Property Flashcards
What are the stages in the conveyancing process?
Stage one premarket
Stage two pre-contract
Stage three exchange of contracts
Stage four pre-completion
Stage five completion
Stage six post completion
What is grant of a new lease?
Create a new lease
- the freehold owner is the landlord and the first tenant is the buyer.
- The terms can be negotiated between the seller and the buyer and the new lease is granted
-if it’s granted more than seven years must be registered at the land registry which creates a leasehold title.
What is grant of a new lease?
Create a new lease
- the freehold owner is the landlord and the first tenant is the buyer.
- The terms can be negotiated between the seller and the buyer and the new lease is granted
-if it’s granted more than seven years must be registered at the land registry which creates a leasehold title.
What is assignment of a lease?
The sale of the remainder of an existing list
Assignment is the transfer of a leasehold estate from one party to another and is also the name of the document that transfers the leasehold estate itself
What is prescribed clauses?
If the lease term is more than seven years it’s subject to compulsory registration at HMLR.
The lease must contain prescribed clauses at the front of it.
These are a summary of the lease terms and they are in a standard form that HMLR can refer to and complete the registration more easily.
What are some main lease provisions?
General provisions
- term
- easements and exceptions
- suspension of rent
- service charge
-management company
Typical covenants
- For the tenant to pay rent
- the tenants repair obligations, usually inside the building and landlord outside or common parts.
- The clause that covers alterations that can be made by the tenant and require landlords consent
- use
- insurance
- alienation
Landlord covenants
- Quite enjoyment
- Enforcing others covenants
- forfeiture
What least terms are unacceptable?
Of course that permits an absolute prohibition against assignment is considered unacceptable in a long residential lease
To remedy should insist on it being removed and the lease amended by deed of variation if they won’t do this and should advise client to withdrawal
What are some common provisions in a commercial lease?
In a commercial context rent is usually a lot higher than for a residential lease usually paid on a monthly or quarterly basis
Landlord will likely want the ability to review the rent and increase it in the term. This could only be done if there’s provision in the lease where review will take place at specified intervals and include valuation. at the time of the review date, the LL will serve notice on the tenant on the review date if they cannot agree, they should take the matter to arbitration if the lease allows them to
Use of the property we usually specify the permitted commercial uses for the property
What is done at the very first stage of a conveyancing process?
Taking instructions from the client
Send a client care letter setting out the level of service to be provided and the costs in accordance with the code of conduct
Obtain appropriate identification evidence to satisfy that the client is legitimate
Carry out appropriate due diligence checks in accordance with anti-money laundering requirements
Advise a buyer client on whether a survey is appropriate
Ascertain whether client will have to pay capital gains tax on the profits made when they sell an asset
We are acting for a buyer and lender what happens if there is a conflict between the buyer and the lender?
May arise where those issue that comes up and the buyer instructs solicitor not to tell the lender, for example they lost their job. A solicitor must cease to act the lender as the duty of confidentiality to the buyer is paramount.
Why can a solicitor act for a buyer and a lender?
Because they have the same common interest to acquire a good marketable title
Can act for a buyer and the lender provided that:
- lender is an institutional lender providing loans in the ordinary course of business
- the standard certificate of title is provided and
- there is no conflict of interest or risk of conflict
but if a conflict does a rise a solicitor should cease to act for both
Conflict may arise where:
- the lender has agreed to lend money for the purchase of a house with the climates clear they intend to do something else with the money or
- the client doesn’t want the sol to disclose the to the lender facts which might material affect the decision to lend money such as impending bankruptcy or planning breach
What should a solicitor advise client in relation to coownership?
If the buyers decide to hold it as tenants in common, they should enter into a declaration of trust which set the circumstances of the purchase and their contributions and shares for them to make a will as the doctrine of survivorship not apply
When is an EPC not required?
Not required for list of buildings
Not required if the previous certificate is valid, they are valid for 10 years
In a commercial context, what are the heads of term?
A commercial estate agent will negotiate the heads of term between the landlord of the commercial premises and the prospective tenant. The heads of term are the equivalent of a memorandum of sale.
What is the code for leasing business premises?
