liabilities, restrictions, and potential issues.
How can failure to register easements by notice affect their enforceability in registered land?
Failure to register easements by notice can render them unenforceable, emphasizing the need to ensure the scope of easement is broad enough for the buyer’s intended use.
What is the significance of reporting to the client in the conveyancing process?
Reporting to the client ensures transparency and keeps them informed of the progress, findings, and any potential issues related to the property transaction.
Describe the importance of keeping the client up-to-date during the conveyancing process.
Keeping the client informed at regular intervals ensures transparency, allows for timely decision-making, and helps maintain a good client-solicitor relationship.
What are some essential searches that should be conducted in pre-contract searches and enquiries?
Essential searches include Land Registry searches, pre-contract enquiries form, local authority searches (LLC1 and CON29), CON29DW for water and sewerage assets, chancel repair search, and environmental search.
Describe the Law Society Conveyancing Protocol.
The Law Society Conveyancing Protocol provides guidelines for property transactions.
What is an interest-only mortgage?
An interest-only mortgage requires the borrower to pay only the interest and not the capital borrowed.
Define a fixed-rate mortgage.
A fixed-rate mortgage has an interest rate that remains constant for a specified period.
How does an offset mortgage work?
An offset mortgage links savings to reduce the amount of interest charged on the mortgage.
Do flexible mortgages allow borrowers to overpay or underpay the loan?
Yes, flexible mortgages allow borrowers to overpay or underpay the loan at certain intervals.
Describe a buy-to-let mortgage.
A buy-to-let mortgage is used for purchasing a property to be rented out rather than lived in.
Describe the purpose of special conditions in property transactions.
Special conditions are used to amend Standard Conditions and cover specific matters like encumbrances, tenancy, and additional repairs.
How is a deposit typically handled in property transactions upon exchange of contract?
A 10% deposit is usually paid by the buyer to the seller, and it can be held either as a stakeholder or by the seller’s solicitor as an agent.
Define stakeholder in the context of property transactions.
A stakeholder is a neutral party, often the seller’s solicitor, who holds the deposit on behalf of both the buyer and seller and cannot release it without consent from both parties.
How does the risk of the property transfer in a property transaction according to standard conditions?
The risk of the property passes to the buyer as of the contract date, requiring the buyer to insure the property.
What are the basics of VAT in property contracts?
Most property transactions are exempt from VAT, but leases and certain freehold transactions may be subject to VAT.
Describe the handling of insurance in property transactions according to the standard conditions.
The buyer is typically responsible for insuring the property, while the seller is not required to unless agreed upon. If the seller insures the property and damage occurs before completion, they must transfer the policy monies to the buyer.
Describe the timing for issuing a certificate of title to a lender.
The certificate of title should be completed and sent to the lender as soon as the completion date is known, typically at least the number of days of notice required by the lender before the funds can be released.
Define the certificate of title and its purpose in a property transaction.
The certificate of title confirms the validity of the title and is used to request the release of mortgage funds upon completion of a property transaction.
How can the exchange of contracts be carried out in a property transaction?
Exchange can be done in person, via post, or by telephone, following different formulas depending on the situation, such as Formula A, Formula B, or Formula C for chain transactions.
Describe the consequences of exchanging contracts in a property transaction.
Upon exchange, the beneficial interest of the property passes to the buyer while the seller retains the legal interest and acts as a trustee for the buyer, remaining in possession of the property.
What is the purpose of a transfer deed in a property transaction?
The transfer deed transfers ownership of a property and must be registered at the Land Registry to effectively transfer legal ownership to the buyer.
How are pre-completion searches conducted in a property transaction involving a mortgage?
The conveyancing solicitor follows standard instructions, including searches like a bankruptcy search (K16), as defined in the UK Finance Mortgage Lender’s Handbook, especially if the buyer is purchasing with a mortgage.
Define the methods of exchange in a property transaction.
Exchange can be done in person, via post, or by telephone, following different formulas like Formula A, Formula B, or Formula C for chain transactions.
Describe the pre-completion requirements for executing a transfer deed in a property transaction.
All parties must sign the prescribed form of transfer deed (e.g., TR1), with each signature witnessed by an independent witness who provides their signature, name, address, and occupation.
Describe the completion process in a real estate transaction.
Completion involves the buyer paying the balance of the purchase price, finalizing the deed, receiving keys and vacant possession.
What are the standard conditions regarding the completion date in a real estate contract?
Standard Conditions 6.1 typically set the completion date as 20 days after the contract date, with time not being of the essence unless a notice to complete is served.
How does the passing of title differ for registered and unregistered land in real estate transactions?
For registered land, title passes when registered at the Land Registry by the buyer’s solicitor, which can take a few weeks after completion. For unregistered land, title passes at completion.