It is a code produced by the Royal institution of chartered surveyors and it sets out best practice for landlords when negotiating the terms of a commercial of the tenant
Provides the landlords must make offers in writing which include clear terms regarding matters such as rent and length of term, any right to break the lease ,rent review arrangements, right to assign and repairing obligations
What is license to assign?
Existing tenant assigning their lease will almost always need the landlords consent. The lease will contain details of how to obtain this. The landlord will need to be satisfied that the incoming tenant is of good standing, can afford and pay rent. might require the incoming tenant to provide references
The landlord satisfied that they will be able to make commitments. The landlord will draft the license to assign setting out the conditions. The document will be signed by all parties to create privity of contract between them.
What extra security might a landlord require when a lease is being assigned?
May require rent deposit
May require a guarantor to guarantee the rent payments in the event of default gives an extra security and potential remedy
May require the outgoing tenant to enter into an authorise guarantee agreement where they will act as guarantor for the immediate successor
What does a sellers solicitor do after they address the preliminary matters?
Solicitor investigates the sellers title
- obtain the title deeds. If registered will be on the HM LR portal if I’m registered must locate the title deeds maybe with a bank.
- Remedy any defects in the title protocol says that the seller should do this as part of investigation of title
- If the seller has a mortgage, they would obtain a redemption figure to see if there is any negative equity
- Obtain confirmation of the title plan
- Sending a copy of the title to the buyers solicitor this is deducing title
What is the sellers duty of disclosure?
The seller is under unlimited duty to disclosure in relation to the contract for sale
In the contract, the seller must disclose latent defects and latent burdens of the land known as in encumbrances but does not need to disclose defects or encumbrances
Latent defects and encumbrances are things that would not be apparent from inspection of the property for example an underground pipe or restrictive covenant
Patent defects are ones which are revealed by inspection such as a visible right of way over the land
What happens if a seller breaches their duty of disclosure?
The buyer may have the right to withdraw from the contract after exchange and claim damages for losses
However the duty to disclose latent defects does not extend to physical defects in the property due to the doctrine of caveat emptor - buyer beware
However, although not under duty to disclose, if a client tries to cover up a patent defect for example by painting over cracks on a wall, this will amount of wilful deceit and the seller could be sued by the buyer in tort
What must seller disclosed when completing the property information form and responses to the buyers enquiries?
Obligation to disclose information when filling these forms out
if make any misrepresentation in the form or their responses may be sued by the buyer for misrepresentation
What does a solicitor send in the contract package?
The draft contract in duplicate
Property information form
Fittings and contents form
Copy of title any relevant documents and title plans
Copies of any guarantees or copy planning permissions
What does the seller send in the contract pack for a lease hold property?
If the parties are granting a new lease
Will send:
- landlord produces title
- Contract will include the contract with draft lease annex
- Landlords freehold title
- Property information form
- Replies to standard precontracting enquiries
- Permission and building regulations
- Service charge budget if it’s a new building development and details of any management company
Assignment of existing lease
- Check if consent is required for assignment if so must apply for consent at the sellers expense and use all reasonable endeavours to obtain this consent note it cannot be unreasonably withheld
- Contract include leasehold register of title, copy of the existing lease
- property information form and
- lease information form
-copies of the last three years service charge
- copy of the landlords freehold title and
- if the house is less than 10 years old copy of the new build warranty plan permissions and building regs
What contract is used?
Contract incorporating the standard conditions of sale
Divided into three parts
Particulars of sale
- Includes the date names of the parties details of the property whether it’s freehold or leasehold any specified in conferences title guarantee completion date purchase price contents price
Standard conditions of sale
Special conditions of sale
- conditions are specific to that particular transaction some of them are pre-printed on the back
In commercial transactions, the standard commercial property conditions will be used
Two parts
Part one contains general conditions covering issues such as service of notices in conferences VAT title risk insurance completion and remedies
Part two contains provisions that apply only if expressly incorporated this includes more detail on VAT transfer businesses as a concern and taxation allowances
What do the standard conditions of sale include?
- Cover issues such as formation of contract, service of notices, matter subject to which property is sold, the physical condition of the property, the right of the buyer to occupy the premises between exchange and completion, details regarding completion and remedies for late completion or no completion.
- Standard conditions that the purchase price and contents price include any VAT.
- require the buyer to pay 10% of the purchase price on exchange parties can however agreed different amount however if the buyer breaches the contract they are liable for the full 10%
- The deposit can be used for related purchase for their residence only in England and Wales cannot be used for buy to let
- the deposit is held by the sellers solicitor as stakeholder. This means that it stays in the client account on behalf of both parties and cannot be paid over until completion. However this can be changed to agent
- The seller provides the property with full title guarantee included guarantee that the seller is entitled to sell the property but they will let their own cost do all their power to transfer the title to the buyer and the seller is selling the property free from all charges or encumbrances other than those disclosed in the contract This is given when the seller owns the full legal and equitable title and has lived in the Home., limited title guarantee is more narrow and the seller warrants that the seller has not created any charges or granted any rights during their period of ownership that is not been disclosed usually given when you’ve got less knowledge or involvement for example if it’s a PR sale no title guarantee the seller has no knowledge of property for example a lender who has taken possession of someone who is disposing the property by way of gift
- include an identity covenant that the buyer agreed to perform the obligation and indemnify the seller if the buyer breaches the obligation in the future
- provisions on risk and insurance the risk passes on exchange of contract and the seller does not have to ensure the property between exchange and completion but the buyer does
- Completion if there is no date inserted into the contract at exchange, provides that completion will take place 20 working days after exchange
What are some common special conditions?
Where the property is being sold with vacant possession on completion or whether they will be in tenant in situ
Whether a different time for completion has been agreed
Whether there are any occupiers in the property
What does the property information form cover?
Boundaries
Disputes with neighbour
Building works or alterations
Notices received about the property
Guarantees or warrantees
Property insurance details
Any flooding
Anyone exercising right over the property?
Any services across the property
Parking arrangements
Occupiers
And utility providers
How should you deal with with a non-owning occupier?
They must sign the contract to confirm they will relinquish any rights they have and move out the property on completion
What does the fittings and contents form list?
List what is included in the sale and what are included an extra price
Who raises requisitions on title?
The buyers solicitor will investigate title and then raise requisitions on title
What does indemnity insurance do?
Can cover future losses that may arise defect in title may cover specific issues such as an undisclosed covenant and missing deed in the chain of title breach of covenant or adverse possession
How is title investigated?
The solicitor will check the title to ensure the seller is entitled to sell the property
Solicitor will look at the different sections of the title register to look for entries which correspond with the information provided for example right of way or mortgages
In unregistered land the solicitor will look at if land should have been registered previously, whether there is a good root of title and whether there is an unbroken chain of ownership, whether any document has been correctly stamped and whether the seller has the ability to sell the property, any parties may have right in relation to the land
The buyers solicitor will examine the documents in the epitome to spot any defects that need to be remedied
What are the requirements of a good root of title?
The document must
- Deal with the whole legal and equitable interest in the property
- Contain an adequate description of the property
- Be at least 15 years old at the date of the contract and
- nothing to cast out on the title
Conveyance of sale is usually the best document
What is epitome of title?
Is a chronological list of all documents with copies of each document attached original sent on completion
What are triggering events?
Event which should have triggered compulsory registration after 1 December 1990
If there has been the seller would need to make an application to the lab registry to register before drafting the contract
What are some pre-contract searches that are done in each case?
Local search
2 parts
1- local land charges search reveals whether there are any local registrations made against the property.12 types that may appear, most common are general and specific financial charges to the local authority, may be in relation to the property this could include things like care home fees, planning charges, agreements or entries, any tree preservation orders, any listed building
2 - enquiries of the local authority which include issues such as roads public rights of way, planning info, any proposed roads rail or traffic scheme, any outstanding planning or enforcement notices, conservation area or whether the properties subject to compulsory purchase
Optional enquiries of the local authority are questions that they will answer if requested and additional fears paid.
- common ones include any road proposals, any major gas pipelines, property as a house in multiple of occupation, any environmental pollution orders and whether the property abuts common land
Water and drainage search
Environmental search
When should a common land in town or country village enquiry be made?
If the property above or is adjacent to land that has been designated common land or a town or village green
There may be restrictions on the land, in addition to restrictions on developing or enclosing. It may also give people in the locality the right to use the land for recreational purposes.
Must be reported to buyer and lender
If the property abuts or next to a village green or is a new build, then it must be marked as an optional enquiry