Define the in-person method of completion in real estate transactions.
In-person completion involves a traditional meeting between the buyer’s and seller’s solicitors to finalize the transaction, transfer funds, and exchange necessary documents.
What are the post-completion steps typically carried out by the buyer’s solicitor in a real estate transaction?
Post-completion steps may include drafting the transfer deed, issuing requisitions, obtaining mortgage redemption figures, and preparing completion statements.
Describe the completion by post method in real estate transactions.
Completion by post is a preferred option for many transactions where the seller’s solicitors complete upon receiving the necessary funds, and final deeds and documents are sent to the buyer’s solicitor on the day of transfer.
Describe the remedies for delayed completion in a contract.
Remedies include common law damages, contractual compensation, and notice to complete.
What is the purpose of notice to complete in a contract?
Notice to complete is a mechanism to pressure a delayed party to complete the contract within a specified timeframe.
How is compensation for delay calculated in a contract?
Compensation is calculated at the daily contract rate, which can be agreed upon or based on the Law Society Interest Rate.
Define rescission in the context of a contract.
Rescission is the act of canceling a contract, where contractual compensation does not apply, and damages would need to be pursued.
Describe the consequences of failing to complete within the specified time in a contract.
If the buyer fails to complete, the seller can retain the deposit, claim damages, and resell the property. If the seller fails to complete, the buyer can seek specific performance or repayment of deposit and interest.
What documents/items need to be included when registering title on AP1 form within the priority period?
Documents/items include TR1 (TP1 for part of land), fee, DS1 (DS3 for part of land), new mortgage deed (if applicable), and MR01.
Describe the repair obligations in a lease agreement for landlords and tenants.
Landlords are usually responsible for structural repairs, shared parts, and the roof, while tenants are typically responsible for repairing the inside of the property.
What is the significance of amending the repair obligation from ‘to keep premises in repair’ to ‘to maintain the premises’ for tenants?
By amending the obligation, tenants are required to maintain the premises in the state they were taken on, rather than repairing them even if in poor condition.
Explain the importance of amending a clause that states repairs must be to the landlord’s satisfaction to refer to the surveyor’s satisfaction in a lease agreement.
This protects the tenant from potentially unreasonable repair standards set by the landlord.
Define the exclusions that should typically be included in the repair obligation of a lease agreement.
Exclusions should cover insured risks and fair wear and tear to avoid double compensation for the landlord and prevent tenants from being responsible for normal wear and tear.
Describe the general insurance requirements for landlords and tenants in a lease agreement.
Landlords are usually required to insure the property against risks and recover part of the premium from tenants, while tenants may request that insurance money be used for property reinstatement.
Explain the types of covenants related to alterations in lease agreements: absolute prohibition, qualified covenant, and fully qualified covenant.
Absolute prohibition prohibits tenants from making alterations, qualified covenant requires landlord consent, and fully qualified covenant allows alterations with reasonable landlord consent.
What does Section 3 of the LL and Tenancy Act 1927 provide for tenants regarding making improvements to a property with an absolute prohibition covenant?
It allows tenants to apply to court for authorization to make improvements despite the absolute prohibition in the lease.
Describe the legal implications of a qualified covenant in a lease agreement regarding alterations and the landlord’s consent.
A qualified covenant means the tenant can only make alterations with landlord consent, which can be withheld for any reason.
How does Section 19(2) of the LL and Tenancy Act 1927 impact covenants related to alterations in a lease agreement?
It upgrades alterations classified as improvements, from a qualified covenant to a fully qualified covenant, based on the tenant’s perspective.
Explain the absence of a legal obligation for landlords to provide a timely decision on alteration consents in a lease agreement.
Landlords are not legally required to make decisions promptly regarding tenant requests for alterations, as there is no specified timeframe for responding to such requests.
Describe the concept of rent review in leasehold properties.
Rent reviews in leasehold properties involve periodic increases in rent, typically at set intervals.
What are the three types of rent review in commercial leases?
The three types of rent review in commercial leases are open market, turnover, and stepped rent increases.
Define alienation in the context of leasing.
Alienation refers to the tenant transferring their interest in a lease through assigning or subletting.
How does the law regulate consent for transfer/sub-let of a lease in new commercial leases?
Section 19(1A) LTA 1927 allows landlords to stipulate circumstances where consent for transfer/sub-let may be refused without a reasonableness test.
What are the options for the term of a lease in terms of duration?
Leases can vary in length with no minimum or maximum term. Residential leases can range from very long leases of 999 years to commercial leases typically lasting 3-10 years.
Describe the registration requirement for leases exceeding a 7-year term.
Leases exceeding a 7-year term must be registered at the Land Registry to be legally recognized.
Describe the purpose of an agreement for lease in a real estate transaction.
It is a contract between a tenant and a landlord to agree on the terms of a future lease.
Define deduction of title in the context of leasing.
It refers to the process of verifying the landlord’s ownership rights before granting a lease, especially for leases of 7 years or more.
How are pre-contract enquiries and searches relevant in leasing?
They are essential to ensure that both parties have a clear understanding of the property’s status and any potential issues before finalizing the lease agreement.
Do both the landlord and the tenant need to agree on the lease terms before finalizing the lease?
Yes, both parties need to agree on the terms of the lease before it can be considered finalized.
Describe the role of the tenant’s solicitor in a leasing transaction involving a mortgaged property.
The tenant’s solicitor must check if the lender’s consent is required before the landlord can grant a lease on a mortgaged property.
What is the significance of having 2 copies of the lease prepared in a leasing transaction?
Having 2 copies ensures that both the landlord and the tenant have a signed copy of the lease for their records and reference.
Describe the privity of contract in lease assignment.
Privity contract exists between the outgoing tenant and the incoming tenant in a lease assignment due to the deed of assignment creating a contract between them.
What is privity of estate in a lease assignment?
Privity of estate in a lease assignment means that the landlord can sue on covenants that ‘touch and concern’ the land with the new tenant.
Define a licence to assign in the context of a lease transfer.
A licence to assign is a document signed by the landlord, outgoing tenant, and incoming tenant to create privity of contract in a lease assignment.
How are title deeds used in the assignment of a lease?
The assignee’s solicitor must obtain title deeds to review the existing lease details and the landlord’s reversion interest in the property.
What is the purpose of a deed of assignment in a lease transfer?
A deed of assignment is required to transfer a lease from one party to another in a lease assignment.
Describe the concept of authorised guarantee agreements (AGA) in lease assignments.
Authorised guarantee agreements are signed by outgoing tenants to remain liable for new tenants; once the new tenant assigns the lease, the original outgoing tenant is no longer liable.
This Authorized Guarantee Agreement (AGA) is made as of [Date], by and between [Landlord’s Name] (the “Landlord”) and [Original Tenant’s Name] (the “Guarantor”).
WHEREAS, the Landlord and [Assignee’s Name] (the “Assignee”) have entered into a lease agreement dated [Lease Date] (the “Lease”), concerning the premises located at [Property Address].
AND WHEREAS, the Guarantor has agreed to guarantee the performance by the Assignee of its obligations under the Lease.
NOW, THEREFORE, the parties agree as follows:
- The Guarantor guarantees to the Landlord the performance by the Assignee of all obligations, covenants, and conditions contained in the Lease.
- This guarantee shall remain in effect until the Assignee lawfully assigns the Lease to another party, and the Landlord provides written consent to such assignment.
- The Guarantor’s liability under this AGA shall be co-extensive with that of the Assignee.
- This AGA shall be governed by and construed in accordance with the laws of [Jurisdiction].
Describe the purpose of a licence to assign/underlet in a lease agreement.
A licence to assign/underlet is the landlord’s permission for a tenant to assign or underlet a lease to a new tenant.
How is privity of contract addressed in a licence to assign/underlet?
A licence to assign/underlet creates privity of contract between the landlord and the new tenant, enabling them to pursue each other for any breaches.
Define the key provisions typically included in a licence to assign.
Key provisions in a licence to assign may include clarifying that the landlord’s consent is specific to the assignment, the assignee agreeing to lease covenants, and the tenant agreeing to pay costs.
What is the purpose of a licence to sub-let in a lease agreement?
A licence to sub-let allows a tenant to sub-let part of the leased property to a sub-tenant with the landlord’s permission.
Describe the liability on covenants in leases granted before 1 January 1996.
In leases granted before 1 January 1996, the original tenant remains liable for breaches of covenants even after assigning the lease to a new tenant.
How does a licence to assign differ from an authorised guarantee agreement (AGA)?
A licence to assign grants permission for a tenant to assign the lease, while an AGA deals with the previous tenant’s obligations and liabilities after assignment.
Describe the process of Commercial Rent Arars Recovery under a commercial lease.
LL can seize goods owned by T to the value of unpaid rent after serving notice, with an enforcement agent seizing and selling the goods to repay the rent.
Define specific performance in the context of landlord-tenant relationships.
Specific performance is a court order that compels a tenant to fulfill their obligations, such as repairs, as outlined in the lease agreement.
How can a landlord pursue guarantors and rent deposits in case of unpaid rent by the tenant?
LL can pursue guarantors under the guarantee terms or retain the deposit for damages, repairs, or unpaid rent.
